The Strategic CFO: Creating Value in a Dynamic Market Environment PDF
Preview The Strategic CFO: Creating Value in a Dynamic Market Environment
The Strategic CFO . Ulrich Hommel (cid:129) Michael Fabich Ervin Schellenberg (cid:129) Lutz Firnkorn Editors The Strategic CFO Creating Value in a Dynamic Market Environment Editors Prof.Dr.UlrichHommel MichaelFabich EBSUniversita¨tfu¨rWirtschaft EquityGateAdvisorsGmbH undRechti.Gr. MainzerStr.19 EBSBusinessSchool 65185Wiesbaden Gustav-Stresemann-Ring3 Germany 65189Wiesbaden [email protected] Germany [email protected] ErvinSchellenberg LutzFirnkorn EquityGateAdvisorsGmbH Ackeranlagen7 MainzerStr.19 74523Schwa¨bischHall 65185Wiesbaden Germany Germany fi[email protected] [email protected] ISBN978-3-642-04348-2 e-ISBN978-3-642-04349-9 DOI10.1007/978-3-642-04349-9 SpringerHeidelbergDordrechtLondonNewYork LibraryofCongressControlNumber:2011939762 # Springer-VerlagBerlinHeidelberg2012 Thisworkissubjecttocopyright.Allrightsarereserved,whetherthewholeorpartofthematerialis concerned,specificallytherightsoftranslation,reprinting,reuseofillustrations,recitation,broadcasting, reproductiononmicrofilmorinanyotherway,andstorageindatabanks.Duplicationofthispublication orpartsthereofispermittedonlyundertheprovisionsoftheGermanCopyrightLawofSeptember9,1965, initscurrentversion,andpermissionforusemustalwaysbeobtainedfromSpringer.Violationsareliable toprosecutionundertheGermanCopyrightLaw. Theuseofgeneraldescriptivenames,registerednames,trademarks,etc.inthispublicationdoesnotimply, evenintheabsenceofaspecificstatement,thatsuchnamesareexemptfromtherelevantprotectivelaws andregulationsandthereforefreeforgeneraluse. Printedonacid-freepaper SpringerispartofSpringerScience+BusinessMedia(www.springer.com) Contents TheStrategicCFO:NewResponsibilitiesandIncreasing JobComplexity ................................................................. 1 MichaelFabich,LutzFirnkorn,UlrichHommel, andErvinSchellenberg PartI Strategy-LinkedApproachestoRiskManagement andCorporateFinancing LinkingStrategytoFinanceandRisk-BasedCapitalBudgeting .......... 9 UlrichHommelandMathiasGerner LinkingStrategy,OperationsandFinancewithSimulation-Based PlanningProcesses ............................................................ 31 MichaelRees Risk-ReturnManagementoftheCorporatePortfolio ..................... 49 UlrichPidunandMatthiasKru¨hler CapturingtheStrategicFlexibilityofInvestmentDecisions ThroughRealOptionsAnalysis .............................................. 69 JohnathanMun Exposure-BasedCash-Flow-at-RiskforValue-CreatingRisk ManagementUnderMacroeconomicUncertainty .......................... 85 NiclasAndre´n,Ha˚kanJankensga˚rd,andLarsOxelheim PartII CopingandBenefitingfromtheDynamicsofFinancialMarkets CapitalMarkets2.0–NewRequirementsfortheFinancial Manager? ..................................................................... 109 HolgerWohlenbergandJan-CarlPlagge v vi Contents EvolvingCapitalMarketsandtheChangingRoleoftheCFO .......... 127 HadyFarag,FrankPlaschke,andMarcRodt IntegratedCapitalStructureManagement–ValueImprovement byOvercomingtheSiloApproachofFinancialInstitutions .............. 143 MichaelFabich,ErvinSchellenberg,andKatinkaWo¨lfer ManagingCashFlowandControlRisksofFinancial Contracting ................................................................... 171 PetriMa¨ntysaari TheCFO’sInformationChallengeinManaging MacroeconomicRisk ......................................................... 189 LarsOxelheim,ClasWihlborg,andMarcusThorsheim PartIII LinkingtheDynamicsofFinancialMarketsandProductMarkets Capacity-AdjustmentDecisionsandHysteresis ........................... 211 BenoˆıtChevalier-RoignantandArndHuchzermeier LinkingStrategytotheRealWorld:WorkingTowardRisk BasedSupplyChainOptimization .......................................... 