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

OCTOBER 10, 2017

For any business to succeed over the long term, it must earn a return that exceeds its cost of capital. It is through continuously making incremental progress in lowering costs and increasing revenues that firms achieve competitive advantage in their industry. Here are four things leaders can do.

Innovation 8

Innovation P&L ROI Long-term 8

Harvard Business Review

OCTOBER 3, 2011

A CEO's job is about resource allocation with a goal of earning a return in excess of the opportunity cost of capital. The challenge is figuring out how to allocate human and financial capital to its best and highest use for the long term. This requires difficult trade-offs. Communication.

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. As important, the rate of reversion to the mean is a function of the relative contribution of luck.

Skills 15

Skills ROIC Sports Cost of Capital 15

Harvard Business Review

NOVEMBER 25, 2013

CMOs must demonstrate and track marketing’s impact by focusing on key performance indicators (KPIs) that are important for shareholder value such as strong cash flow, cost of capital, return on capital, and operating margin. Marketing KPIs need to incorporate customer acquisition and retention targets and costs.

CFO 8

CFO Short-term Long-term Benchmarking 8

Harvard Business Review

AUGUST 21, 2015

“A marketer’s goal is to move his or her products from relatively elastic to relatively inelastic,” she continues. Read refreshers on net present value , breakeven quantity , debt-to-equity ratio , and cost of capital. . “If my product is highly elastic, it is being perceived as a commodity by consumers.”

Price 8

Price Debt to Equity Ratio Marketing Metrics 8

Harvard Business Review

JUNE 22, 2015

” The other forms of ROI often require a more complex understanding of financial concepts such as the firm’s cost of capital or the time value of money. “It most closely relates one of our main goals in marketing, to generate demand, to the costs that we incur to achieve it.”

Payback Period 8

Payback Period Fixed Costs Analysis Price 8

Harvard Business Review

SEPTEMBER 8, 2014

The goal of strategy is profitable growth, meaning economic value above the firm’s cost of capital. Smartly reducing assets devoted to activities that earn less than their cost of capital requires good links with evolving market realities. ( Or, they learn fast after a few investor meetings.)

Debt to Equity Ratio 10

Debt to Equity Ratio Cost of Capital Strategy Incentives 10

Harvard Business Review

SEPTEMBER 26, 2016

Proponents of shareholder value maximization got a crucial logical boost in the late 1970s when Mike Jensen, a friend of mine and a great scholar, made the argument that the only way a corporation can make intelligent decisions is if it has a single goal that it seeks to maximize because it is impossible to optimize two (or more) things at once.

Objective 8

Objective Cost of Capital Bottom-up Environment 8

Harvard Business Review

MAY 25, 2018

The most successful will develop clear joint goals and an entrepreneurially enabled management style that focuses more on outcomes than on control. Today’s low cost of capital creates a powerful financial incentive to put money to work by investing in a portfolio of ideas and capabilities.

Incubator 8

Incubator Insurance Cost of Capital Competitive Advantage 8

Strategy Driven

SEPTEMBER 9, 2011

The logic of NPV is to project cash flows into the future and then discount those flows back into today’s dollars at a given cost of capital. Net present value [NPV] is a case in point. Discovery-Driven Growth : A Breakthrough Process to Reduce Risk and Seize Opportunity by Rita McGrath.

Innovation 50

Innovation NPV Business Model Constraint 50