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Adapt Your Strategy to Higher Interest Rates

Harvard Business Review

While many executives and investors were thrown by last year’s interest rate increases, the cost of capital needn’t be a threat. Companies that integrate the cost of capital into their strategy and planning reap real benefits. When something is cheap, people waste it.

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A Refresher on Cost of Capital

Harvard Business Review

You’ll likely be asked to show that the return on the investment will be better than your company’s cost of capital. What is the cost of capital? “The cost of capital is simply the return expected by those who provide capital for the business,” says Knight. Further Reading.

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Entrepreneurship Suffers When Well-Paid Jobs Are Plentiful

The Horizons Tracker

The author believes that while lower costs of capital would certainly help raise the entrepreneurship rate, it would be most beneficial to entrepreneurs with lower skills. of physicians operating as independent owners in 2019, versus 48.5% Positive or negative?

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The Rise of FinTech in Supply Chains

Harvard Business Review

The use of FinTechs allows suppliers to access funding at the multinationals firm’s lower cost of capital.). They include new enterprises such as Orbian , Prime Revenue , C2FO , Taulia , and Ariba as well as new operations launched by traditional financial service firms such as Citi Group, HSBC, BNP Paribas, and Deutsche Bank.

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Strong Dollar, Weak Thinking

Harvard Business Review

But the strengthening creates a serious challenge for the big American multinationals with large foreign operations. 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.

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CEOs Don’t Care Enough About Capital Allocation

Harvard Business Review

” 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.

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Shutting Down Stores Doesn’t Have to Be Bad for Business

Harvard Business Review

Managing death more effectively can provide numerous benefits: It can boost profits significantly, lower the cost of capital, and reduce complexity in operations, which can improve the performance of concepts that are in the early and midlife stages. Managers also frequently did not discount deeply enough early in a liquidation.

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