Define and give examples of the following terms:
1. Coreness
2. Imitability – Possessing the ability to be imitable.
.
3. Tacit knowledge - Tacit knowledge (as opposed to formal or explicit knowledge) is
knowledge that is difficult to transfer to another person by means of writing it down or
verbalizing it.
With tacit knowledge, people are not often aware of the knowledge they possess or how it can be
valuable to others. Effective transfer of tacit knowledge generally requires extensive personal
contact and trust. Another example of tacit knowledge is the ability to ride a bicycle.
4. T-skills
5. Substitute products 6. Co-opetitors - Coopetition occurs when companies work together for parts of their business
where they do not believe they have competitive advantage and where they believe they can
share common costs.
Toyota and Ford have merged their Indiana Parts and Shipping Companies together as a
Coopetitos, in order save money and share in many of the common cost, which are associated
with their day-to-day manufacturing business.
7. Idiosyncratic assets
8. Value stock - A stock that tends to trade at a lower price relative to its fundamentals (i.e.
dividends, earnings, sales, etc.) and thus considered undervalued by a value investor. Common
characteristics of such stocks include a high dividend yield, low price-to-book ratio and/or low
price-to-earnings ratio.
Value stocks are those stocks that tend to trade at a low price relative to their fundamentals (i.e.
dividends, earnings, sales, etc.). Therefore, stocks that have a relatively high dividend yield; low
price to sales ratio; and/or low PE ratio would tend to be classified as value stocks. The low
valuations that value stocks enjoy are often as a result of some type of bad news (i.e. poor
earnings report, bad press, legal issues, etc.). However value investors tend to focus on quality
value stocks in hopes that all the bad news is out and already priced in with the stock having
nowhere to go but up.
Dogs of the Dow would be considered value stocks since they trade at a relatively high dividend
yield.
9. Moral Hazarrd Moral hazard occurs when a party insulated from risk may behave
differently than it would behave if it were fully exposed to the risk. In insurance, moral hazard
that occurs without conscious or malicious action is called morale hazard.
Moral hazard is a special case of information asymmetry, a situation in which one party in a
transaction has more information than another.
10. Era of ferment
Describe the major changes that are occurring in the business world in the U.S. due to the
rise of the Internet.
There are many changes occurring in the business world due to the rise of the internet.
1. rise of global business. International business is a huge area now. Even small companies are
"going global" and offering their products overseas.
2. rise of many more small businesses. It is not as expensive to start an online company and takes
a lot less risk assumption.
3. ability to get anything anywhere. Due to the internet, customers can find just about any
product anywhere they want any time of day or night.
4. new innovation. Innovation (such as the Internet) brings more innovation--web cams, net
meetings, automated spamming, etc.
What costs are likely to be incurred by businesses in the U.S. due to these changes?
-additional budgeted money needed for hosting website, creating website, and maintaining.
Possibly more employees for this.
-monthly fees for website
-additional shipping charges due to wide geographic locations of customers
What benefits are likely to be incurred by businesses in the U.S. due to these changes?better able to compete with other businesses
-more products and services available
-more technology and innovations
-possible higher level of satisfaction
-possible increase of sales