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The New CEO Corporate Leadership Manual: Strategic and Analytical Tools for Growth

ISBN: 978-1-118-09306-1
456 pages
May 2011
The New CEO Corporate Leadership Manual: Strategic and Analytical Tools for Growth (1118093062) cover image
The ultimate instruction manual for every new CEO

The New CEO Corporate Leadership Manual is essential reading for every CEO needing a blueprint for the role of CEO, including an overview of organizational structure, corporate strategy, management systems and finance. Along with considerable information about the financial systems needed for a modern corporation, with particular emphasis on funds management, going public, and dealing with investors, this important book explains how to select acquisition targets, price them appropriately, and successfully integrate them, as well as how to turn around a failing enterprise.

  • Gives new CEOs a hard, quantitative view of the systems and techniques needed to run a company
  • Discusses the CEO's place in the corporation
  • Explores information technology strategy, tax strategy, outsourcing strategy and more

Filled with pragmatic insights, proactive strategies, and best practices, The New CEO Corporate Leadership Manual is destined to become the desktop companion you employ to be successful in your new position.

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Preface xi

CHAPTER 1 New CEO Activities 1

Immediate Priorities 1

Measure the Business 3

Get to Know the Company 5

Develop a Strategy 7

Create a Budget and Related Systems 9

Review the Management Team 10

Review Risks 11

Review Costs 13

Summary 15

PART I STRATEGY DEVELOPMENT 17

CHAPTER 2 General Corporate Strategy 19

Overview of General Corporate Strategy 19

Building a Strategy: General Concepts 23

Building a Strategy: Product Differentiation 26

Building a Strategy: Low Cost 29

Building a Strategy: Focus on a Niche 32

Building a Strategy: Impact of the Internet 34

Building a Strategy: Additional Comments 34

Strategy Testing 37

Summary 38

CHAPTER 3 Financial Strategy 39

Cash 39

Investments 41

Working Capital 42

Inventory Reduction Decision 45

Fixed Asset Lease versus Buy Decisions 46

Payables 47

Debt 49

Equity 52

Product Elimination Decisions 56

Step Cost Reductions 59

Temporary Labor Decisions 60

Divestiture Decisions 61

Summary 62

CHAPTER 4 Tax Strategy 65

Accumulated Earnings Tax 66

Cash Method of Accounting 67

Inventory Valuation 68

Mergers and Acquisitions 68

Net Operating Loss Carry forwards 69

Nexus 69

S Corporation 70

Sales and Use Taxes 71

Transfer Pricing 72

Unemployment Taxes 75

Summary 76

CHAPTER 5 Information Technology Strategy 77

Reasons for Devising an Information Technology Strategy 77

Developing the Information Technology Strategy 78

Technical Strategies 81

Specific Applications 82

Summary 85

CHAPTER 6 Outsourcing Strategy 87

Overview of Outsourcing 87

Outsourcing Risks 92

Initiating Outsourcing 94

Companies that Take Over Outsourced Functions 94

Summary 97

PART II THE BUDGET 99

CHAPTER 7 Budgeting Process 101

System of Interlocking Budgets 101

Sample Budget 109

Flex Budget 127

Budgetary Control Systems 127

Summary 129

CHAPTER 8 Capital Budgeting 131

Hurdle Rate 131

Payback Period 132

Net Present Value 134

Internal Rate of Return 136

Throughput-Based Capital Budgeting 137

Problems with the Capital Budget Approval Process 140

Cash Flow Modeling Issues 141

Funding Decisions for Research and Development Projects 142

Postcompletion Project Analysis 143

Summary 145

PART III RISK MANAGEMENT 147

CHAPTER 9 Risk Management: General Concepts 149

Risk Management Policies 149

Risk Management Planning 150

Manager of Risk Management 152

Risk Management Procedures 153

Types of Business Insurance 155

Types of Insurance Companies 157

Evaluating the Health of an Insurance Carrier 158

Annual Risk Management Report 159

Summary 160

CHAPTER 10 Risk Management: Foreign Exchange 163

Foreign Exchange Quote Terminology 163

Nature of Foreign Exchange Risk 164

Data Collection for Foreign Exchange Risk Management 165

Foreign Exchange Hedging Strategies 165

Summary 176

PART IV FINANCIAL ANALYSIS 179

CHAPTER 11 Performance Measurements 181

Asset Utilization Measurements 181

Operating Performance Measurements 186

Cash Flow Measurements 190

Liquidity Measurements 193

Solvency Measurements 197

Return on Investment Measurements 199

Market Performance Measurements 204

Summary 206

CHAPTER 12 Cost Reduction Analysis 207

Types of Reports Used for Cost Reduction Analysis 207

Spend Analysis Overview 211

Spend Database 211

Supplier Consolidation Analysis 212

Parts Consolidation Analysis 213

Maintenance, Repair, and Operations Item Analysis 213

Spend Compliance 213

Spend Analysis Reports 214

Workforce Reduction Analysis 217

Workforce Reduction Issues 217

Workforce Reduction Alternatives 221

5S Analysis 223

Error Quantification 223

Fixed Cost Analysis 224

Ishikawa Diagrams 224

Value Stream Mapping 225

Waste Analysis 226

Summary 227

CHAPTER 13 Mergers and Acquisitions 229

Evaluating Acquisition Targets 229

Complexity Analysis 245

Valuing an Acquisition Target 246

Types of Acquisitions 260

Summary 266

PART V THE PUBLIC COMPANY 269

CHAPTER 14 Initial Public Offering 271

Reasons to Go Public 271

Reasons Not to Go Public 272

Cost of an IPO 274

Preparing for the IPO 274

Finding an Underwriter 277

Registering for and Completing the IPO 280

Alternatives for Selling Securities 282

Trading on an Exchange 284

American Stock Exchange 285

Overview of the Nasdaq 287

New York Stock Exchange 289

Comparing the Stock Exchanges 291

Over-the-Counter Stocks 292

Summary 293

CHAPTER 15 Investment Community 295

Analyst’s Perspective 295

Finding the Right Analyst 297

Sell Side: Analysts 297

Negative Analyst Report 299

Sell Side: Brokers 300

Sell Side: Investment Bankers 301

Sell Side: Investor Relations Specialists 302

Buy Side: Types of Investors 302

Buy Side: Institutional Investors 303

Buy Side: Individual Investors 304

Buy Side: Presentations to Investors 306

Summary 307

CHAPTER 16 Public Company Activities 309

Investor Conference Call 309

Road Show 311

Concept of Guidance 315

Form of Guidance Issued 316

Frequency and Timing of Guidance 318

Aggressiveness of Guidance 319

How Short Sellers Operate 320

How to Handle Short Sellers 321

Measuring Short-Seller Activity 322

Summary 323

CHAPTER 17 Taking a Company Private 325

Going-Private Transaction 325

Rule 13e-3 325

300-Shareholder Limit 326

Form 15 327

Summary 327

Appendix New CEO Checklist 329

About the Author 337

Index 339

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STEVEN M. BRAGG, CPA, has been the chief financial officer or controller of four companies, as well as a consulting manager at Ernst & Young and auditor at Deloitte. He is the author of over thirty books primarily targeted toward corporate financial leaders (controllers, treasurers, and CFOs) and their needs. Bragg received a master's degree in finance from Bentley College, an MBA from Babson College, and a bachelor's degree in economics from the University of Maine.
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