An IRR preference will always provide the investor with a return that is equal to or greater than the return from an IRR lookback.
<h3>What is IRR preference and IRR lookback?</h3>
- With an IRR preference, the investor receives all additional cash flow from the sale (after each party has received capital equal to their investment) until a specified IRR is reached.
- The cash flow after each party has received capital equal to their initial investment is split in a predetermined proportion with an IRR lookback.
- IRR Lookback Payment refers to a payment that brings the annualized internal rate of return on the loan to 25%, as determined by the lender.
- IRR is a metric that expresses as a percentage to an investor the average annual compounded return on a real estate investment over time. The preferred return is the first claim on distributions of free cash flow.
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Answer:
Penetration pricing is a pricing strategy where a company charges less than its competitors in order to entice its competitors' customers to patronise them instead.
Competitive pricing on the other hand will see a company charging the same price as its competitors.
Benefits of using Penetration pricing over Competitive
- Reduce competition - If the company engaging in penetration pricing is large enough with more influence in the market, charging less than competitors might lead to competitors leaving the market as the prices will be too meagre for them to cover costs.
- Market Dominance - using penetration pricing can lead to customers moving from the competitors to the company using penetration pricing thereby giving that company market dominance.
- Economies of scale - Penetration pricing allows the company to sell more quantity of its product which means that it will have to produce more and this will reduce average costs for the company.
Risks involved
- Price War - There is a risk of a price war if a company uses penetration pricing. A price war happens when a company reduces its prices and their competitors react by reducing their own prices as well. It might led to a situation where this continues until all the companies are making significant losses.
- Brand Image damage - Cheaper products are usually perceived as having lower quality. Reducing prices might see customers believing instead that the brand is poor and so they may avoid it.
- Attracts low loyalty - The customers gained through this strategies most often have little brand loyalty and when a better deal comes than the one they are being offered in that moment, they will leave.
Answer: (C) Core competencies
Explanation:
The core competencies is the one of the type of collective skills that comprised all the advantages of the strategic business.
The concept of core competencies was introduced by the Gary hamel and the C.K prahalad. It is defined as the combination of the multiple skills and the resources which helps in the distinguish in an organization.
The following are the personal core competencies are as follows:
- The problem resolution skill
- Analytical ability
- The creating thinking
Sorry, I’m not sure so I don’t want to mislead you