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Is Coca-Cola the “Perfect” Business? (Case Study)

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  A.       One of the most important skills to learn in managerial economics is the ability to identify a good business.  Discuss at least four characteristics of a good business. Interesting perspective on the characteristics of wonderful businesses has been given by legendary Wall Street investors T. Rowe Price and Warren E. Buffett.  The late T. Rowe Price was the founder of Baltimore-based T. Rowe Price and Associates, Inc., one of the largest no-load mutual fund organizations in the United States, and the father of the "growth stock" theory of investing.  According to Price, attractive growth stocks have low labor costs, superior research to develop products and new markets, a high rate of return on stockholder's equity (ROE), elevated profit margins, rapid earnings per share (EPS) growth, lack cutthroat competition and are comparatively immune from regulation.  Omaha 's Warren E. Buffett, the billionaire head of Berkshire Hathaway, Inc., also looks for