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Article
Publication date: 18 April 2008

This paper aims to review the latest management developments across the globe and pinpoints practical implications from cutting‐edge research and case studies.

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Abstract

Purpose

This paper aims to review the latest management developments across the globe and pinpoints practical implications from cutting‐edge research and case studies.

Design/methodology/approach

This briefing is prepared by an independent writer who adds their own impartial comments and places the articles in context.

Findings

Joseph Calandro Jr, Ranganna Dasari and Scott Lane, in their collaborative article “Berkshire Hathaway and GEICO: an M&A case study”, explain in detail the success of one of the world's great entrepreneurs: Warren Buffett. This is a study in a particular methodology of evaluation, the Graham and Dodd (G&D) valuation approach, and how it was applied by Buffett in Berkshire Hathaway's 1995 acquisition of the US insurance giant, GEICO.

Practical implications

Provides strategic insights and practical thinking that have influenced some of the world's leading organizations.

Originality/value

The briefing saves busy executives and researchers hours of reading time by selecting only the very best, most pertinent information and presenting it in a condensed and easy‐to‐digest format.

Details

Strategic Direction, vol. 24 no. 5
Type: Research Article
ISSN: 0258-0543

Keywords

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Article
Publication date: 14 November 2008

Joseph Calandro, Scott Lane and Ranganna Dasari

Risk management has grown increasingly popular in recent years due to the recognition that risk should be as actively managed as performance. A key objective of risk management is

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Abstract

Purpose

Risk management has grown increasingly popular in recent years due to the recognition that risk should be as actively managed as performance. A key objective of risk management is to evaluate performance in the context of the relative volatility in which business operations are undertaken. However, accomplishing this has generally proven difficult. This paper aims to present a practical approach for risk‐adjusting performance.

Design/methodology/approach

This paper presents a practical risk‐adjustment methodology that is based on a popular statistical measure. The utility of the approach is demonstrated in two practical examples: the first is an industry example and the second is an M&A example.

Findings

The results of the research suggest that the risk‐adjustment approach presented here could become an important part of both performance management and risk management programs.

Research implications/limitations

The approach detailed in this paper facilitates the practical risk‐adjustment of select performance measures and risk measures. As this is an introductory paper, further research could be conducted on the specifics of the risk‐adjustment process as well as the strategic context in which measures are risk‐adjusted.

Originality/value

This paper introduces a practical approach of risk‐adjusting performance that was inspired by a popular statistical measure, which is demonstrated in two practical examples.

Details

Measuring Business Excellence, vol. 12 no. 4
Type: Research Article
ISSN: 1368-3047

Keywords

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Article
Publication date: 13 November 2007

Joseph Calandro, Ranganna Dasari and Scott Lane

This paper aims to illustrates the use of the modern Graham and Dodd valuation methodology as a corporate M&A tool by way of case study.

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Abstract

Purpose

This paper aims to illustrates the use of the modern Graham and Dodd valuation methodology as a corporate M&A tool by way of case study.

Design/methodology/approach

The paper presents a case study of the 1995 Berkshire Hathaway acquisition of GEICO and draws on previously published Graham and Dodd methodological materials as well as GEICO's publicly available financial information. The valuation presented in the case is the sole work of the authors.

Findings

The paper finds that, while Graham and Dodd‐based valuation is a popular investment methodology it has thus far received scant attention as a corporate M&A tool. The results of the GEICO case suggest that Graham and Dodd valuation could be applied successfully to corporate M&A.

Research limitations/implications

The paper explains modern Graham and Dodd valuation in the context of Berkshire Hathaway's 1995 GEICO acquisition. It demonstrates how that acquisition contained a reasonable margin‐of safety, or price discount to estimated intrinsic value, even though it was taken private at a 25.6 percent premium over the $55.75/share market price at the time. The case demonstrates the practical utility of Graham and Dodd‐based valuation in corporate M&A, and provides recommendations for its use in that context.

Originality/value

While Graham and Dodd valuation has been well covered from an investment perspective this is the first work, as far as the authors are aware, that seeks to apply it to corporate M&A.

Details

Strategy & Leadership, vol. 35 no. 6
Type: Research Article
ISSN: 1087-8572

Keywords

Available. Content available
Article
Publication date: 14 November 2008

Mike Bourne

347

Abstract

Details

Measuring Business Excellence, vol. 12 no. 4
Type: Research Article
ISSN: 1368-3047

Available. Content available
Article
Publication date: 13 November 2007

Catherine Gorrell

533

Abstract

Details

Strategy & Leadership, vol. 35 no. 6
Type: Research Article
ISSN: 1087-8572

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Article
Publication date: 9 May 2008

Joseph Calandro

This paper introduces the base‐case‐valuation pattern, which is derived from the modern Graham and Dodd valuation methodology, and it demonstrates how that pattern could be

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Abstract

Purpose

This paper introduces the base‐case‐valuation pattern, which is derived from the modern Graham and Dodd valuation methodology, and it demonstrates how that pattern could be utilized in M&A by way of a case study.

