Management Questions

1. Do you have an explicit TSR target guiding your strategic plan? Is that target appropriate given the expectations embedded in your stock price and the ability of your business plans to deliver improved performance? Do you understand how each of your businesses will contribute to meeting your TSR goal?
2. What are the historical sources of TSR for your company? How does your historical profile compare with that of your peers? How has the way you create value evolved over time? Are the company’s future sources of TSR likely to be similar to or different from those underlying your recent performance?
3. What drives the differences in valuation multiples in your industry? Are investors discounting your multiple? If so, do you understand why and what to do about it? Are you experiencing multiple compression? How will your strategic choices affect your multiple in the future?
4. What is your financially sustainable growth rate? Is it in balance with the estimated growth rates in the markets you currently serve? If not, what is the best way to deploy your excess cash?
5. Is M&A a critical part of your corporate strategy? If so, do you know whether the deals you are considering will improve TSR? Have you set the appropriate financial hurdle rates for potential deals?
6. What is the impact of your financial policies on your valuation multiple and TSR? Do you know their implications for your business strategy choices?
7. Who are your dominant investors? Do you know their goals and priorities for value creation? Is your corporate strategy in sync with those goals and priorities? If not, do you have a plan for migrating to investors more closely aligned with your strategy?
8. What are your key value-creation alternatives for the future? Do you have a robust process in place for analyzing these alternatives, debating their pros and cons, and creating alignment around the right path forward?
9. Are your business strategy, financial strategy, and investor strategy internally consistent? Do they reinforce or contradict one another?
10. Do you have a detailed corporate-strategy timeline describing how you will execute your strategy? Does it include the necessary internal development programs and external investor communications?

Source: Missing Link: Focusing Corporate Strategy on Value Creation | Boston Consulting Group (BCG)

224No Comments »http%3A%2F%2Fwww.mgmtquestions.com%2F2008%2F10%2F23%2F10-value-creation-questions-every-ceo-should-know-how-to-answer%2F10+Value+Creation+Questions+Every+CEO+Should+Know+How+to+Answer2008-10-23+21%3A15%3A07Administratorhttp%3A%2F%2Fwww.mgmtquestions.com%2F%3Fp%3D224 Posted by Administrator / CEO / Executive Questions

1. What is your TSR aspiration? Is that aspiration appropriate given the expectations embedded in your stock price and the ability of your plans to deliver improved performance?
2. How much growth do you need in order to deliver on that aspiration? What target revenue-growth rate is required in order to meet your goal given the momentum contribution of other TSR drivers?
3. Will optimizing growth and margins in your existing businesses be sufficient to meet your goal? Or will TSR success require you to consider a more radical strategy?
4. What drives the differences in valuation multiples in your industry? Will your growth plans enhance or erode your multiple relative to peers?
5. Will your growth initiatives create more TSR than alternative uses of cash or capital? In particular, what would be the impact of increasing dividend payout rather than investing in growth?
6. Is your investor mix aligned with your growth agenda? If not, do you have a plan for migrating to investors who are likely to be more closely aligned with your strategy?
7. Is there a balance between your sustainable growth rate and the growth rate of your served markets? If not, what is your plan for effectively using excess cash to optimize TSR?
8. How will today’s growth initiatives affect your ability to find growth and deliver superior TSR in the future? In particular, what will be the impact of your growth initiatives on your company’s average return on capital?
9. Do you need to revisit your company’s TSR target and strategy in light of your answers to the above questions? If so, do you have a process in place for doing so?
10. Are your management team, board, and investors aligned on the optimal role for growth in achieving your TSR objectives? If not, do you have a plan for creating such an alignment?

Source: Spotlight on Growth: The Role of Growth in Achieving Superior Value Creation / Eric E. Olsen, Frank Plaschke, Daniel Stelter / Boston Consulting Group (BCG), September 21, 2006

36No Comments »http%3A%2F%2Fwww.mgmtquestions.com%2F2006%2F11%2F25%2F10-questions-about-growth-that-every-ceo-should-know-how-to-answer%2F10+Questions+About+Growth+that+Every+CEO+Should+Know+How+to+Answer2006-11-25+21%3A05%3A58Administratorhttp%3A%2F%2Fwww.mgmtquestions.com%2F2006%2F11%2F25%2F10-questions-about-growth-that-every-ceo-should-know-how-to-answer%2F Posted by Administrator / CEO / Executive Questions and Finance Questions

