Joseph Calandro and Robert Flynn
The purpose of this article is to introduce the “Financial Strategy Framework”.
Abstract
Purpose
The purpose of this article is to introduce the “Financial Strategy Framework”.
Design/methodology/approach
During the course of the authors' ongoing financial management research, it was observed that leading academicians frequently integrate finance and strategy in interesting ways. Similarly, many top executives and firms tend to blend strategy and finance in highly productive ways. Nevertheless, the critical functions of finance and strategy are regularly practiced in isolation. This disconnect led the authors to design the framework presented here.
Findings
The key insight of the approach is that the efficient management of the interactions of strategy, resource allocation and performance measurement can generate more value over time than any of these disciplines taken in isolation. The approach presented is not merely the linkage of three critically important disciplines, but rather a way of capitalizing on the interactions of each within a comprehensive framework.
Practical implications
The practical implications of the approach presented are a strategy that clearly guides production, resources that are allocated to efficiently execute strategic initiatives and performance measurement that serves as a cohesive management and feedback system rather than simply a method of reward/punishment. The research implications could be significant in that they could lead to interdisciplinary case and statistical studies.
Originality/value
While this article builds on earlier theoretical and practical work, it is the first to the outline the approach to financial strategy in the manner presented here.
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Joseph Calandro and Robert Flynn
Many insurance companies vigorously pursue top‐line growth, even though it has the potential to develop unprofitably over time. The time lag (or tail) between when insurance is…
Abstract
Purpose
Many insurance companies vigorously pursue top‐line growth, even though it has the potential to develop unprofitably over time. The time lag (or tail) between when insurance is sold and when claims are paid generates risks unique to insurance companies. Furthermore, the insurance market is both mature and efficient (i.e. its level of competitive risk is very high), which means that profitable opportunities are both rare and untenable unless protected by competitive advantage. There is currently no practical measure available (of which the authors are aware) at the business unit level to evaluate insurance premium growth in the face of the industry's risks, impairing executives' ability to assess segment opportunities (and hazards), thus hampering strategic decision making. The purpose of this paper is to introduce a practical measure developed by the authors called Underwriting Return (UWR) which aims at helping to alleviate this situation.
Design/methodology/approach
The paper introduces UWR which was developed during the course and scope of the authors' work in the insurance industry, and their research into applying value‐based management to that industry.
Findings
The paper finds that UWR is a practical measure that property and casualty executives can use at the business unit level to help quantify market segments to grow, hold, harvest and abandon.
Originality/value
A variety of strategic analysis tools, such as the popular Boston Consulting Group matrix, are utilized today. In general, the application of such tools is hampered by an imprecision of measurement but each can add a level of insight to executives' resource allocation options. UWR can further aid insurance executives in strategic analysis by helping to quantify in which segments to compete, and which ones to abandon. The paper demonstrates the utility of the measure in an example based on an actual analysis.
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The paper aims to explain why and how, in the USA, a very particular interpretation of economic liberalism, faring though different historical contexts, has generated, since the…
Abstract
Purpose
The paper aims to explain why and how, in the USA, a very particular interpretation of economic liberalism, faring though different historical contexts, has generated, since the 1970s, a new kind of capitalism whose language, logic, legitimating paradigm and associated practices have become, thanks to “organic intellectuals” and active networks of power and influence, the “newspeak” and compass of chief executive officers from around the world, despite their always direst societal consequences.
Design/methodology/approach
Using history as a support to investigate the domestic and international relations contexts that bore financialized globalization, the paper is strongly located into political sociology. As such, and if we consider that political sociology is the “science of power”, the paper tries to identify precisely the networks of power and influence which transformed a specific interpretation of liberalism and business into a dominant paradigm and specific kind of capitalism, in the USA and the rest of the world. The approach helps to understand which sets of ideas and authors were deemed worth supporting by business and political networks of power and influence and how both sides drew on their reciprocal resources to transform their cosmogonies into dominant paradigms and real politics (corporate and States).
Findings
The paper provides a global but precise understanding of the complex processes that allowed some vested interests to impose their vision of economics and business on a domestic, then world, scale. It also questions the relevancy of that vision according to a presentation of the negative societal externalities the associated policies generated and according to the official investigations that have been conducted on the corporate and banking misdemeanors that it contributed to generate.
Practical implications
The paper illustrates a method of investigation that can be used to develop the “global view”, a prerequisite to making decisions in full knowledge of causes and consequences and thus a means to train future “globally responsible leaders”.
Social implications
By revealing the hidden interests behind financialized globalization and the societal consequences of their power plays, the paper indirectly demonstrates the urgent need for an “alter‐economy” geared to meet the fundamental needs of societies and to preserve their natural environment in the long term.
Originality/value
The paper offers a different perspective on economics and business which is seldom presented in business schools where, owing to the discussed dominant ideology, politics is considered irrelevant to understand business and economics and where the latter are nearly always presented as vectors of good.
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More than $2 million in cash sounds like an unbelievable amount of money for any one person (other than Michael Eisner) to earn every year. But believe it. In April of last year…
Abstract
More than $2 million in cash sounds like an unbelievable amount of money for any one person (other than Michael Eisner) to earn every year. But believe it. In April of last year, Business Week reported that among 365 major U.S. corporations, the average CEO's salary and bonus was $2.3 million. When you threw in stock options and other incentive pay, the average shot up to $5.8 million.
Who's Who in America (WWiA), released in its forty‐first edition in May 1980, is one of the few reference books that enjoys two types of renown.
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…
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.
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Did you ever make a business decision without all the facts? Did you learn something after you implemented your decision that you would have changed had you known it sooner? If…
Abstract
Did you ever make a business decision without all the facts? Did you learn something after you implemented your decision that you would have changed had you known it sooner? If the answer to either question is “Yes”, chances are you lost money, time, morale and the competitive advantage. All of these could easily be avoided with business intelligence.
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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…
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.
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UNITED STATES: Flynn exit will change policy style