Download - Where are we? Why? What does that mean? Where are we going? Risks & Opportunities I need it now!
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• Where are we?
• Why?
• What does that mean?
• Where are we going?
• Risks & Opportunities
• I need it now!
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Planning, Budgeting, Reporting, Forecasting
Basic Objectives:
1. Increase Shareholder Value
2. Provide the Basis for Improved Shareholder
Value
3. Identify Developing Opportunities &
Problems in Time for Effective Action
4. Provide Logic & Order in Financial Process
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Planning – Tactical & Strategic
• Controls the Numbers
• Ability to Impact
Develops:
• Mergers, Acquisitions, and Divestitures
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Planning – Tactical & Strategic
Needed Quantifiable Abilities:
• Modeling Skills (mechanical – economic)
• Presentation Skills
• Networking Skills
– Talk to people outside the group
– Get beneath the smoke
– Keep internal confidences
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Planning – Tactical & Strategic Needs:
• Knowledge of Business/ Industry/ Economics
• Management and Board Interface
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Reporting
• Levels of Involvement
• Motivations
• Coordination of the #’s 1 Set
– Accounting - Business Analysis
– Tax - Treasury
– Sales - Manufacturing
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Reporting – Accounting/Business Analysis
• LOB, Overhead, Corporate Costs
• EVA … Base vs. Acquired
• Time needed for producing Reports
• Management Simplification
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Lessons Learned - Reporting
• Protect Confidences
• Promote Finance to Finance Discussions
• Help Educate Up & Down
• Recognize there are Lots of No Option Deadlines
Going in – be Flexible, & Manage Stress
• Lowes’ Theorem of “Steel Management”
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L.L. – Reporting II
• Great Place to Visit/Learn
– But be careful not to stay too long
• Get a Clear Separation of Responsibilities with
Accounting
• Insure Continuity
• Drive Systems Standards
• Overlay Systems and Models Only if Necessary
• Network, Network, Network
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Investor Relations
• Driven By S.E.C. Filings
To Stockholders
– Results of Operations
– Unusual or Infrequent Items
– Liquidity
– Capital Resources
– Significant Uncertainties
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Investor Relations Responsibilities:
• See that the Company is Favorably Understood
• To Ensure Full and Timely Public Disclosure
• To Respond to Requests for Reports & Info.
• To Maintain Productive Relations with Firms:
– Investment Bankers, Specialists, Major Broker-Dealers, and
Institutional Investors
• To Take Direct Measures to Ensure that the Company’s
Shares are Properly Valued
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Investor Relations
• Communications
– Strategy
– Manage Management
– Analyst Meetings
– Annual Reports
– Quarterly Reports
– Buy Side / Sell Side
– Employees
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Investor Relations – Focuses On:
• Buy Side– Index– Value– Growth– Growth At a Reasonable Price
(GARP)– Momentum (Day Traders)
– Tiger– Soros
Long-termShareholders
Short-termShareholders
Momentum Creators
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Lessons Learned – I.R.
• Need to Educate Analysts
• Shutdown Problem Analysts
• Control Your Temper
• Keep Your Integrity
• “No Comment” is a Good Comment
• Help Good Analysts Sell
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L.L. – I.R. II
• Careful How you Give out Business
• Remember the Rest of the Management Team
• Remember the Employees
• Be Careful working for CEO’s that are Not
Financially Savvy
• Don’t Stay Glued to the Screen
• You Can’t Explain Every Up & Down
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L.L. – I.R. III
• If you have to Disappoint or Restructure
– Go Big and Never Go Back.
• K.I.S.S.
– Convoluted Data / Discussions – Lock You In.
• The First Sound Bite is Very Important
• The Entire Style should be Bites
• Deal with the Issue Yourself, so you can Place the Spin
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YUM – 3/31/00
Spin
Warning
Q3
RumorsNew CFO
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YUM – 3/31/00
Rumors
New CFO
Rumors
New CFO
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Business Analysis-From Tons of Data to Useful Information
• Economics
-Global
-Country
-Industry
-Business
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Business Analysis
• Economics
– Base Business Models
– Competition – Global
– Demographics
• Population, Birth Rate, Shifts in Distribution of
Disposable Income
• Growing Incongruence between Economic
Globalization & Political Splintering
• “Think Global, Act Local”
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Business Analysis Personnel
• Analysts – Corporation vs. Industry
• Corporate – in all areas / functions / levels of Co.
• Management Support Role – Process Mgt.
– Budgeting
– Forecasts
– Capital Expenditure Analysis
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Business Analysis
• Skill Base
– Modeling
• Accounting / Financial
• Statistics
– Communications
– Interpersonal / Relationships
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Business Analysis
• Skill Base
– Knowledge of Business
– Analytical
– Presentation
• Verbal & Written
• Project Management
• Cross-Functional Teams
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Business Analysis
• Facts vs. Forecasts
• Forecasting Distortions
– other agendas
• Sensitivity Analysis
– Ranges vs. Single Points
• Conflicts
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Business Analysis - Pitfalls
• Sunk Costs• Ex: Toaster Strudel
• Incrementally Influenced Costs
• Residual Value
• Integration Costs
• Overhead Allocations
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Business Analysis• Q1- Too Early to Call +
• Opportunity & Risk
• Q2 – Adjust Forecast
• Q3 – Call Year Conservatively• Base for Opportunity
• Forecast that’s Managed
• Provides the #’s for next year’s bonuses and budgets
• Q4 – Manage til Year End
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Lessons Learned – Business Analysis Problem Resolution Process
• Focus Data Collection on Leverage Points
• Sort and Understand the Problem– Will Probably Require: “Thinking Outside the Box”
• Analytically Play with it– Develop and Play with Options
• Create Solutions
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L.L. – Business Analysis II
• Beta Test It (Test Run)
– Revise as Necessary
– Sell a Larger Test
– Continue Cycling through the Process
• Evaluate & Rethink it with New Data
– Over Communicate at Critical Points
– Supervise Implementation
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L.L. – Business Analysis III
• Having and Knowing where your Hard Data comes from
• Have Lots of Qtrly Forecasts
• Under Promise Over Deliver
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If It’s Not Broken,
Don’t Fix It.
- Don’t spin your wheels analyzing
something to death.
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Change the Things that you Can,
Accept the Things that you Cannot Change,
And God Willing you Will Know the Difference.
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Project Assessment
Risk
Political/CultureChange
R = P(s) & $
P(s) = Amountof Change
+TechnicalAbilities
+Resources
+Commitment
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L.L. – Red Zone
• Get the Biggest Champion or Mentor you Can Get
• Protect Your People
• Be Careful Not to be Used & Abandoned
• Cover All the Bases/Options• Be Ready & Armed for the Opposition
– Know the Reasons for Failure
& Be Able to Knock Down Objections
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• Oscar Mayer (OM)
Slaughter Plant Restructuring
Louis Rich - Protein Analysis
• Phillip Morris (PM)
GF – Restructuring / Integration
Kraft – Acquisition / Integration
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• Heinz (HNZ)
CAPM
Ketchup vs. Pickles
Distribution Tracking
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• General Foods (GF)
Sugar Pricing Model
Coffee Logistics
Burger Chef
Oscar Mayer
Gaines
Entenmann’s
Merriwether’s
Gaudalaharry’s
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• Pillsbury
Divestitures
POGO
Pillsbury Push
• Grand Metropolitan (GMET)
Divestitures
Brewing
Dairy
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• GMFENational BusinessesPillsbury - U.K.Haagen Daz
• Burger King (BKC)Focus & Restructure International / U.S. Product Line
-Get Your Burger’s Worth-French Fry