Business Valuation Methods

The cardinal rule of business valuation is, that the value of something cannot  stated in an abstract form; all that can be stated is the value of a thing in a particular place, at a particular time, in particular circumstances. Valuation of the target requires valuation of the totality of the incremental cash  flows and earnings.  Valuation of a target is based on expectations of both the magnitude and the timing of  realization  of the anticipated benefits. Where, these benefits are difficult to forecast, the valuation of the target is not precise. This exposes the bidder to valuation risk. The degree of this risk depends on the quality of information available to the bidder, which, in turn, depends upon whether the target is a private  or a public company, whether the bid is hostile or friendly, the time spent in preparing the bid and the pre-acquisition audit of the target. Continue reading

Case Study: Failure of Vodafone in Japan

Vodafone Group plc is a British multinational mobile network operator, its main headquarter is in Newbury, England. It is the world’s largest mobile telecommunication network company, based on revenue, its market value on the UK stock exchange is about £80.2 billion as of August 2010, making it Britain’s third largest company. It is currently operating in 31 countries and has partner networks in a further 40 countries. In 2001 Vodafone announced to get into Japanese market with acquiring AT&T’s 10% economic interest in Japan Telecom Co., Ltd. (“Japan Telecom”) for a cash consideration of US$1.35 billion ( £0.93 billion). Japan Telecom was one of Japan’s leading telecommunications companies and parent of the fast growing mobile network, J-Phone Communications Co., Ltd., and its regional wireless operating companies (collectively known as “the J-Phone Group”). After this deal, Vodafone held 25% of Japan Telecom’s equity. The reason for Vodafone going into Japanese market Continue reading

Running out of money? 5 ways to save your business!

As a business owner, money is an important part! Not only do you need to pay your employees, cover all your costs, but of course you want to have some money for yourself too. Especially with sudden extra expenses, having enough money can be a big problem. Long term, the lack of money could even ruin the dream of having your own business; that’s why we want to share with you some tips and tricks on how to earn extra money for your business. Always expect extra expenses! Especially for someone who is just starting out with their business, money can be tight. There is no room for extra expenses! Unfortunately, emergencies can happen, or you suddenly have costs that you didn’t calculate into your budget, but what now? Just throw away your dream and all the invested resources? No, we have some essential and valuable tips and tricks for Continue reading

Introduction to Business Ethics

There is a big difference between what you have a right to do and what is right to do. – Justice Potter Stewart Man is a social animal. Though rules of nature control humans as they control other living beings, man himself has derived certain principles to govern his own individual and group behavior. These rules, in the form of behavioral standards may differ across cultures and times, but their basic objectives are always mutual existence and peace within the particular community or the social group. By ensuring security and protection of the group these standards helps in the survival of the particular community or a social group and thus its members. These standards of behavior are called “ethics.” Ethics is two things: First, ethics refers to well-based standards of right and wrong that prescribe what humans ought to do, usually in terms of rights, obligations, benefits to society, fairness, Continue reading

Seven Sources of Innovation by Peter Drucker

The most effective way to compete in a changing environment is to churn out new products and services rapidly according to the needs of the market. Innovation helps a company to stay ahead of the pack and move into less crowded areas. No wonder all companies are talking about innovation these days. Very often, innovation is misunderstood as invention. Invention is creating new things. But innovation is all about taking new ideas to the market place. History is full of examples of many companies that developed a new technology or product but failed to take it to the market.   For example, Xerox developed many of the concepts associated with the modern day PC but failed to make a commercial proposition out of them. Seven Sources of Systematic Innovation “Entrepreneurs innovate and innovation is the specific instrument of entrepreneurship”  Peter Drucker – page 44,  Innovation & Entrepreneurship Peter Drucker refers Continue reading

Team Based Pay System Design

There are many considerations in the designing of a team-based compensation system. After the alignment of pay with strategy, culture, and competencies of the employee, then the next step is to determine the type or types of team in a particular organization. There are four types of teams: The first is the parallel team that is defined as a part-time team that can be temporary or permanent that employees participate on in addition to their normal activities. The second type of team is a process team that carries out the work processes and is done collectively by members of a team. A project, or time-based team, is the third type of team and is the opposite of a parallel team in that members work full-time for the duration and until completion of a project. A fourth type is a hybrid organization that includes a mixture of the teams described above. Continue reading