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Questions and Answers
What is the main difference between growth stocks and value stocks?
What is the main difference between growth stocks and value stocks?
- Growth stocks have higher risk-adjusted rates of return
- Value stocks have positive earnings surprises (correct)
- Value stocks have higher potential for earnings growth
- Growth stocks appear undervalued for reasons other than earnings growth potential
What are the two major competitive strategies?
What are the two major competitive strategies?
- High-cost and differentiation
- High-cost and imitation
- Low-cost and imitation
- Low-cost and differentiation (correct)
What does SWOT analysis help companies do?
What does SWOT analysis help companies do?
- Exploit their competitive advantages and defend against weaknesses (correct)
- All of the above
- Identify their strengths and weaknesses
- Identify opportunities and threats
What are some examples of strengths for a company?
What are some examples of strengths for a company?
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What are some examples of threats for a company?
What are some examples of threats for a company?
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Study Notes
- Growth stocks have positive earnings surprises and high risk-adjusted rates of return.
- Value stocks appear undervalued for reasons other than earnings growth potential.
- Low-cost and differentiation strategies are two major competitive strategies.
- SWOT analysis helps companies exploit their competitive advantages and defend against weaknesses.
- Strengths can include customer service, high-quality products, strong brand image, customer loyalty, innovation, market leadership, and financial resources.
- Weaknesses occur when competitors have potentially exploitable advantages over the firm.
- Opportunities include a growing market, shrinking competition, favorable exchange rates, and identification of new markets or product segments.
- Threats include a slowing economy, government regulation, increased competition, and threats of entry.
- Apple's strengths include a strong brand image, good customer service, and robust financial performance.
- Apple's weaknesses include the loss of Steve Jobs, product recalls, and patent infringement.
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