1. Market Share
   Are you gaining, holding or losing market share in each of the segments that constitute your business? Why? Against which competitors?
2. Customer Leverage
   What percentage of your product is sold to customers who have significant leverage over you? Which customers are they, and why do they have leverage? Please provide a list of your top 25 customers and approximate sales volume to each. How much revenue comes from price-sensitive commodity products?
3. Fixed And Variable Costs
   What is the ratio of fixed and variable costs for your business? If the business has several segments, is there a wide range by segments? Provide a profit and loss report for last year and your planned P&L for this year. Break down the fixed and variable costs in some detail.
4. Purchasing
   How do you do your purchasing? Who does it for you? How would you assess the skills of those who are involved with the purchasing process? Do any of your purchasing needs complement those of another business unit? If so, how do you exploit that? What percentage of your total external purchases are bought from suppliers with significant leverage over your business?
5. Balance Sheet
   Are you running an asset-intensive business? What’s been happening with working capital over the last few years? What is likely to occur this year? Why?
6. Research And Development
   How would you describe the role of R&D in your business? Who takes the lead in your business unit, and how does this person work with corporate R&D? How much R&D comes from within the business, and how much comes from the corporate office, or outside the company altogether? What is your total R&D budget?
7. Leadership Approach
   What is your personal approach toward running your business? If you had to sum it up in three to five phrases or qualities, what are they? Has this approach worked? What tells you so? Are you able to modify your approach if you see that it does not appear to be working? Can you offer any examples? What are your five best strengths, and how did you come by them? What are five areas for improvement, and what are you doing about them?
8. People
   What are you doing to ensure that the best-qualified people are in a position to move forward in your organization? That is, what is your approach to succession planning? How are you ensuring that you re-recruit your keepers and remove and replace those who are either not good contributors or who are not able to adjust to changes in the business?
9. The New CEO
   What are the three most critical qualities, skills or capabilities that a new CEO should have at this stage of the company’s history? Why?
10. Business Turnover
    Of your total business turnover, how much of it this year will likely come from markets or market segments where your company is (a) Clearly the leading competitor? (b) One of several equally strong competitors? (c) Clearly one of the weaker competitors? In each of the three situations, how does being in such a position affect your pricing tactics?

Source: Rules For Rookie CEOs / Steve Schaubert and William Hayes / Forbes, 08.15.06

35No Comments »http%3A%2F%2Fwww.mgmtquestions.com%2F2006%2F11%2F13%2F10-questions-new-ceos-should-ask-their-executives%2F10+Questions+New+CEOs+Should+Ask+Their+Executives2006-11-14+00%3A13%3A06Administratorhttp%3A%2F%2Fwww.mgmtquestions.com%2F2006%2F11%2F13%2F10-questions-new-ceos-should-ask-their-executives%2F Posted by Administrator / CEO / Executive Questions

1. What fundamental value will your current plans generate? Is that performance really defensible given the competitive dynamics of your industry? Is it enough to meet your TSR aspirations?
2. What are the market expectations embedded in your stock price? Is there a gap between what you can deliver and what investors expect? If so, do you have a plan for closing it?
3. What drives valuation multiples in your industry? Why is your valuation multiple at its current level relative to industry peers?
4. What are the key tradeoffs between improving fundamental value, optimizing your valuation multiple, and distributing free cash flow? Do you have a plan for managing these tradeoffs?
5. Who are the dominant investors in your company and what are their priorities? Are your plans in sync with their investment goals? Do they find your value-creation strategy credible?
6. What is an appropriate TSR target given your company’s situation? Does your management team understand and own it?
7. How will you close the gap between the TSR your current plans are likely to generate and the TSR targets that you have set? What are the implications for your business strategy and financial strategy?
8. What are the consequences of your company’s value-creation strategy for line managers and their business units? Do they know what they must deliver to achieve your TSR target? Have you translated that target into operational metrics and goals that line managers can actually influence? Are they genuinely committed to reaching these goals?
9. Are management processes such as planning and budgeting, resource allocation, and incentive compensation aligned with your value-creation strategy? Do they surface the right trade-offs for management discussion? Do they appropriately balance short-term and long-term priorities?
10. Do you have a process in place for revisiting the company’s value-creation strategy as economic conditions and the company’s situation change? Have you established explicit triggers for activating that process?

Source: The Next Frontier: Building an Integrated Strategy for Value Creation / Eric E. Olsen, Daniel Stelter, Pascal Xhonneux / Boston Consulting Group, December 16, 2004

34No Comments »http%3A%2F%2Fwww.mgmtquestions.com%2F2006%2F10%2F01%2F10-questions-every-ceo-should-know-how-to-answer%2F10+Questions+Every+CEO+Should+Know+How+to+Answer2006-10-02+01%3A47%3A31Administratorhttp%3A%2F%2Fwww.mgmtquestions.com%2F2006%2F10%2F01%2F10-questions-every-ceo-should-know-how-to-answer%2F Posted by Administrator / CEO / Executive Questions

1. Is the structure right?
2. Is the business model sustainable?
3. Do you want to be in the business you are in?
4. Is executive success (and succession) in place?
5. Do you know your customers?
6. Are the costs right?
7. Is the product right?
8. Do you know your competition?
9. Is the balance sheet right?
10. Where are you on technology?

Source: As the Economy Turns: 10 Questions for Executives / John McCallum / Ivey Business Journal, May/June 2001

24No Comments »http%3A%2F%2Fwww.mgmtquestions.com%2F2006%2F05%2F11%2F10-questions-for-executives%2F10+Questions+for+Executives2006-05-11+18%3A56%3A26Administratorhttp%3A%2F%2Fwww.mgmtquestions.com%2F%3Fp%3D24 Posted by Administrator / CEO / Executive Questions