Investing in Competitive Methods Chapter 7. By: Fiona Caramba-Coker For: Dr. Fred DeMicco. OBJECTIVES. Upon completion of this chapter, you will be able to: understand the role of the manager in adding value to the firm.
By: Fiona Caramba-Coker
For: Dr. Fred DeMicco
Upon completion of this chapter, you will be able to:
Adding Value Worksheet
Aggregated Cash Flowof
Estimating cash flows
Determining riskThe Pillars of the Investment Decision in Competitive Methods
Factors to be evaluated in every investment decision
Some investments may have risks. It is important to measure the operating leverage and risk for a given investment, in order to estimate the break even point and amount of profit possible.
Discounted cash flow techniques refer to forecasting the ________ of a competitive method into the future.
A. Cash flows
C. Balance sheet
Managers should consider some factors when making investments, EXCEPT:
A. The capital outlay.
B. Quality and life of investment materials.
C. New ideas.
D. Design, engineering, and construction.
If the net present value (NPV) is zero or greater, the manager can make the investment.
Investors can avoid unnecessary risk by making the right investments based upon their effective environmental scanning.
The money provided by investment banks, institutional investors, individuals, friends, family, and in-laws is referred to as debt capital.
Capital can be obtained through debt.
What are the pillars of the investment decision in competitive methods?
What are the factors affecting the investment decision?
What are two primary discounted cash flow (DCF) techniques employed by analysts?
According to the information below, try to answer the questions: The cost of debt is 2 percent.The cost of equity is 10 percent. The total of long-term liabilities and stockholder's equity is $600,000. The total amount of the long-term liabilities is $300,000. The total amount of the stockholder's equity is $100,000.
1a. The proportion of debt to total capital is ____________ . 1b. The proportion of equity to total capital is ____________ . 1c. The weighted average cost of capital is ____________ .
1A. Soundness of content: Is the case credible? As far as you know, does the case depict the industry with reasonable accuracy? Note any factual errors.
1. Pedagogical value: In its coverage of CRM-customer relationship management, does the case satisfactorily address learning objectives that are important in a marketing management course? Why or why not?
2. Quality of presentation: Does the depiction of Hilton's organization and executive leadership strike you as balanced and objective? If not, why not? Is the case story interesting and fluently told? Was it engaging to you? What more, if anything, should the authors do to inject energy or drama into the case?
4. Exhibits: This case has an unusually large number of exhibits for an HBSP Brief Case. Are they all valuable? Can you recommend one or two that might, in the interest of brevity, be eliminated without damaging the pedagogical purpose?
5. Quantitative aspect: Please evaluate carefully the quantitative challenge that the case presents to you. Will good students correctly perceive the quantitative analysis and interpretation that is expected of them? Should the assignment be made more or less explicit in the case? Is the quantitative assignment pegged at roughly the right level for your good students? Please review the TN's discussion of the quantitative aspect of the case: simply put, is the math correct? Is the analysis appropriate and intellectually sound?
6. Breadth and depth: Is the case sufficiently broad in focus and deep in detail to support a full-class discussion in your course? Conversely, is the case too ambitious in scope and complexity for a single session of homework plus class discussion? If the latter, what topics should be dropped or trimmed back?
7. Which statement below best reflects the case's readiness for publication?
In there efforts to become one of the world’s premier hospitality firms, Hilton Hotels identified some key problems within the firm that need to be solved. One problem the firm identified was that Hilton Hotels lacked outstanding technological innovations. They also saw a problem with the lack of IT infrastructure in the firm, and that the organization had no way of maintaining its relationship with its valued customers. Another problem that the firm saw was that there was a need for man-power in order to properly build and maintain these strong relationships with customers. The causes of these problems were due to forces in the industry, both from competitors and consumers. Hilton Hotels conjured up some great solutions for there different problems, and the solutions were all found in technology. Solutions for the problems included, Hilton OnQ, CRM, Using Call Centers to optimize the CRM concept, Best Guest Arrival Reports, and The Satisfaction and Loyalty Tracking (SALT). In hopes that Hilton Hotels would continue in their growth via the use of technology, my recommendations were also centered around technology. I recommend the expansion of the OnQ and CRM technologies, as well as the implementation of free internet access for guests at all properties.
Using Call Centers to optimize the CRM concept – The Hilton Hotels wanted to optimize the new CRM portion of the OnQ system, so they utilized the call centers to gather more information about their customers during the reservation process. “OnQ Reservation allows the agents to access callers’ personal dossiers and update their preferences. This information shortens the time on the phone and it enables better cross-selling.”
Best Guest Arrival Report – This was a useful tool, because it allowed the property to prepare for receiving guests. This report was useful to the property because it listed and ranked all expected guests that had a profile in OnQ and formatted relevant information from their dossier in an easily s canned format. This allowed the property to pre-assign guests to a room that was prepared according to their preferences. This helped the firm to become more efficient in the services they provided to their valued guests.
The Satisfaction and Loyalty Tracking (SALT) – SALT was a survey that a sample of departing guests were asked to complete. This survey was an important measuring tool because it assessed whether the CRM initiative was truly working and how it could be tweaked.