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Conservative Investors Sleep Well (Checklist (People (employee engagement,…

- - - - Margin
        
        price out competitor in a downturn
        
        increase price (after competitors fail)
      - Support organic growth
        
        avoid more stock issue
        
        less debt
    - - identify consumer needs
      - profitable NPD
      - monitor profitability of various product lines
    - - New product / service
        
        customer needs
        
        within existing marketing / sales capacity
        
        profitability
      - cheaper existing product / service
      - better existing product / service
    - - understand all costs / profitability
      - better capital allocation
      - identify risks
      - better receivable / inventory control
  - - - Promote from within
      - BAD SIGN: bring in external CEO
    - - good place to work
      - employee set target-performance (endowment effect, peer pressure)
      - employee-effectiveness index (Texas Instruments)
    - - delegate authority
      - work with a team
        
        BAD SIGN: CEO's salary is way higher than NO.2/3
      - no over-lapping of responsibility
  - - - Margin profit
        
        Inherent characteristics (moat)
        
        Economies of Scale
        
        Leader advantage
        
        Low production cost
        
        Brand equity
        
        Higher marketing / ad budget
        
        Bigger sales / service network
        
        First-mover advantage
        
        Interdisciplinary technology
        
        Marketing / Sales in niche market
        
        consistently 2-3% higher than next Player
      - Return on invested assets (used by corporate managers to compare different projects)
    - - Expand business
        
        NPD
        
        New factory/store/equipment
        
        AR/inventory
      - Protect business when cost increase cannot be passed onto customers
    - - Monopoly
      - Operation efficiency
- - - - Appraisal on the stock
      - Appraisal on industry
        
        Image change: due to the financial community emphasizing certain industry background influences rather than another
        
        Fact / fundamental changes: e.g. be replaced by more advanced technology
      - Appraisal on Stock Market
        
        when interest rate increase, stock market is less attractive