Harvard Business Review

APRIL 16, 2012

To enhance financial flexibility, companies have been retaining unprecedented amounts of cash on their balance sheets, calling it "strategic" cash to distinguish it from the "operating" cash that is needed to run the business. CFOs should always think about strategic cash within the context of a company's allocation priorities.

Company 13

Company Cost of Capital Finance Long-term 13

Harvard Business Review

AUGUST 20, 2018

companies for an eight-year period (2005–2013). It is an important question because the Allaire data shows the truly sad and unfortunate outcomes for the companies after the hedge funds ride off into the sunset, after a median holding period of only 423 unpleasant days. But for the universe of U.S. What will stop this lunacy?

Hedge 8

Hedge TSR Company Sample 8

Harvard Business Review

JUNE 22, 2016

A new type of services company could transform global supply chains: Financial technology companies that act as intermediaries in facilitating transactions between a company and its suppliers. The use of FinTechs allows suppliers to access funding at the multinationals firm’s lower cost of capital.).

Supply Chain 11

Supply Chain Cost of Capital Transportation Finance 11

Harvard Business Review

AUGUST 27, 2015

Companies in the top one-fifth of profitability earn, in aggregate, about 70 times more economic profit (accounting profit less cost of capital) than those in the middle three-fifths combined, according to McKinsey’s database of 3,000 large, publicly listed, nonfinancial U.S. An increasing number of U.S.

ROIC 8

ROIC McKinsey GDP Company 8

Harvard Business Review

MARCH 10, 2011

When executives evaluate a potential investment, whether it's to build a new plant, enter a new market, or acquire a company, they weigh its cost against the future cash flows they expect will spring from it. It's the opening paragraph of a Harvard Business Review article called "What's Your Real Cost of Capital?"

CAPM 13

CAPM Cost Discounted Cash Flow Cost of Capital 13

Harvard Business Review

APRIL 16, 2015

” A quarter century later, not much seems to have changed: fewer than five out of the 100 CEOs on HBR’s 2014 list of best-performing CEOs even mention “return on capital” on their official biography — and none of those five lead companies listed in the Dow Jones Industrial Average (DJIA) or in the EuroStoxx50. .”

CEO 8

CEO ROIC Cost of Capital Merton 8

Harvard Business Review

JUNE 18, 2015

PE firms typically buy controlling shares of private or public firms, often funded by debt, with the hope of later taking them public or selling them to another company in order to turn a profit. But how do PE firms decide which companies to buy? We classify private equity as buyout or growth equity investments in mature companies.

CAPM 8

CAPM Discounted Cash Flow Company Rate of Return 8

Harvard Business Review

APRIL 5, 2017

The McKinsey Global Institute, in conjunction with FCLT Global, recently released research stating that long-term-oriented companies perform better than those that focus on short-term results. While a laudable effort in principle, measuring a company’s tendency to make myopic operating and investing decisions is fiendishly complex.

EPS 9

EPS Metrics Depreciation Short-term 9

Harvard Business Review

FEBRUARY 1, 2018

based companies by anywhere from 10% to 20% , depending on their current tax position. At a recent investor conference, one of us heard a CEO proudly state that the new law would have no effect at all on how his company views investments. Why are CEOs so reluctant to pursue bold new investments in growing their companies?

Supply Chain 9

Supply Chain CEO Discount Retail 9

Harvard Business Review

OCTOBER 13, 2015

The standard concern is that the high US dollar hurts America’s manufacturing cost position because US production costs are inflated by the dollar’s appreciation. A way to think about it is that shareholders currently pay a P/E of approximately 20 times for the shares of an S&P 500 company.

EPS 8

EPS Short-term Cost of Capital Long-term 8

Harvard Business Review

JULY 25, 2017

Companies spend a lot on marketing communications. What is Marketing ROI, and How Do Companies Use It? Marketing ROI is exactly what it sounds like: a way of measuring the return on investment from the amount a company spends on marketing. Juan Díaz-Faes for HBR. In fact, global spending on media is expected to reach $2.1

ROI 8

ROI Marketing Marketing Mix Short-term 8

Harvard Business Review

SEPTEMBER 4, 2017

Beyond wages, other forms of investment in human capital include education and training, improved healthcare, and other, less obvious investments, such as the time and space to explore new ideas and professional development opportunities. Small and large companies alike are experimenting with these concepts.