227 WilhelmK.Kross DealingwithRecentChallengesinCashFlowManagement: CommodityVolatilityandCompetitivePressure .......................... 249 LutzFirnkorn,ArnoGerken,SvenHeiligtag,KonradRichter, andUweStegemann HowClimateChangeImpactstheRoleoftheCFO ...................... 265 ThomasRu¨schenandMarkusEckey CapturingtheImpactofMarketDynamicsonFirmValue forService-DrivenEnterprises .............................................. 285 DiemHo CreatingCorporateValuewiththeExposuretoFinancial Innovations:TheCaseofInterestRates ................................... 295 MarcusSchulmerich Authors Biography Niclas Andre´n is an associate professor of the Department of Business Adminis- tration,LundUniversitySchoolofEconomicsandManagement,Lund,Sweden.He holdsaPhDinbusinessadministration.NiclasAndre´nistheDirectorofthemaster programinCorporateandFinancialManagementandformerDirectorofthemaster programinFinance,bothatLundUniversity.Hehasextensiveteachingexperience withincorporatefinance,espincorporateriskmanagement,valuation,andfinancial restructurings. He has specialized in interactive and applied teaching pedagogics, notleastcase-basedteaching.Hisresearchinterestsarecorporateriskmanagement, behavioralcorporatefinance,andassetpricing. Per-Olof Bjuggren has a Master of Political Science from Lund University and took his PhD in Economics at Lund University in 1986. The PhD thesis is about vertical integration in the Swedish pulp and paper industry. A new theoretical paradigm, the transaction cost approach, is used. It is one of first studies that use this approach empirically. In 1994 he was appointed associate professor of Eco- nomics at Linko¨ping University. Since July 1995 he is Associate Professor of EconomicsatJo¨nko¨pingInternationalBusinessSchool.Hisownresearchincludes studies in the fields of industrial organization, law and economics and corporate governance.HehaspublishedarticlesinjournalssuchastheInternationalReview of Law and Economics, Small Business Economics, Geneva Papers of Risk and InsuranceandFamilyBusiness Review.Severalarticleshave alsobeen published inrefereed internationalbooks.Hehas togetherwith ArneMAnderssonandOlle Ohlssonpublishedindustrialorganizationtextbooks(inSwedish). Dr.BenoˆıtChevalier-RoignantgraduatedinbusinessadministrationfromEML- YON Business School and WHU – Otto Beisheim School of Management in September2007andsubsequently joined theMunich office ofL.E.K.Consulting, aglobalconsultingfirmwithfocusonprivateequityadvisoryservices.From2009 to2011,hecompletedadoctorateattheDepartmentofProductionManagementat vii viii AuthorsBiography WHU under the supervision of Arnd Huchzermeier, PhD and Lenos Trigeorgis, DBA.InSeptember2011,hejoinedtheUniversityofTexasatDallasaspostdoc- toralfellowunderthesupervisionofDr.AlainBensoussan.Hisresearchdealswith applicationofstochasticcontroltheoryanddifferentialgamestotheanalysisofreal options in competitive settings. Benoˆıt co-authored Competitive Strategy with Lenos Trigeorgis (forthcoming at the MIT Press) and has published in leading academicjournalssuchastheEuropeanJournalofOperationalResearch. Dr.DiemHoismanagerofUniversityRelationsforIBMEuropeMiddleEastand Africa.Heisinchargeofresearchcollaborations,skilldevelopment,andtechnology access with/for the academic community and driving higher education reforms to meetindustryneedsandsocietalchallengesinaservicedominanteconomy.Diem has held many different positions in IBM, from research, consulting to manage- ment. He has successfully led management consulting engagements at more than 16 leading European banks and financial services companies throughout Europe. He was elected to the IBM Academy of Technology in 1995. He is an associate editor of the Journal ofComputational Economics andhas