Can Functional Leaders Act Strategically?

Corporate support functions like IT, HR, Finance, Administration have generally looked to carry out their respective functions in an efficient and organised manner trying to ensure that the line management is able to function effectively and that they are able to achieve the objectives set for the organisation – short term & long term. The support function role is generally more transactional than strategic. In other words

“They fulfill day-to-day needs, meet legal and regulatory requirements, accommodate requests from business units, and put out the inevitable fires that erupted when there was a conflict or urgency. When functional leaders were asked to make improvements, it meant doing the same things more efficiently and at a greater cost savings.”

Can functional leaders act strategically too? Is it required?

What Can CXOs Expect Of World Economy in 2013 & Beyond?

Business leaders (CXOs) take a number of decisions – financial & non-financial – based on their expectations of the economic growth expected in their country of business and also how the world economy is likely to fare, given the interconnected world of today. For multinationals the global economic view becomes much more important.

Decisions could vary based on their views of economic growth (GDP) and its consequent impact on interest rates, exchange rates, freight rates, commodity prices and the like.

So what are the current expectations based on which leaders may want to take a view as regards their business?

Taking Heinz Private – Did Berkshire & 3G Overvalue The Transaction?

Around middle of February this year came the announcement that the Brazilian private firm 3G Capital & Berkshire Hathaway (BRK) have come together to buy the 144 year old iconic H.J. Heinz Co.

“Including debt assumption, Heinz valued the transaction, which it called the largest in its industry’s history, at $28 billion. Buffet’s Berkshire Hathaway and 3G will pay $72.50 per share, a 19 percent premium to the stock’s previous all-time high,” reported Reuters.

Analyzing the transaction Fitch Ratings had to say this:

“First, it is unusual for BRK to pair with a private equity firm to make an acquisition, mostly because BRK’s sizable resources mean few deals would be too large to go alone. In fact, Warren Buffett still claims to be in the market for another large acquisition.

Second, Mr. Buffett’s reputation has long been, and is, as a value investor in search of undervalued assets. One could argue the sizable premium above Heinz’s record high stock price simply does not qualify this as a “value” investment.

Last, and perhaps most importantly, teaming with 3G Capital to acquire Heinz could complicate any exit strategy. BRK has historically been a long-term investor, while private equity firms typically have a shorter term investment horizon.”

Did the deal deviate from Mr. Buffet’s playbook on the value front? 

Do Dividends Make Sense? Warren Buffet’s View

The Dividend Disadvantage

 (Excerpts from the Warren Buffet Annual Letter March 2013)

“A number of Berkshire shareholders – including some of my good friends – would like Berkshire to pay a cash dividend. It puzzles them that we relish the dividends we receive from most of the stocks that Berkshire owns, but pay out nothing ourselves. So let’s examine when dividends do and don’t make sense for shareholders.”

Google’s Mobile Revenue Model

According to reports

“Mobile searches have increased 200% year over year in 2012, and it’s predicted that within the next year, mobile will become the primary way people access Google’s services.”

“The major factor supporting Google’s rising valuation is the weakening of the mobile bear thesis, which indicated the growth of mobile usage, and thus advertising, would eat into the search giant’s core business.”

“Its impressive run since mid-November, with shares gaining nearly 30%, is “justified and sustainable,” …”expects the stock to hit $950 over the next 12 months and possibly break the $1,000 mark if conditions are right.”

With mobile becoming the key access point  how is Google’s strategy emerging on this front?

Where Gold Comes From & Where It Goes?

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Source: Trustable Gold .Com

Do CFOs Kill Innovation?

CFO’s ‘Street-Fear’ & Innovation

Accountants & CFOs are trained to think conservatively. They swear by one of the important convention in accounting – recognize all possible losses but recognize gains only when it happens.

Innovation, especially the disruptive type calls for big money and the payoffs are not immediate. This then creates a balance sheet issue which the Street, focused on quarterly results does not take sympathetically. Such risks do create a lot of negativity among analysts & investors. The CFO ‘Street-Fear’ is for real.

So do Accountants/CFOs stifle innovation? How is that over the past decade disruptive innovations have actually happened?

10 Worst Corporate Accounting Scandals

Source: Accounting-Degree.org

Basics Of Risk-Return Framework

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