Human Capital 15

Human Capital Kaizen Agility Energy 15

Harvard Business Review

JUNE 26, 2015

Our studies of a wide range of retailers have found that companies often have the most difficulty managing death. So as the liquidation value of the assets in question increases, so does the amount a lender will provide in return for a given amount of collateral, thus lowering the effective cost of capital for retailers.

Retail 8

Retail Cost of Capital Price Discount 8

Harvard Business Review

JULY 31, 2017

Digital technology has been roiling markets and disrupting companies for more than two decades, but despite that lengthy history, incumbents are still struggling to enact and deliver on digital transformations. How the best companies get up to speed. We clustered companies in two ways. Insight Center.

Strategy 8

Strategy ROI Technology Cost of Capital 8

Harvard Business Review

SEPTEMBER 13, 2017

These ranges were wide due to the relative size of the different players in the supply chain (for example, a company that has higher revenues will realize greater benefits than a smaller firm). These values can be estimated credibly and cost-effectively, and we set about applying them to the Brazilian beef sector. of revenues).

Supply Chain 8

Supply Chain Net Present Value Retail Cost of Capital 8

Harvard Business Review

NOVEMBER 4, 2014

Divestment can theoretically address this market failure by limiting investment by the fossil fuel industry by depressing company valuations and thereby increasing the cost of capital. For many companies, most of the capital expenditures are financed from internal cash flows and bank financing.

Finance 8

Finance Cost of Capital Constraint Price 8

Harvard Business Review

NOVEMBER 4, 2014

Divestment can theoretically address this market failure by limiting investment by the fossil fuel industry by depressing company valuations and thereby increasing the cost of capital. For many companies, most of the capital expenditures are financed from internal cash flows and bank financing.

Finance 8

Finance Cost of Capital Constraint Price 8

Harvard Business Review

FEBRUARY 2, 2012

Today, only 9% of businesses in the world have achieved even a modest level of sustained, profitable growth over the past decade on average (5.5%, earning cost of capital) and that is declining — even though virtually all the businesses aspire to something like this or more.

Competitive Advantage 15

Competitive Advantage Porter Goleman Emotional Intelligence 15

Harvard Business Review

MARCH 10, 2011

Many are deeply uncertain about which initiatives they should fund — and one root of this indecision is a general lack of confidence in the cost of capital projections they are using to make the call. We find that 55 percent of respondents are convinced their cost of capital estimates are off by more than 50 basis points.

Cost of Capital 13

Cost of Capital CAPM Cost Discounted Cash Flow 13

Terry Starbucker

AUGUST 29, 2010

This once proud company had taken a bunch of body blows, and was staggering – badly. Its CEO at the time was great at cutting costs and preserving capital, but investors weren’t buying it. And change it did, because the new CEO had a vision that went beyond product, and costs, and overhead, and costs of capital.

Technology 282

Technology Price Video Cost of Capital 282

Harvard Business Review

JUNE 27, 2012

My colleagues and I at Bain & Company have been tracking this for forty years, and we have never seen companies losing their leadership positions as quickly as they are today. Did it seem "creative" to Nokia shareholders when the company missed the smart phone wave despite having some of the early technology?

Creativity 14

Creativity Long-term Kotter Cost of Capital 14

Harvard Business Review

OCTOBER 15, 2013

At many companies the total cash investment in acquisitions, R&D, and fixed assets has not earned back its cost of capital after adjusting for the time lag in realizing incremental benefits. Such decisions might be unpopular and break a lot of traditions, yet they set the future course of the company.

P&L 8

P&L Fixed Assets Charan Delegation 8

Harvard Business Review

APRIL 23, 2015

The basic principles are: If you want to earn above the cost of capital (if you want to create value), you must get a higher return on your efforts than the average competitor. Every day entrepreneurs find new ways of getting higher prices than competitors or of reducing costs below those of competitors.

Strategy 8

Strategy Porter Price Cost of Capital 8

Harvard Business Review

MAY 4, 2012

Investors reward companies (such as Apple and Kimberly-Clark ) whose current performance or guidance for the future exceeds market expectations, and they punish companies (as they did Starbucks and Procter & Gamble ) whose performance or guidance fails to meet expectations. Otherwise, they may be shackled by Fair Disclosure (Reg.

CFO 11

CFO Metrics Price Depreciation 11

Harvard Business Review

APRIL 9, 2015

Your company is ready to make a big purchase — a fleet of cars, a piece of manufacturing equipment, a new computer system. But before anyone writes a check, you need to calculate the return on investment (ROI) by comparing the expected benefits with the costs. Profit appears on a company’s income statement.

