Earn Your Cost of Capital or Prepare to Be Boarded |
|
The laws of the sea are pitiless. So are the laws of capitalism.
One of them says that shareholder value can be created only
by investing in projects that earn more than their cost of capital,
withdrawing from activities that earn less,
or enhancing operating efficiency.
Case |
Risk analysis. |
Challenge |
A fast-growing private cable operator sought to leverage its core capabilities by offering telephony and Internet access services. They asked us to assess the business and economic risks they were facing. |
CBMI Approach |
CBMI worked with the client’s senior staff to determine the perceived uncertainties and how they could affect the economic outcome. We then analyzed how this company and its industry create value for the shareholders, and highlighted how today’s management decisions will impact the financial and operational indicators throughout the firm’s planning horizon. |
Outcome |
The company changed its overall business plan to concentrate on fewer cities and adapted its marketing strategy along the lines of CBMI’s recommendations. As a result, the shareholders approved the company’s investment plan. |
