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

Harvard Business Review

FEBRUARY 2, 2012

I heard it in a session led by Professor Michael Porter and Dean Nitin Nohria of the Harvard Business School who were sharing a research project on declining American Competitiveness. An example was a discussion session of tired-looking European finance ministers, defensive and elusive about the speed of acting on the Euro crisis.

Competitive Advantage 15

Competitive Advantage Porter Goleman Emotional Intelligence 15

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

MAY 14, 2013

Share prices for European utilities and industrial companies have fallen too, threatening a wave of credit downgrades and increasing companies'' cost of capital. And it will be much harder to attract private capital to infrastructure projects through public-private partnerships.

Price 9

Price Energy Politics Marketing 9

Harvard Business Review

SEPTEMBER 8, 2014

The goal of strategy is profitable growth, meaning economic value above the firm’s cost of capital. Most projects and investment initiatives in firms are driven by revenue-seeking activities with customers. It may seem that sales has little impact on the fourth value-creation lever, the firm’s cost of capital.

Debt to Equity Ratio 11

Debt to Equity Ratio Cost of Capital Strategy Incentives 11

Harvard Business Review

NOVEMBER 25, 2013

Moreover, the previous year’s survey showed that 63 percent of projects do not use analytics to inform marketing decisions. That means that almost two out of three CMOs are using qualitative measures to show impact, or aren’t measuring impact at all. Shareholders don’t care about fans or followers unless those numbers can be tied to profit.

CFO 8

CFO Short-term Long-term Benchmarking 8

Harvard Business Review

MAY 24, 2017

According to Bain’s Macro Trends Group, the global supply of capital stands at nearly 10 times global GDP. In contrast, today’s scarcest resource is your human capital, as measured by the time, talent and energy of your workforce. Invest human capital just like you invest financial capital. Monitor it.

Human Capital 15

Human Capital Management Company ROCE 15

Harvard Business Review

OCTOBER 21, 2016

billion in mining projects since 2010. . “Stranded assets” are investments that become obsolete due to regulatory, environmental, or market constraints. For example, social conflict related to disruptions to water supplies in Peru has resulted in the indefinite suspension of $21.5 Fostering innovation.

Supply Chain 8

Supply Chain Price Loyalty Efficiency 8

Harvard Business Review

OCTOBER 11, 2013

When the well-known hedge fund manager and short-seller Jeremiah Hughes first put Terranola in the spotlight, issuing ominous warnings about unsold products, a looming patent expiration, and flawed growth projections, the considered judgment of the executive team was to do nothing. “I Terranola had been moving forward with A.J.’s

Case Study 8

Case Study CFO Hedge PR 8

Harvard Business Review

FEBRUARY 7, 2017

We know from FCLT surveys , for example, that 61% of executives and directors say that they would cut discretionary spending to avoid risking an earnings miss, and a further 47% would delay starting a new project in such a situation, even if doing so led to a potential sacrifice in value. As noted earlier, if all public U.S.

Long-term 8

Long-term EPS Short-term Management 8

Harvard Business Review

APRIL 2, 2014

The capital asset pricing model was supposed to allow companies to calculate their cost of capital in a consistent way. So in that framework what do is you calculate the beta of your firm or your project with two components of the market return, and one of them is the one that you really worry about.

CAPM 8

CAPM Discount Price Finance 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. Time after time, new initiatives and projects are rolled out with great fanfare only to end up abandoned and dubbed expensive flops. Net present value [NPV] is a case in point.

Innovation 50

Innovation NPV Business Model Constraint 50