ROI 8

ROI Analysis Rate of Return Net Present Value 8

Harvard Business Review

NOVEMBER 20, 2013

Two uncomfortable strategic truths face the vast majority of executives and companies – and probably you, too. Though both statements may sound extreme, they are the clear implication of new McKinsey research on how companies create value and allocate resources. Whatever the degree of change required at your company, make it.

Strategy 8

Strategy McKinsey Strategic Planning Cost of Capital 8

Harvard Business Review

MARCH 31, 2015

While consumers are rightfully worried that their personal information may be compromised, shareholders and companies’ management have a wider set of concerns, including loss of intellectual property, operational disruption, decreased customer trust, tarnished brand, and loss of investor commitment.

Price 8

Price Long-term Banking Short-term 8

Harvard Business Review

MARCH 28, 2016

How many companies of any kind are still around after the equivalent of three or four generations? A study of 25,000 publicly traded companies from 1950 to 2009 found that, on average, they lasted around 15 years, or not even through one generation. These are disheartening numbers. But let’s put them in perspective.

Long-term 8

Long-term Short-term Reputation Incentives 8

Harvard Business Review

OCTOBER 3, 2011

CEOs need to understand the principles of shareholder value and why they are so important in judging difficult trade-offs, learn about the relationship between the financial performance of the company and the company's stock, and communicate clearly and act appropriately when expectations gaps open. Understanding Capital Markets.

Short-term 12

Short-term Long-term Price CEO 12

Harvard Business Review

FEBRUARY 7, 2011

Take, for instance, a group of companies that currently have high returns on invested capital (ROIC). If you follow that group over time, you would see their ROICs revert back toward the cost of capital. Likewise, executives who led their companies in the 2000s did poorly with their ESOs. Hiring stars.

Skills 15

Skills ROIC Sports Cost of Capital 15

Harvard Business Review

APRIL 26, 2017

Banks’ cost of capital is typically 50 basis points or less. These low-cost and reliable sources of funds are from taxpayer-insured deposits and the Federal Reserve’s discount window. ” Can banks out-compete the disruptors? The recent partnership between OnDeck and JPMorgan Chase is such an example.

Banking 12

Banking Stage-Gate Credit Scoring Competitive Advantage 12

Harvard Business Review

MAY 24, 2017

Today’s executives spend a lot of time managing the balance sheet, despite the fact that it doesn’t represent their company’s scarcest resource. Financial capital is relatively abundant and cheap. According to Bain’s Macro Trends Group, the global supply of capital stands at nearly 10 times global GDP.

Human Capital 15

Human Capital Management Company ROCE 15

Harvard Business Review

MAY 14, 2013

Because of the economic slowdown, industrial activity has dropped more than 20% in certain sectors of the Continent''s economy, and most industrial companies are using much less energy than they were a few years ago. That means future carbon-credit auctions, which help fund clean-energy initiatives, will yield lower revenue.

Price 9

Price Energy Politics Marketing 9

Harvard Business Review

OCTOBER 21, 2016

Yet executives are often reluctant to place sustainability core to their company’s business strategy in the mistaken belief that the costs outweigh the benefits. We exclude companies with a traditional CSR program that supports employee volunteering in the community – this does not by itself qualify as sustainability.

Supply Chain 8

Supply Chain Price Loyalty Efficiency 8

Harvard Business Review

AUGUST 21, 2015

In fact, determining price is one of the toughest things a marketer has to do, in large part because it has such a big impact on the company’s bottom line. Say that a clothing company raised the price of one of its coats from $100 to $120. How do companies use it? This is not what companies tend to do in practice.

Price 8

Price Debt to Equity Ratio Marketing Metrics 8

Harvard Business Review

JUNE 22, 2015

“Breakeven quantity is the number of incremental units that the firm needs to sell to cover the cost of a marketing program or other type of investment,” says Avery. If the company doesn’t sell the equivalent of the BEQ as a result of the investment, then it’s losing money and it won’t recoup its costs.

Payback Period 8

Payback Period Fixed Costs Analysis Price 8

Harvard Business Review

NOVEMBER 25, 2013

In our experience, companies that adopt this marketing analytics approach can unlock 10–20 percent of their marketing budget to either reinvest in marketing or return to the bottom line. And at another — a consumer packaged goods company — a series of strong brands had evolved in separate silos.

CFO 8

CFO Short-term Long-term Benchmarking 8