been guest editor for a numberofjournalspecialissues.Dr.Hoisalsoamemberofthepeerreviewteams fortheEFMD-EQUISandEPASaccreditationprogrammes(EuropeanFoundation for Management Development – European Quality Improvement System and ProgrammeAccreditationSystem)andamemberoftheEPAScommitteeandhas involved in a number industry group initiatives such as the Career Space Consor- tium(ICTskillsandnewUniversitycurriculaforthe21stCenturyEconomy)and the European Learning Industry Group (ELIG). He’s supervised PhD candidates and published widely in Engineering, Physics, Mathematics, Remote Sensing, Image Processing, Optimization, Finance and Business Intelligence. He is also a frequentinvitedcontributortotheOECDandUNESCOconferences andpublica- tions.Diemobtained2M.S.degreesandaPh.D.degreefromStanfordUniversity, California. Dr.MarkusEckeyisaVicePresidentinDeutscheBank´sGlobalCreditTrading division where he originates and executes structured asset finance transactions. Before,heworkedinDeutscheBank´sCorporateDevelopmentdepartmentfocus- sing on principal M&A transactions and strategy-related projects. Prior to joining DeutscheBank,Markus workedinthe Investment Banking Division ofGoldman, Sachs & Co., specialising in M&A and IPO transactions across a variety of industries.MarkusholdsadiplomainBusinessAdministrationfromtheUniversity ofMannheimandaPh.D.fromtheEuropeanBusinessSchool(ebs). MichaelFabichisco-FounderandManagingPartnerofEquityGateAdvisorsGmbH inWiesbaden(Germany).Withover25yearsofprofessionalexperience,Michaelco- heads EquityGate’s corporate finance team. He has previously been Head of the GermaninvestmentbankingdivisionofSalomonSmithBarney(Citigroup),Member oftheBoardatSalomonBrothersAGinFrankfurt,andMemberoftheGlobaland European Investmentbanking Committees. Previously he was Co-Head of M&A AuthorsBiography ix Germany at Dresdner Kleinwort Benson. Michael founded and headed Schro¨der Mu¨nchmeyer Hengst Corporate Finance GmbH. Before setting up EquityGate, he was Chairman of the German Advisory Board of Duke Street Capital in London. Michael graduated from the University of Applied Sciences in Mainz, and is a MemberoftheAdvisoryBoardoftheStrategicFinanceInstitute(SFI)atEuropean BusinessSchool(EBS)InternationalUniversity. Dr. Hady Farag is a Principal in the Frankfurt office of The Boston Consulting Group(BCG).HeisacorememberoftheCorporateDevelopmentpracticeareaand theCorporateFinanceTaskForce.Hehassupportedclientsacrossawidevarietyof industriesandgeographies,includingEurope,SoutheastAsia,andSouthAmerica, focussing on capital market and M&A-related projects. Prior to joining BCG, Dr. Farag served as researcher and later Head of University Development at the EuropeanBusinessSchool(EBS),whereheearnedadoctoratedegreeinbusiness administration.He alsoholdsmaster-level degrees fromboth EBSandtheJoseph M.KatzGraduateSchoolofBusiness(UniversityofPittsburgh). LutzFirnkornisaProjectManagerinMcKinsey&Company’sFrankfurtoffice, wherehefocusespredominantlyonriskmanagementforEuropeanfinancialinsti- tution. Furthermore, he is a PhD candidate at the endowned chair for corporate financeandcapitalmarketsattheEuropeanBusinessSchool(EBS),withresearch focus on corporatefinance andcorporate risk management. Lutz Firnkornholds a Mastersdegree(DiplomGrandeEcole)fromtheESCP-EAPinParis. Mathias Gerner is a Research Assistant and Doctoral Candidate at European Business School (EBS) International University in Germany. In addition, he was a Visiting Scholar at The University of Texas at Austin (UT) during the summer 2009. He completed his studies in Industrial Engineering at The University of Karlsruhe (TH) including a semester abroad at the Mathematics and Statistics DepartmentattheHerriot-WattUniversityofEdinburgh.Between2006and2008 he successfully