Go through the Porter Analysis slides and answer the questions below, which have been taken from those slides. Keep in mind that we’re thinking of interactions between financial and non-financial strategic decisions. This means that the two decisions cannot be delegated to two different individuals without significant co-ordination. Keep in mind that when I say strategic decisions, I mean decisions, i.e. some _choice_ is being made. Keep in mind our list of financial decisions as a guideline for what decisions are financial; availability of financial resources is not a decision. By a strategic decision, I mean a decision that has long-term implications, that relates to the firm’s interactions with competitors, that determines the firm’s decision. This can be contrasted to operational decisions, which have to do with the firm’s day-to-day running.
Do not write more than five or six sentences to answer each question.
- What are the corporate decisions that you think of as financial decisions?
- How can financial strategies make it more difficult for new firms to enter the industry and compete with your firm?
- How can the right financial decision help overwhelm or outgun existing competitors?
- How can financial decisions help redress the balance of power between the firm and its suppliers?
- How can financial decisions help increase the firm’s economic power vis-à-vis its customers?
- Can financial decisions help the firm ward off substitutes competing against its products?
- Are there specific firm characteristics that can help a firm in its operating decisions?
Even though we are yet to identify the specifics of how financial strategies could be used to add value using a Porter Five Forces or a Resource Based View framework, try to think creatively. What I am looking for is not so much identification of the correct financial strategies, but a willingness to think broadly and to imagine. This will set the stage for a better appreciation of how credit management, capital structure, dividend policy and financial risk management could affect operating and strategic decisions.
To make things concrete, keep in mind a specific firm, Uber. Answer the questions above with respect to Uber; you can have a general introduction, but then narrow in on how your comments apply to Uber. By Uber, I mean Uber Technologies (UBER), whose stock is traded on the NYSE. However, in your answer, you can make reference to any market, either the US market or the global market or any specific market.