CoachStation

SEPTEMBER 16, 2015

Compare Michael Porter’s competitive advantage definition: “Competitive advantage, sustainable or not, exists when a company makes economic rents, that is, their earnings exceed their costs (including cost of capital).” Is change communication in your organisation more like the first example or the second?

Storytelling 146

Storytelling Competitive Advantage Conference Cost of Capital 146

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?" by James J.

CAPM 14

CAPM Cost Discounted Cash Flow Cost of Capital 14

Harvard Business Review

JUNE 22, 2016

The use of FinTechs allows suppliers to access funding at the multinationals firm’s lower cost of capital.). The supplier gives the buying firm a discount on the invoice amount at the buyer’s lower cost of capital. the supplier gets $9,959 of the $10,000).

Supply Chain 10

Supply Chain Cost of Capital Transportation Finance 10

Harvard Business Review

APRIL 16, 2015

Unless your company’s return on capital exceeds its cost of capital, no amount of revenue growth can create value. For the many firms whose cost of capital and return on capital are roughly equal, in fact, the only path to value creation is to increase return on capital.

CEO 8

CEO ROIC Cost of Capital Merton 8

Harvard Business Review

SEPTEMBER 13, 2017

Nonetheless, the case study demonstrates that measuring the value of sustainable business can be done, and that sustainable business itself can be cost-effective. We set about investigating the financial costs and benefits of the uptake of sustainable and deforestation-free beef by ranchers, slaughterhouses, and retailers in Brazil.

Supply Chain 8

Supply Chain Net Present Value Retail Cost of Capital 8

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. The way to do that is to build market share in international markets at a level of profitability that is higher than the cost of capital.

EPS 8

EPS Short-term Cost of Capital Long-term 8

Harvard Business Review

APRIL 16, 2012

Strategic cash usually is invested in high quality short-term securities; this ensures safety and liquidity, but produces a meager return on investment—especially in a low interest rate environment—and does not achieve the company's cost of capital. How Should You Approach Strategic Cash?

Company 13

Company Cost of Capital Finance Long-term 13

Harvard Business Review

APRIL 5, 2017

However, firms can efficiently increase margin growth without much revenue growth by managing to squeeze out their fixed costs to service the same level of output. McKinsey’s margin growth measure classified firms that report higher earnings growth than revenue growth as myopic. What would better measures be?

EPS 8

EPS Metrics Depreciation Short-term 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. Your prices must be higher or your costs, including the cost of your balance sheet and the cost of taxes, must be lower. Insight Center.

Strategy 8

Strategy Porter Price Cost of Capital 8

Harvard Business Review

JULY 25, 2017

Some companies establish a threshold for MROI that takes into account its risk tolerance and cost of capital, below which they are hesitant to make investments. The cost of the marketing investment is pretty concrete. While the calculation looks straightforward, there are a lot of complexities to actually using it.

ROI 8

ROI Marketing Marketing Mix Short-term 8

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

SEPTEMBER 4, 2017

In turn, the company is achieving lower levels of employee and customer churn, and correspondingly lower employee hiring and customer acquisition costs. The compounding and virtuous effects of increasing customer and employee advocacy more than offset the higher cost of wages.

Human Capital 14

Human Capital Kaizen Agility Energy 14

Harvard Business Review

JUNE 26, 2015

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.

Retail 8

Retail Cost of Capital Price Discount 8

Harvard Business Review

FEBRUARY 1, 2018

In a world already awash in investable capital , these changes should further widen the spread between after-tax investment returns and capital costs, driving up multiples. The cost of capital is at historic lows, averaging below 6% for most large U.S.

Supply Chain 9

Supply Chain CEO Discount Retail 9

Harvard Business Review

JULY 31, 2017

Based on our recent worldwide survey of 2,000 incumbent companies across all major industries and countries, we estimate that the average return on incumbent digital initiatives is below 10% — barely above the cost of capital. Accor, which is opening its online booking platform to independent hotels offers a good case.

Strategy 8

Strategy ROI Technology Cost of Capital 8

Harvard Business Review

SEPTEMBER 8, 2011

Banks aren't looking for cheaper capital; they are looking for lower risk. Cost of capital is passed on to the businesses borrowing the money so it is not a huge factor for lenders.) Thus, the government must find a way to reduce the risk for the banks while reducing the cost of capital for the businesses.

GDP 12

GDP Planning Cost of Capital Banking 12

Harvard Business Review

OCTOBER 25, 2018

To analyze the superstar dynamics of firms, our metric was economic profit, a measure of a firm’s profit above and beyond opportunity cost. (To To do this, we take the firm’s returns, deduct the cost of capital, and multiply by the firm’s total invested capital.)

Industry 12

Industry Company GDP Bottom-up 12

Harvard Business Review

NOVEMBER 4, 2014

The key argument for fossil fuel divestment is that the cost of carbon dioxide emissions and other pollutants are not being accurately priced by the market. 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.

