Dr. John Psarouthakis, Executive Editor, www.BusinessThinker.com. Founder and former CEO, JP Industries, Inc, a Fortune 500 industrial corporation. Adjunct professor, Strategy and Acquisitions, Ross School of Management, University of Michigan
The effective manager needs to understand and be able to use the latest strategy tools for analyzing industries, and be able to create strategies for sustainable advantage, and understand industry transformations.
Strategic management must include a broad set of strategic management issues, including:
- Industry analysis and the forces that determine industry attractiveness;
- Competitive positioning and the factors determining relative firm performance;
- Industry transformation and strategic sustainability;
- International strategy
By Allan H. Meltzer who is an American Economist and the Allan H. Meltzer professor of Political Economy at Carnegie Mellon University’s Tepper School of Business. He is the author of a large number of academic papers and books on monetary policy and the Federal Reserve Bank. Dr. Meltzer’s two volume books, “A History of the Federal Reserve”, are considered the most comprehensive history of the central bank. He is considered one of the world’s foremost experts on the development and application of monetary policy. Currently he is also President of the Mont Pelerin Society. Dr. Meltzer originated the aphorism “Capitalism without failure is like religion without sin. It doesn’t work.”
This is a monthly column written by Professor Meltzer for Defining Ideas of the Hoover Institution.
It is posted in
After the unprecedented financial events of the past decade, several Congressmen and Senators recently proposed steps to rein in the Federal Reserve’s broad powers over monetary policy and commercial bank regulation. Like many of their constituents, the authors and supporters of the new rules are fed up with both Fed bailouts of large banks and the financing of government deficits at historically low interest rates.
The proposed changes would require the Fed to announce and follow a rule for monetary policy and stop using taxpayer funds to bailout large banks and financial firms. Both changes are welcome and long overdue.
Dr. John Psarouthakis, Executive Editor, The Business Thinker, llc.
Author of “How to Acquire the Right Business”, go to books at the home page.
This is the 7th of short articles of my thoughts about Acquisition of a business.
Letter of intent and formal due diligence
This article briefly introduces some of the basic concepts of valuation of the company. Although four basic approaches, the profitability method, the asset method, historic cash flow and discounted cash flow, are all described, the discounted cash flow method is considered the most accurate valuation of the company. However, a comparison of values from different methods can provide useful insights, especially in the early stages of valuation of the business.
This article also point out the distinction between value and price. The value is the worth of the company as will be operated by the buyer. The price is the amount you wish to pay for it. The synergy you can realize from the sale, the motivation of the seller, and the projected growth of the industry, and the type of financing are just a few of the factors you might consider in negotiating the final price.