Transcript
If The Only Tool You Have Is a Hammer, You Treat Everything Like a Nail
Abraham Maslow
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Management Cycle
Objectives Objectives gap Diagnosis
Generation of responses
Analysis of consequences
Selection
Programming
Measurement of performance Communication and leadership Perception of trends
Ansoff, 1990
To others in the firm
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External environment
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Manager Archetypes
Leader
Administrator
Statesman
Planner
System Architect
Entrepreneur
Ansoff, 1990
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Selecting a management system to fit the firm
Implementation decision
Compliance monitoring
Action instructions
Productive units
Implementation management
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Selecting a management system to fit the firm
Historical control management
Control decision
Performance evaluation
Implementation decision
Historical standards
Performance measurement
Compliance monitoring
Action instructions
Productive units
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Selecting a management system to fit the firm
Goals
E n v i r o n m e n t
Control decision
Profit budgets
Resource budgets
Action programs
Performance evaluation
Feasibility
Implementation decision
Performance and resource forecast
Performance measurement
Compliance monitoring
Action instructions
Productive units
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Business
Products / Services CONSISTENCY ? Benefits Brand Accelerating Factor Images TRUST I S O
E X P E R I E N C E
S
MANAGEMENT SYSTEM
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Sales Process
Sell Your Self
Sell Your Company
Sell Your Products
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Smarter Sales
Insight-based selling
Solution-based selling
Product-based selling
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Needs
Wants
Expectation
Fears
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Marketing mixes
All other stimuli
Economic needs
Psychological variables
Social influences
Purchase situation
Consumer decision process
Need awareness Problem solving • Information search • Identify alternatives • Set criteria • Evaluate alternatives Purchase decision Experience after purchase
Postpone decision Feedback based on experience
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Buyers
Users
Buying Center
Influencers
Gatekeepers
Deciders
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Risk Job security Comfort Individual’s needs Career advancement Money/Rewards Other needs Overlap In needs
Innovation Survival Customer satisfaction Company’s needs Growth Profit Other needs
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What does she
THINK AND FEEL?
what really counts major preoccupations worries & aspirations What does she
What does she
HEAR?
what friends say what boss say what influencers say
SEE?
environment friends what the market offers
What does she
SAY AND DO?
attitude in public appearance behavior toward others
PAIN
Fears, frustrations, obstacles
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GAIN
Wants/need measures of success
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Managing Risk
Preventable Risk Strategy Risk
• Internal risk • Controllable and ought to be eliminated or avoided • Voluntarily accepts by the company in order to generate superior return from its strategy
External Risk
• Some risks arise from events outside the company and are beyond its influence or control
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Kaplan 2012
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Company Resources
Tangible assets Intangible assets
Organizational Capabilities
Performance
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VRIO Framework
Value • Does it provide customer value and competitive advantage ? Rareness • Do other competitors posses it ?
In-imitability • Is it costly for others to imitate ?
Organization • Is the firm organized to exploit the resource ?
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Barney, 1994
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What makes a resource valuable ?
Value creation zone
Demand
Scarcity
Appropriability
Collis et al, 1995
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Organizational Capability
Managers
Mentality
Climate
Culture
Competence
Problem solving
Power
Distribution of power Informal system
Management systems Organizational structure Reward and incentives Information and technology
Competence
Capacity
Ansoff, 1990 Organizational capacity
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ORGANIZATION CAPABILITY
LEADER
MMGD
?
BIG COMPANY : -Annual sales > 500 bilion -Employee > 100 persons SMALL COMPANY : -Annual sales < 500 bilion -Employee < 100 persons
COMPETENCE
FORMAL SYSTEM, PROCEDURE, SOP, STRUCTURE
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CLIMATE
INFORMAL, SYSTEM RELATIONSHIP, CULTURE, COHESIVENESS,
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The greatest danger in times of turbulence is not the turbulence … it is to act with yesterday’s logic
Peter Drucker
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Professional Knowledge
carewhy knowwhy knowhow knowwhat
Pattern
Learning Org.
Learning how to alter Mental Model
Double-loop Learning
Dynamic Business Complexity
Systems Thinker
Structure
Time
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CLASSES OF ASSETS
FINANCIAL PHYSICAL HUMAN
REPUTATION
KNOWLEDGE
RELATIONSHIPS
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Discipline of Market Leader
“Best product” Product Leadership Product differentiation
Operational Competence
Customer Responsive
Operational Excellence “Best total cost”
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Customer Intimacy “Best total solution”
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Strategic Fit
. . . . . .