Finance 8

Finance Cost of Capital Constraint Price 8

Harvard Business Review

NOVEMBER 4, 2014

The key argument for fossil fuel divestment is that the cost of carbon dioxide emissions and other pollutants are not being accurately priced by the market. 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.

Finance 8

Finance Cost of Capital Constraint Price 8

Terry Starbucker

AUGUST 29, 2010

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. It was about passion. And about people who have it.

Technology 282

Technology Price Video Cost of Capital 282

Harvard Business Review

APRIL 26, 2017

In addition to improving the experience for business owners, digitization has the potential to substantially reduce the cost of lending at every stage of the process, making SME customers more profitable for lenders, and creating opportunities to serve a broader swath of SMEs. Banks’ cost of capital is typically 50 basis points or less.

Banking 11

Banking Stage-Gate Credit Scoring Competitive Advantage 11

Harvard Business Review

APRIL 9, 2015

But before anyone writes a check, you need to calculate the return on investment (ROI) by comparing the expected benefits with the costs. It indicates what is left after all costs and expenses are subtracted from the company’s revenue. Some of those costs and expenses aren’t cash-based, either.

ROI 8

ROI Analysis Rate of Return Net Present Value 8

Harvard Business Review

AUGUST 20, 2018

This is ironic, of course, because studies show the majority of acquisitions don’t earn the cost of capital for the buyer. When a S&P500-sized company gets sold, the average premium over the prevailing stock price that is paid for the right to take over that company is in excess of 30%.

Hedge 8

Hedge TSR Company Sample 8

Harvard Business Review

MAY 4, 2012

Less Volatility in Stock Price: The net effect of providing guidance is arguably a less volatile stock price, which can result in a lower beta and a lower cost of capital. FD) constraints.

CFO 11

CFO Metrics Price Depreciation 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. This underinvestment has a real cost to U.S.

ROIC 8

ROIC McKinsey GDP Company 8

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. That outcome reflects the wrong allocation and/or ineffective execution.

P&L 8

P&L Fixed Assets Charan Delegation 8

Harvard Business Review

MARCH 31, 2015

Companies are spending millions in litigation costs, efforts to restore brand loyalty, and refunds. It is true that that breaches are expected and have become a regular cost of doing business, but there are deeper reasons for the market’s failure to respond to these incidents. Let’s look in some more detail at a few cases.

Price 8

Price Long-term Banking Short-term 8

Harvard Business Review

JUNE 22, 2015

Marketers often have to make the call on whether a certain marketing investment is worth the cost. 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. The variable costs to make each pair of flip flops are $14.00.

Payback Period 8

Payback Period Fixed Costs Analysis 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

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.

Innovation 8

Innovation P&L ROI Long-term 8

Harvard Business Review

JUNE 18, 2015

Rather, they rely on internal rates of return and multiples of invested capital. Furthermore, few PE investors explicitly use the capital asset price model (CAPM) to determine a cost of capital. the notion that debt financing can be “cheap” at certain times). Not all PE firms use the same strategy.

CAPM 8

CAPM Discounted Cash Flow Company Rate of Return 8

Harvard Business Review

JUNE 27, 2012

real revenue and profit growth and earning their cost of capital has steadily declined. Only 9% of companies achieved even a modest level of sustained and profitable growth. In the past decade, the percentage of companies achieving even 5.5% Yet almost every business aspires to do this.

Creativity 14

Creativity Long-term Kotter Cost of Capital 14

Harvard Business Review

NOVEMBER 25, 2013

Only when they began to really analyze their marketing costs did the company realize that it was spending three times the industry benchmark on coupons and 50 percent more on research. Marketing KPIs need to incorporate customer acquisition and retention targets and costs.

CFO 8

CFO Short-term Long-term Benchmarking 8

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. Disruptions in the supply chain may affect production processes that depend on unpriced natural capital assets such as biodiversity, groundwater, clean air, and climate.

Supply Chain 8

Supply Chain Price Loyalty Efficiency 8

Harvard Business Review

MAY 14, 2013

Swayed by arguments, particularly from coal-reliant Eastern Europe, that restoring proper market pricing would increase energy costs and possibly hinder growth during a time of deep recession, the European Parliament said no. There''s no way to determine precisely how much effect the postponement would have had on carbon prices.

Price 8

Price Energy Politics Marketing 8

Harvard Business Review

NOVEMBER 20, 2013

Companies run by decisive CEOs rack up more economic profit — what’s left of operating profit after the cost of capital is subtracted – than competitors do. Whatever the degree of change required at your company, make it. Returns to shareholders of reallocating firms are strong.

Strategy 8

Strategy McKinsey Strategic Planning Cost of Capital 8

Harvard Business Review

MARCH 28, 2016

As a result, family equity can come at a very low cost of capital, where businesses can meet the annual needs of their shareholders without having to worry about paying back the principal. Over a three to five-year period it cost them money, but over a 20-year period this investment will pay off handsomely.

Long-term 8

Long-term Short-term Reputation Incentives 8