Design/methodology/approach

The paper presents a case study of the 2004 acquisition of Sears by hedge‐fund manager Eddie Lampert. It draws on previously published Graham and Dodd methodological materials as well as Sears' publicly available financial information. The valuation calculations presented in the case is the sole work of the author.

Findings

The results of the case suggest that base‐case valuation could be practically utilized in M&A. Significantly, it could also be utilized in the formulation of an M&A‐negotiating strategy, shareholder‐communication plan, and performance‐improvement plan.

Research limitations/implications

The paper demonstrates how that acquisition contained a reasonable margin‐of safety, or price discount to estimated value, even though it occurred at a multiple of 1.8x Sears' book value at the time.

Practical implications

This case demonstrates the practical utility of base‐case value in M&A by way of the 2004 Sears acquisition.

Originality/value

This work introduces the base‐case‐valuation pattern, and it is the first work, as far as we are aware, that applies the Graham and Dodd methodology to the Sears acquisition even though Eddie Lampert is a noted Graham and Dodd‐based practitioner.

Details

Strategy & Leadership, vol. 36 no. 3
Type: Research Article
ISSN: 1087-8572

Keywords

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Article
Publication date: 13 March 2007

Joseph Calandro and Scott Lane

The purpose of this paper is to introduce the relative profitability and growth matrix and to demonstrate its use as a competitive analysis tool.

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Abstract

Purpose

The purpose of this paper is to introduce the relative profitability and growth matrix and to demonstrate its use as a competitive analysis tool.

Design/methodology/approach

Two well‐known drivers of value are profitability and growth. After a study of 2 × 2 matrices we applied these drivers on a relative or industry comparative basis to a 2 × 2 matrix, and then we applied that matrix to competitive analyses of two industries to assess its strategic utility.

Findings

Our findings suggest that the relative profitability and growth matrix could be a useful competitive analysis screening and communications tool.

Practical and research implications

The relative profitability and growth matrix assesses a firm's profitability and growth relative to its industry and by so doing helps to identify and classify performance in a succinct format that facilitates further analysis. After such analysis has been completed the matrix can also serve as a convenient tool to communicate the analytical findings.

Originality/value

The relative profitability and growth matrix is a value‐driver based 2 × 2 matrix, the strategic utility of which is demonstrated and explained in two examples.

Details

Strategy & Leadership, vol. 35 no. 2
Type: Research Article
ISSN: 1087-8572

Keywords

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Article
Publication date: 7 November 2008

Joseph Calandro

This paper aims to acquaint managers with a little known mergers and acquisitions (M&A) diagnostic tool that made its debut in the book Deals from Hell – M&A Lessons that Rise

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Abstract

Purpose

This paper aims to acquaint managers with a little known mergers and acquisitions (M&A) diagnostic tool that made its debut in the book Deals from Hell – M&A Lessons that Rise Above the Ashes (NY: Wiley, 2005) by Robert Bruner.

Design/methodology/approach

This paper offers a retrospective case study using Bruner's risk assessment framework to examine Berkshire Hathaway's 1998 Gen Re acquisition by CEO Warren Buffet, which proved to be a problematic deal. The case study makes use of recent post‐deal reports.

Findings

The case study supports the findings of Bruner's research regarding the utility of the M&A risk assessment framework presented in his book.

Research limitations/implications

Tthe field of real disasters could be the subject to further strategy‐based research.

Practical implications

Bruner's disaster‐based M&A risk assessment framework could be practically utilized in M&A.

Originality/value

This paper is practically‐oriented commentary on recently published M&A risk assessment research, which is analyzed via case study.

Details

Strategy & Leadership, vol. 36 no. 6
Type: Research Article
ISSN: 1087-8572

Keywords

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Article
Publication date: 6 March 2009

Joseph Calandro

This paper aims to consider how top corporate executives in a variety of industries can find important lessons in the recently published sixth edition of Benjamin Graham and David

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Abstract

Purpose

This paper aims to consider how top corporate executives in a variety of industries can find important lessons in the recently published sixth edition of Benjamin Graham and David Dodd's Security Analysis (New York: McGraw‐Hill, 2008).

Design/methodology/approach

This paper includes an interview with the lead editor of the book, value investor Seth Klarman. He explains key strategic lessons that non‐financial executives can learn from the value investing concepts and methodology.

Findings

The insights contained within Security Analysis can and should be leveraged by business leaders and strategists to create value for their firms.

Practical implications

Graham and Dodd‐based valuation and investment is a viable method with which to assess corporate strategic initiatives (such as mergers and acquisitions, share buy‐backs, etc.).

Originality/value

This paper, the first in a business strategy journal, explains how business leaders can become adept at using modern applications of Graham and Dodd‐based valuation insights and technology to inform their strategic decision‐making.

Details

Strategy & Leadership, vol. 37 no. 2
Type: Research Article
ISSN: 1087-8572

Keywords

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