Strategic gap
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Environmental Turbulence
leaders competence climate
Org
Strategy
Igor Ansoff, 1991
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Organization Effectiveness 7S, McKinsey
strategy
structure systems
shared values skills staff style
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External Environment
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Issue Priority Matrix
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Industry Analysis
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Industry Analysis
Bargaining Power of Buyers -Buyer is powerful when: Buyer purchases large proportion of seller’s products Buyer has the potential to integrate backward Alternative suppliers are plentiful Changing suppliers costs very little Purchased product represents a high percentage of a buyer’s costs Buyer earns low profits Purchased product is unimportant to the final quality or price of a buyer’s products
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Industry Analysis
Bargaining Power of Suppliers -Supplier is powerful when: Supplier industry is dominated by a few companies but sells to many Its product is unique and/or has high switching costs Substitutes are not readily available Suppliers are able to integrate forward and compete directly with present customers Purchasing industry buys only a small portion of the supplier’s goods.
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Corporation’s Value Chain
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SWOT Matrix
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Porter’s Competitive Strategies
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Risk of Generic Strategies
Risks of Cost Leadership
Cost leadership is not sustained: • Competitors imitate. • Technology changes. • Other bases for cost leadership erode. Proximity in differentiation is lost. Cost focusers achieve even lower cost in segments. Risks of Differentiation Differentiation is not sustained: • Competitors imitate. • Bases for differentiation become less important to buyers. Cost proximity is lost. Differentiation focusers achieve even greater differentiation in segments. Risks of Focus The focus strategy is imitated: The target segment becomes structurally unattractive: • Structure erodes. • Demand disappears. Broadly targeted competitors overwhelm the segment: • The segment’s differences from other segments narrow. • The advantages of a broad line increase. New focusers subsegment the industry.
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8 Dimensions of Quality
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BCG Matrix (Portfolio Analysis)
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GE Business Screen (Portfolio Analysis)
High Winners A Winners B C Question Marks D
Winners E
Medium
Average Businesses F Losers
Losers G Low Profit Producers Strong Average
H
Losers Weak
Business Strength/Competitive Position
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Staffing & Directing
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Evaluation and Control
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Financial Perspective
Long-term Shareholders Value
The Balanced Scorecard Framework
Kaplan & Norton (2004)
Cause-and-Effect Relationship
Revenue Growth Defines the chain of logic by which intangible assets will be transformed to tangible value.
Productivity
Customer Perspective
Product/Service Attributes Price Quality Time Function Relationship Partnership Image Brand
Customer Value Proposition
Clarifies the conditions that will create value for the customer.
Internal Process Perspective
Manage Operations Manage Customers Manage Innovation Manage Regulatory and Social Processes
Value-Creating Processes
Defines the processes that will transform intangible assets into customer and financial outcomes.
Learning and Growth Perspective
Human Capital
+
Information Capital
+
Organization Capital
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Clustering of Assets and Activities
Defines the intangible assets that must be aligned and integrated to create the value.
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Financial Perspective
Long-Term Shareholder Value
Productivity Strategy
Growth Strategy
Improve Cost Structure
Increase Asset Utilization
Expand Revenue Opportunities
Enhance Customer Value
• Reduce cash • Eliminate defects; improve yields
• Manage capacity from existing assets • Make incremental investments to eliminate bottlenecks
• New sources of revenue (new products, markets, partners)
• Improve profitability of existing customers
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Customer Perspective
• Customer Profitability
• Market Share • Account Share
• Customer Acquisition
• Customer Retention
Customer Value Proposition
Price Quality Availability Selection Functionality Service Partnership Brand Image
Product/Service Attributes
Relationship
• Customer Satisfaction
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Internal Perspective
Operation Management Processes Processes that produce and deliver products and services • Supply • Production • Distribution • Risk management
Customer Management Processes Processes that enhance customer value
Innovation Processes Processes that create new products and services • Opportunity ID • R&D portfolio • Design/develop • Launch
Regulatory and Social Processes Processes that improve communities and the environment • Environment • Safety and health • Employment • Community
• Selection • Acquisition • Retention • Growth
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Learning and Growth Perspective
Creating Alignment
Strategic Job Families
Strategic IT Portfolio
Organization Change Agenda
Creating Readiness
Human Capital • Skills • Training • Knowledge
+
Information Capital • Systems • Databases • Networks
+
Organizational Capital • Culture • Leadership • Alignment • Teamwork
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Financial Measurement
Total assets. Total assets per employee. Profit as a % of total assets. Return on net assets. Return on total assets. Revenues/total assets. Gross margin. Net income. Profit as a % of sales. Profit per employee. Revenue. Revenue from new products. Revenue per employee. Return on equity (ROE). Return on capital employed (ROCE). Return on investment (ROI). Economic value added (EVA). Market value added (MVA).
