What Are The Financial Characteristics Of Leaders?

Among a lot of leadership abilities, less attention is paid to leaders' ability in finance, although many of our business leaders are usually "grasping money (Finance Department) and grabbing people (Human Resources Department)". In fact, leaders' different ways of assessing risks and benefits will affect their strategic decisions. Therefore, in order to Help Corporate executives better understand their financial characteristics, better match their "financial traits" with the real needs of enterprises, and "financial trait law" arises at the historic moment.

The financial trait approach combines the two data of gross margin and indirect cost to determine the specific financial methods employed by executives in enterprises. There are four kinds of extreme cases in the financial trait law (see below). The details of these four characteristics illustrate how the four groups use resources and create value in different ways.

Venture Capitalist: high investment and high return. Apple Com puter Inc CEO Jobs is a typical example. This is evident from his creation of computer company NeXT Software Inc. and Pixar Animation Studios, an investment film production company. NeXT computer company is indeed a major breakthrough, but its commercial value is overshadowed by comparison. Pixar was also a big burn, but it ended up laughing. The above two initiatives are typical results of the financial characteristics of venture capitalists, that is, sometimes an investment can make you rich, while another investment may lose everything.

In the high-tech industry, the type of venture capitalists is the most senior. common . However, traces can be found elsewhere, especially those with high value-added products or services that require large investments. In general, this requires a visionary approach, intelligence, great patience and a gambler mentality that bears the heart of the global trend.

Commercial Pirates (Buccaneer): get huge profits quickly. High volume Return and minimum cost are the objectives of business pirates. Usually, such executives will use unprecedented originality to earn high returns. So at the beginning, business pirates would not have any rivals, and competition would only arise when others began to plagiarize them. Sandy Will, former chairman of Citigroup, is an example. Will's concern for low cost has become a legend in the industry. His persistence in cost control has brought him a competitive advantage, making him go all the way in the acquisition of Commercial Credit and Travelers, and eventually win the handsome income of Citigroup.

Commercial pirates seldom create new technologies or products by themselves. Their talent is to discover and excavate opportunities that others ignore. They will always avoid small profits, because they are innately lacking in patience with such enterprises. The aggressive style of action allows them to focus on those markets that enable them to quickly and decisively gain huge profits.

Mercantilist (Mercantilist): pursue scale instead of efficiency. Usually, mercantilist executives run large industrial or retail enterprises in the mature market. Generally speaking, mercantilism strategy will bring huge costs and huge risks. An obvious way to make it work is to increase market share and share costs with sales. But this approach is also risky: if a huge investment can not be recovered and gross margins remain low, enterprises will be in trouble. For example, CEO Chuck (Chuck Conaway) in the late 1990s hoped to bring enough sales to the company through the Blu ray promotion act, and then get out of the predicament. But this measure failed, and kemate later had to apply for bankruptcy. This is actually a typical portrayal of a mercantilist enterprise against its harm.

Discount shop operator (Discounter): Streamline housekeeping and never venture. Like mercantilism, discount store operators often appear in the general merchandise market. The difference is that mercantilists are usually concentrated in industries with high fixed costs, such as durable goods, while discount operators prefer industries with low fixed costs (such as non durable goods and services).

Discount operators are a group of people who are very disgusted with risk. They usually compensate for gross margin by extreme savings. Generally speaking, they will not focus on product value-added, but concentrate on how to reduce the use of resources. They all have preferences and control over details, but they do not take the overall situation into consideration. They are more likely to be obsessed with market share and gross margin, but are not interested in controlling the whole market.

The late Lewis (Reginald Lewis) is a typical representative. He spent $1 billion to finance the acquisition of TLC Beatrice international holding company, an international food company. Before that, he bought McCall Pattern. The characteristic of Lewis's management is that he takes a laissez faire attitude towards the enterprises he acquired and does not add any value to them. Therefore, in this respect, he is just a financial planner who buys the other enterprises with the traditional way of financing and buying. In addition to making money, he will not make any vision for the company. Making money is his strong point. Later, he sold McCall and made a lot of money. For Beatrice, he only sold part of the business and left the money he made. In 1993, he died of brain cancer. He was 50 years old. At that time, his property was estimated at about $four hundred million.