Are you smarter than a CEO?

After “The Gaming Company” I realized that every decision affects your company’s overall success. One decision can also dictate your company’s future performance. During the activity, I made an error on the evaluation sheet, which prompted me to suggest we not order for a second week. Unfortunately, we got hit with significant inventory costs for the next week.

This leads me to my question:

Are you smarter than a CEO?

Wait, before you answer that, ask yourself this:

Could you take over Apple, Microsoft, Google, or Facebook and keep them as leading innovators?

Hold on, do you have the experience?

As much as it may hurt your ego, the answer is NO. That is not to say that it is impossible. Steve Jobs, Bill Gates, Larry Page, and Mark Zuckerberg all started their companies with little to no experience.  What happened before their companies reached the status of instant recognition?

All the companies listed above have faced critical decisions, where missteps could have cost them greatly.  Management, especially at the CEO level, is the driving force to a company’s success. An example of this is a company that may have the best Accountants, with one problem, their accounting for a lot of losses and debt. Management is a very broad word which has many approaches that may be effective. I think what all successful managers have in common is the ability to adapt.

I also noticed the importance of leadership/management at my company’s 4Q earnings report meeting. My company’s management has historically taken a decentralized approach to the management of its various entities. One analyst was concerned that he was beginning to see the company becoming more centralized. Of course as business students we all know that this would give more management control to the corporate level of the company. This could effectively change the entire way a company operates, which may lead to increased or decrease production.

So do you think you are smarter than a CEO?

Remember one last factor, there is millions of dollars on the line, not a pack of Starbursts!

If you do, give me the reason in one sentence.

The Big/Little Picture

The Start:
I’m sure everyone knows the difference between Macroeconomics and Microeconomics.  Forecasting, which is used in economics, also can be done on a macro and micro level. I will first discuss how forecasts of the United States economy influence business.  Then I will talk about how I use a specific forecasting tool at my internship.

The Big:
As the United States economy continues to sputter, economists continue to change their corresponding forecasts.  Accurate forecasting can become difficult with the current philosophical division in Washington.  Forecasting the economy right now is like a meteorologist predicting the weather a year from now. In both cases, uncertainly makes the forecaster less confident in their prediction.   The attached link is an article that did an effective job of explaining how economists forecast the United States economy.  At the end of the article, it talked about how businesses can still benefit from using economic forecasts. Do think businesses can benefit from the forecasts of the economy? Or, do you think using economists’ predictions is like using a prediction from a meteorologist a year in advanced?

The Little:
Virtually every business uses some level of forecasting to make decisions. My company is no different; they have a whole department for planning future transactions. As a tax intern, I was given the task to work on a spreadsheet that predicts an important value on the balance sheet. The spreadsheet is designed to manipulate the most recent values from our accounting software to predict a current balance sheet value.  As discussed earlier, the depressed state of the economy is forcing the United States to make fiscal policy changes. On the World stage, it is no different. Many countries have either recently changed, or are planning to change their fiscal policy, specially segments of their tax laws. Of course, due to time constraints, it is nearly impossible to adjust the spreadsheet I work on to reflect these changes. This ultimately results in a less accurate number for future decisions for the company.  Do you think it is the depressed economy, or just the nature of fiscal policy that will cause inaccuracies to my forecast?

The End:
As you can see, forecasting the economies effect on business is an imperfect science. It is never easy, but the level of uncertainly in Washington makes forecasting the economy that much harder.  It is my belief that this uncertainly is causing many companies to be conservative. When companies are conservative they hire less, and take less risk. This causes a country to have a higher unemployment rate and lower rewards, or GDP.

Article: http://www.ehow.com/about_6559853_economic-issues-affect-financial-forecasts.html