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What happens when management fails?

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The Art of Management

Capital efficiency

In principle at least, the main function of management is the efficient use of capital in everyday decision making. Managers have to satisfy three main beneficiaries of the company, namely the employees, bondholders, and the investors. Company employees benefit by earning a salary, while bondholders gain by receiving interest on their held bonds. However, both these beneficiaries are more concerned with short term gains, whereas investors, who are the residual owners of the company, are more concerned with long term gains. Investors receive benefit from the company by either receiving a cash dividend, and/or capital gains on the price of the stock.

Are You an Entrepreneur or a Business Owner?

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Are You an Entrepreneur or a Business Owner?

A main differentiator between an entrepreneur and a business owner is their cash survival rates. One group can survive the so-called “Valley of Death” better than the other group. But what is the “Valley of Death”?