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Value added per employee. Compound growth rate. Dividends. Market value. Share price. Shareholder mix. Shareholder loyalty. Cash flow. Total cost. Credit rating. Debt. Debt to equity. Times interest earned. Days sales in receivables. Accounts receivable turnover. Days in payables. Days in inventory. Inventory turnover ratio
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Customer Related Measurement
Customer satisfaction. Customer loyalty. Market share. Customer complaints. Complaints resolved on first contact. Return rates. Response time per customer request. Direct price. Price relative to competition. Total cost to customer. Average duration of customer relationship. Customers lost. Customer retention. Customer acquisition rates. Percentage of revenue from new customers. Number of customers. Annual sales per customer. Win rate (sales closed/sales contacts). Customer visits to the company. Hours spent with customers. Marketing cost as a % of sales. Number of ads placed. Number of proposals made. Brand recognition. Response rate. Number of trade shows attended. Sales volume. Share of target customer spending. Sales per channel. Average customer size. Customers per employees. Customer service expense per customer. Customer profitability. Frequency (number of sales transaction). Rizal Nangoy 49
Internal Operation Measurement
Time.
On-time delivery receipt. Order cycle time. Order cycle time variability. Response time. Forecast/planning cycle time. Planning cycle time variability.
Cost.
Finished goods inventory turns. Days sales outstanding. Cost to serve. Cash to cash cycle time. Total delivery cost. Cost of goods Transportation costs Inventory carrying costs Material handling costs All other costs Information systems Administrative Cost of excess capacity. Cost of capacity shortfall.
Quality.
Overall customer satisfaction. Processing accuracy. Perfect order fulfillment. On-time delivery Complete order Accurate product selection Damage-free Accurate invoice Forecast accuracy. Planning accuracy. Schedule adherence.
Other/Supporting.
Approval exceptions to standard. Minimum order quantity Change order timing Availabiltiy of information.
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Internal Operation Measurement ( cont’d)
Average cost per transaction. On-time delivery. Average lead time. Inventory turnover. Environmental emissions. Research and development expense. Community involvement. Patents pending. Average age of patents. Ratio of new products to total offerings. Stockouts. Labor utilization rates. Response time to customer requests. Defect percentage. Rework. Customer database availability. Breakeven time. Cycle time improvement. Continuous improvement. Warranty claims. Lead user identification. Product and services in the pipeline. Internal rate of return on new projects. Waste reduction. Space utilization. Frequency of returned purchases. Downtime. Planning accuracy. Time to market of new products/ services. New products introduced. Number of positive media stories.
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Learning and Growth Measurement
Employee participation in professional or trade associations. Training investment per customer. Average years of service. Percentage of employees with advanced degrees. Number of cross-trained employees. Absenteeism. Turnover rate. Employee suggestions. Employee satisfaction. Participation in stock ownership plans. Lost time accidents. Value added per employee. Motivation index. Outstanding number of applications for employment. Diversity rates. Empowerment index (number of managers)
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Quality of work environment. Internal communication rating. Employee productivity. Number of Scorecards produced. Health promotion. Training hours. Competency coverage ratio. Personal goal achievement. Timely completion of performance appraisals. Leadership development. Communication planning. Reportable accidents. Percentage of employee with computers. Strategic information ratio. Cross-functional assignments. Knowledge management. Ethics violations.
