Investing in Comp Etitive Methods: By: Fiona Caramba-Coker For: Dr. Fred Demicco
Investing in Comp Etitive Methods: By: Fiona Caramba-Coker For: Dr. Fred Demicco
OBJECTIVES
Upon completion of this chapter, you will be able to: 1. understand the role of the manager in adding value to the firm. 2. develop an understanding of the investors requirements for return on
invested capital.
3. relate the estimation of cash flows, cost of capital, risk, and investment
to the responsibility of adding value.
4. relate the use of the net present value (NPV) discounted cash flow
technique to the adding value imperative of all managers.
Competitive Methods
P1
S1
P2
S2
P3
S3
The launching of a business requires money. This money must come from investors who expect
wealth and returns maximization.
Read Pages 208-212 in your book.
Cash Flows, Cost of Capital, Risk, and Investment and Their Responsibility to Adding Value
Cash Flows, Cost of Capital, Risk, and Investment and Their Responsibility to Adding Value
Synthesizing Coalignment Theory with the Realities of the Firms Need to Produce Cash Flow The Value Adding Model
Products/Services
P1
Outsource Restaurant
Expert Systems
S1
Strategic Alliances
Resource Allocation
Cash Flows, Cost of Capital, Risk, and Investment and Their Responsibility to Adding Value
Cash Flows, Cost of Capital, Risk, and Investment and Their Responsibility to Adding Value
Net Present Value (NPV) and Discounted Cash Flow (DCF) Technique
CFt NPV I t t 1 1 k
Investment
Cost of Capital
Length of Project
What Now???
Multiple Choice
Discounted cash flow techniques refer to forecasting the ________ of a competitive method into the future. A. Cash flows B. Capital C. Balance sheet D. Assets Managers should consider some factors when making investments, EXCEPT:
A. B. C. D.
The capital outlay. Quality and life of investment materials. New ideas. Design, engineering, and construction.
True or False?!?!
If the net present value (NPV) is zero or greater, the manager can make the investment. True False Investors can avoid unnecessary risk by making the right investments based upon their effective environmental scanning. True False The money provided by investment banks, institutional investors, individuals, friends, family, and in-laws is referred to as debt capital. True False Capital can be obtained through debt. True False
1a. The proportion of debt to total capital is ____________ . 1b. The proportion of equity to total capital is ____________ . 1c. The weighted average cost of capital is ____________ .
Case Study: Hilton Hotels Brand Differentiation through Customer Relationship Management
Case Study: Hilton Hotels Brand Differentiation through Customer Relationship Management
1A. Soundness of content: Is the case credible? As far as you know, does the case depict the industry with reasonable accuracy? Note any factual errors. 1. Pedagogical value: In its coverage of CRM-customer relationship management, does the case satisfactorily address learning objectives that are important in a marketing management course? Why or why not? 2. Quality of presentation: Does the depiction of Hilton's organization and executive leadership strike you as balanced and objective? If not, why not? Is the case story interesting and fluently told? Was it engaging to you? What more, if anything, should the authors do to inject energy or drama into the case? 4. Exhibits: This case has an unusually large number of exhibits for an HBSP Brief Case. Are they all valuable? Can you recommend one or two that might, in the interest of brevity, be eliminated without damaging the pedagogical purpose?
5.
Quantitative aspect: Please evaluate carefully the quantitative challenge that the case presents to you. Will good student s correctly perceive the quantitative analysis and interpretation that is expected of them? Should the assignment be m ade more or less explicit in the case? Is the quantitative assignment pegged at roughly the right level for your good st udents? Please review the TN's discussion of the quantitative aspect of the case: simply put, is the math correct? Is t he analysis appropriate and intellectually sound?
6. Breadth and depth: Is the case sufficiently broad in focus and deep in detail to support a full-class discussion in your course ? Conversely, is the case too ambitious in scope and complexity for a single session of homework plus class discussi on? If the latter, what topics should be dropped or trimmed back? 7. Which statement below best reflects the case's readiness for publication?
A first-rate case: Ready for publishing with virtually no changes. A good case nearly ready for publication, but needs minor refinements or improvements. A good case, but needs major refinements or improvements before ready for publication. I doubt this case is worthy of publication even if further work is invested.
Supplemental Readings
Problems Hilton Hotels was lacking the technological innovations that made other firms in the industry really stand out to new customers while, maintaining and building relationships with their valued customers. Lack of an IT infrastructure that would enable employees to deliver great customer service. Hilton Hotel did not have an innovative way to maintain and strengthen the relationship they had with their valued customers. There was a need for man-power along with technology in order to strengthen these relationships.
Causes of the Problems The pace of innovation, via technology, in the hospitality industry was growing tremendously and Hilton Hotels needed to keep up to remain competitive in the industry. The force from their competitors was weighing in on them. Hilton also had no way of tracking/monitoring their premier customers, in a way that would build a stronger relationship with each of them. The force from their consumers was a cause In the problems.
Solutions to Problems Hilton OnQ this IT Infrastructure created by the Hilton gave their firm a nervous system. This allowed customers to have a one-stop shopping of an integrated solution, and also allowe d employees to provide excellent customer service on cue. The system was able to support the property-level operations of every Hilton Hotel, regardless of its size or segment. OnQ is a competitive advantage and, it helped Hilton to aggressively expand at a quicker and more consistent pace. CRM CRM was an addition made to the OnQ infrastructure. It utilized technology to give Hilton a solidified relationship with its premier customers. CRM added a holistic view to excellent service, and it allowed Hilton to foster a closer relationship with the Best Guests throughout their life cycle of interactions with the Hilton Family Brands.
More Solutions to Problem Using Call Centers to optimize the CRM concept The Hilton Hotels want ed to optimize the new CRM portion of the OnQ system, so they utilized the call centers to gather more information about their customers during the reservation process. OnQ Reservation allows the agents to access callers personal dossiers and update their preferences. This information shortens the time on the phone and it enables better cross-selling. Best Guest Arrival Report This was a useful tool, because it allowed the property to prepare for receiving guests. This report was useful to the property because it listed and ranked all expected guests that had a profile in OnQ and formatted relevant information from their dossier in an easily s canned format. This allowed the property to pre-assign guests to a room that was prepared according to their preferences. This helped the firm to become more efficient in the services they provided to their valued guests. The Satisfaction and Loyalty Tracking (SALT) SALT was a survey that a sample of departing guests were asked to complete. This survey was an important measuring tool because it assessed whether the CRM initiative was truly working and how it could be tweaked.
Recommendations I would recommend that Hilton expands their OnQ and CRM technology to include all of the properties that they own. Meaning, whether a customer stays at an Hilton Hotel, a Homewood Suites, or a Waldorf-Astoria, their preferences would still be available at the various properties. With the growing need for technology for most consumers even when they are away from their homes and offices. Therefore, it would be beneficial to Hilton Hotels to be the first hospitality firm to offer FREE unlimited internet service to all hotel guests. It can be up to the firm to decide whether the free internet should be wireless or via Ethernet. By adding this feature to all of their hotels, Hilton Hotels will attract many new customers that will become faithful customers due to the free access to the internet.