Week 4 Discussion Responses

Week 4 Discussion Response 1 - Strat Man

BY: M,H

Considering the information listed in the discussion, I believe that the organization might be out sourcing too much if numerous smaller competitors are fully integrated.  I would recommend several acquisitions as a short-term plan with goal of increasing distribution and expanding customers.  I believe that the organization should considering strategically acquire several small competitors.  This would rapidly provide access to the other smaller organizations value chains and could increase the geography of the organization, depending on the current suppliers.  I believe that once a solid value chain is established internally along with key geographic manufacturing locations. 

The risk in the acquisition is that the acquired organizations might not provide the intended value.  In this instance I believe the highest risk would be the value of acquired organization’s value chain.  I believe that the geographic expansion with the acquisition is controllable with adequate research.  Integrating the activities that were once outsourced is an initial financial risk that will take capital.  It will be important for the organization to increase production and expand in order meet projections.  It is also equally important for the organization to not expand so rapidly that they spending capital investments faster than they are able increase revenue at an acceptable rate. 

 

Thompson, A. A., Peteraf, M. A., Gamble, J. E., & Strickland, A. J. (2018). Crafting and Executing Strategy: The quest for competitive advantage (21st ed.). New York: McGraw Hill Education.

Week 4 Discussion Response 2 - Strat Man

BY: S,J

Prior to expansion of my industrial cleaning company, I would conduct a SWOT analysis of any potential market and their impact on the current status of different segments of the company.  Budget resources  can then be evaluated and prioritized to see where they can best be assimilated. A small scale cleaning company will need to find ways to increase sales and profits in order to earn the revenue that can be invested towards the expansion and become a larger scale supplier. Because Mexico and Canada have been identified as markets without competition those markets need to be researched extensively in order to pursue a viable market expansion strategy such as to seize the initiative ((Thompson, Petraf, Gamble, & Strickland, 2016).

The company has the option of even merging with other companies that are not necessarily a threat but could benefit the company as an acquisition.  Hiring new Human Resources could help to minimize extra salaries that are not necessary. You can also increase the investment in research and development to potentially increase technology for increased profits. This quick access can strengthen the company and continue to allow them to expand.

 

Reference

 

Thompson, A., Petraf, M., Gamble, J., and  Strickland, A.J.  (2016) Crafting and executing strategy :The Quest For Competitive Advantage : Concepts and Cases (20th ed.).  New York, N.Y. : McGraw-Hill.

 

Week 4 Discussion Reponse 1 – Managerial Acct

BY: I,H

An article in the Journal of Finance found that firms that give CEOs high incentives outperform firms that give low incentives by up to 10 percent (Edmans, 2016.) While many will argue that performance based pay will not work, leading firms like Apple are proving otherwise. Performance based pay is established with the goal of rewarding successful performance results with a motivating salary, stock options, and or benefits. In support of performance based pay, it can be argued that this system attracts motivated individuals while promising a salary that will not decrease can attract coasters who want a more quiet life (Edmans, 2016.)

When looking at Apple we can see that they are a firm who believes in performance based salary for their top executives. Apple uses performance based compensation for its executives based on board approved measures for revenue and operating income (Reisinger, 2017.) In essence there are different thresholds for each milestone that is measured, and depending on the performance results for that year are the values of the compensation provided to the senior executives. This very well could mean that a future year that is successful, just not as successful as a past year could result in a lower compensation. This was the case for Apple in 2016 where Tim Cook reportedly was paid $8.7 million compared to the $10.3 million he took home in 2015.

To conclude, yes, it is my opinion the majority of executives are overcompensated. I feel this way because too often you hear that bonuses are being cut but the big wigs are still cashing their checks. While senior management makes big decisions, it is those below them that actually put in the work that keeps the company running. If their compensation was not as large and there was less of a gap between top executive pay and the pay of lower management and other staff, we can only imagine what that motivated workforce could do for their firm.

Edmans, A. (2016, February 23). Performance-Based Pay for Executives Still Works. Retrieved November 15, 2017, from https://hbr.org/2016/02/performance-based-pay-for-executives-still-works

Reisinger, D. (2017, January 06). Apple's 2016 Stumble Causes Tim Cook to Lose Pay. Retrieved November 15, 2017, from http://fortune.com/2017/01/06/apple-tim-cook-salary/

 

 Week 4 Discussion Response 2 – Managerial Acct

BY: A,T

I looked up a company that showcased the benefit of performances based pay.  The CEO of Hilton Worldwide is Christopher Nassetta.  He has been acting CEO since 2007.  In 2014 Christopher raked in just over $9.9 million in total earnings for the year.  Out of that $9.9 million, only 11% was his base salary, the remainder was all driven by stock options, incentives, and bonuses.  That year he personally exceeded his performance objective by 200%. (Peltier, 2015).  

His performance for the year was outstanding so he should be able to reap the benefits.  Giving executives higher base salaries doesn't truly convey the message that they are invested in the company, but only guaranteeing yourself a $1.1 million base salary proves you are committed to the company's success and growth because it effects your year end take home pay.  I feel long-term performance based pay should be used more than short-term as quarterly type goals can be favorable or unfavorably skewed and there can be tricks used to compensate in the short-term.  Long term success is a direct reflection of one's stock price. (Admens, 2016).  Incentives truly make employees more engaged in their work and feel like they have more of an impact because at the end of the day they are effecting their take home pay.  I certainly support performance based pay especially for executives if handled and measured properly.  

Reference:

Edmans, A. (2016, February 23). Performance-Based Pay for Executives Still Works. Retrieved from https:her.org/2016/02/performance-based-pay-for-executives-still-works

Peltier, D. (2015, May 26). The 10 Most Highly Compensated Hotel CEOs of 2014. Retrieved from https://skift.com/2015/05/26/the-10-most-highly-compsenated-hotel-ceos-of-2014/