finished the Management Trainee Program (SGP) of the Siemens AG, Sector Energy. His main research areas are commodity risk management, energypricesandderivatives. Dr.ArnoGerkenisaDirectorinMcKinsey&Company’sFrankfurtOffice,andis leading McKinsey’s Global Risk Management Practice out of Europe. Dr. Arno Gerkenhasvasteexperienceinriskmanagementforfinancialinstitutionsaswellas for corporates. Dr. Arno Gerken holds a diploma in national economics, with majorsingametheory,microtheory,andstatisticsandreceivedhisPhDfromthe UniversityofBonn,Germany,oncreditportfoliomodeling. Dr.SvenHeiligtagisaPrincipalinMcKinsey&Company´sHamburgOfficeand amemberofboththeTransportation&LogisticsaswellastheRiskManagement Practice. He has significant experience in advising clients on corporate finance, strategy, organizational and marketing/sales topics. Dr. Sven Heiligtag has a x AuthorsBiography MastersdegreeinChemistryfromtheUniversityofHamburg,aPh.DinBiochem- istryfromtheUniversityofHamburgandtheCancerResearchCenterofHawaii. Prof.UlrichHommelPhDisaFullProfessorofFinanceandheadstheEndowed ChairofCorporateFinance&CapitalMarketsatEuropeanBusinessSchool(EBS). UlrichHommelholdsaPh.D.inEconomicsfromtheUniversityofMichigan,Ann Arbor,andhascompletedhishabilitationinBusinessAdministrationattheWHU, Germany.HewasanAssistantProfessorofFinanceattheWHUfrom1994to1999 and has subsequently joined the faculty of the EBS. He is the Director of the StrategicFinanceInstituteattheEBS.Inthepast,UlrichHommelhasheldvisiting appointmentsattheStephenM.RossSchoolofBusiness(UniversityofMichigan), the Krannert School of Management (Purdue University) and the Bordeaux Busi- ness School. His main research interests are corporate risk management, venture capital&privateequity,familybusinessfinanceandcorporaterestructuring.Ulrich HommelhasbeenAcademicDeanoftheFacultyattheEBSfrom2000to2002and hassubsequentlyheldthepositionofRectorandManagingDirectorfrom2003to 2006. Since 2007, he is also an Associate Director of Quality Services at the European Foundation for Management Development (EFMD) in Brussels and, as oneoftheDirectors,isresponsiblefortheEFMDProgrammeAccreditationSystem (EPAS). Prof.Dr.ArndHuchzermeierchairstheProductionManagementDepartmentand theCenterforCollaborativeCommerce(CCC)ofWHU–OttoBeisheimSchoolof Management in Vallendar. In 1986, he received a masters degree in business administration as well as computer science and operations research from the Karlsruhe Institute of Technology (KIT). In 1991, he received a Ph.D. degree in OperationsManagementfromtheWhartonSchooloftheUniversityofPennsylvania, USA. He published, among others, in Interfaces, Management Science, Manufacturing&ServiceOperationsManagement,MarketingScienceandOpera- tionsResearch.Since2007,heisMemberoftheBoardofECREurope’sInterna- tional Commerce Institute; Belgium, and Executive Editor of the International Commerce Review: ECR Journal. In 2000, he was awarded the Mercurius Award byFedis,theEuropeanFederationofDistributionSocieties,Belgium.In2002,he received the Franz Edelman Finalist Award from the Institute for Operations Research and Management Science/INFORMS, U.S.A. In 2003, he won both the ISMSPracticePrizefromtheMarketingScienceInstitute,U.S.A.andtheManage- mentScienceStrategicInnovationPrizefromtheEuropeanAssociationsofOpera- tional Research Societies / EURO, Belgium. In 2009, he was awarded the ECCH Case Award from the European Case Clearing House, U.K., in the category ‘ProductionandOperationsManagement’.Since1995,heactsasAcademicDirec- toroftheGermanindustrycompetition‘BestFactory/IndustrialExcellenceAward’ (jointly with the business journal Wirtschaftswoche and INSEAD, France). In 2009,heco-foundedthecarsharingcompanyMobilityNow.
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