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Maslow’s Hierarchy Of Needs
Self-actualization needs Esteem needs Belongingness needs Security needs
Physiological needs
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Expectancy Theory of Motivation
Effort-to-performance expectancy 0.0-1.0 x x Performance-to-outcome expectancy 0.0-1.0 Sum of all outcomes Environment Valence
Valence of all outcomes
Effort
Performance
Outcomes
Ability Effort-toperformance expectancy
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Performance-tooutcome expectancy
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Remuneration Principles
Parties Should be noted
Needs and Values
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People Motivation
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Remuneration Components
Pay for POSITION
F I X • Fixed
• Cash • Periodic, routine
Pay for PERFORMANCE
• Variable • Cash • Periodic, routine
Direct and Indirect Financial Payment
Pay for PEOPLE
• Fixed and Variable • Cash and Non Cash • Periodic, routine, Incidental
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Situational Leadership
Supporting (Lo T, Hi R)
Coaching (Hi T, Hi R)
Delegating (Lo T, Lo R)
Directing (Hi T, Lo R)
Task behaviors
M4 M3 M2 M1
Follower maturity
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Strategic Renewal and Organizational Change
Shifting Competitive Environment Organizational Change
Strategic Renewal
New Opportunities
Altering Behavior Patterns of Employees
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Component Processes of Business Analysis
Business Environment & Strategy Analysis
Industry Analysis Strategy Analysis
Financial Analysis Analysis of cash flows
Accounting Analysis
Profitability Analysis
Risk Analysis
Prospective Analysis
Cost of Capital Estimate
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Intrinsic Value
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Analyzing Return on Assets-ROA
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Conceptual map of strategic management
Environmental challenge Information Evolution of systems Strategic planning Environmental turbulence Segmentation Competitive posture Strategic port folio Dispersed positioning Strategic analysis Strong signals Issue management Weak signals Surprises
Technology strategy Societal strategy Internationalization strategy
Strategic diagnosis
Organizational design
Design of functional capability
Design of general management
General managers
Systems
Structure
Resistance to change
Change management Managing Change Institutionalizing change
Ansoff, 1990
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Matching aggressiveness and responsiveness with turbulence
Environmental turbulence
Level 1 Repetitive
Strategic aggressiveness
Stable based on precedents
Responsiveness of capability
Custodial suppresses change
Level 2 Expanding
Reactive based on experience Anticipatory based on extrapolation Entrepreneurial based on expected futures Creative based on creativity
Production adapts to change
Level 3 Changing
Marketing seeks familiar change
Level 4 Discontinuous
Strategic
seeks new change
Level 5 Surprising
Flexible seeks novel change
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Blue Ocean Strategy
Kim and Mauborgne (2005)
Value Innovation: The Cornerstone of Blue Ocean Strategy
Costs
Value Innovation
Buyer Value The Simultaneous Pursuit of Differentiation and Low Cost
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Blue Ocean Strategy
Red Ocean Versus Blue Ocean Strategy
Red Ocean Strategy
Competing in existing market space. Beat the competition. Exploit existing demand. Make the value-cost trade-off.
Kim and Mauborgne (2005)
Blue Ocean Strategy
Create uncontested market space. Make the competition irrelevant. Create and capture new demand. Break the value-cost trade-off.
Align the whole system of a firm’s activities with its strategic choice of differentiation or low cost.
Align the whole system of a firm’s activities in pursuit of differentiation and low cost.
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Blue Ocean Strategy
The Four Actions Framework
Kim and Mauborgne (2005)
Reduce
Which factors should be reduced well below the industry’s standard?
Eliminate
Which of the factors that the industry takes for granted should be eliminated?
A New Value Curve
Create
Which factors should be created that the industry has never offered?
Raise
Which factors should be raised well above the industry’s standard?
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The 4 Discipline of Execution
Discipline 3
Keep a compelling scoreboard
Discipline 1 Focus on the wildly important Discipline 2 Act on the lead measures Discipline 4 Create a cadence of accountability
McChesney, Covey, 2012
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Leading Change
Kotter, 1996
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Levels of Culture
Basic Underlying Assumptions
Espoused Belief and Values
Artifacts
Schein, 2010
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How Leaders Embed and Transmit Culture
Primary Embedding Mechanisms Secondary Articulation and Reinforcement Mechanisms
What leaders pay attention to, measure, and control on regular basis
How leaders react to critical incidents and organizational crisis How leaders allocate resources Deliberate role modeling, teaching, and coaching How leaders allocate rewards and status How leaders recruit, select, promote, and excommunicate
Organizational design and structure
Organizational systems and procedures Rites and rituals of the organization Design of physical space, facades, and buildings Stories about important events and people Formal statements of organizational philosophy, creeds, and charters
Schein, 2010
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Six Thinking Hats
Think of Paper
• information • Facts and figures
Think of Fire. Think of Warmth. Think of Feelings
• Emotional view • Feelings and intuition
Think of Caution
• Risk, dangers, obstacles, potential problems, and the downside of a suggestion • Point out weaknesses in an idea
Think of Sunshine. Think of Optimism
• Positive and constructive • Visioning and optimistic
Think of Vegetation. Think of Growth
• Creativity and new idea • Alternative provocation
Think of Sky. Think of “Overview”
• Concern with control • The organization of the thinking process, and the use of the other hats
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De bono, 1985
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Corporate Valuation
FCFF = EBIT ( 1 – Tax ) + depreciation - initial investment - change in net working capital
Rm = indext – indext-1
Cost of equity Value to firm = FCFF WACC - GROWTH WACC = Cost of equity + cost of debt ( proportion ) Cost of debt = CAPM model Er = Rf + β ( Rm - Rf ) Ri,t = α + β ( Rmt ) Index t-1
Interest ( 1 – tax )
Ri,t = Pi,t – Pi, t-1 Pi, t-1 Growth = Ln(TAt) – Ln(TAt-1) Ln(TAt-1)
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