THE 2 x 2 HIGH-LOW PRESENTATION STRUCTURE

By

TAMAL DATTA CHAUDHURI

                                                 Principal & Professor, Finance and Economics

While teaching a course on Concepts of Management, I rediscovered the usefulness of a 2x2 high low presentation structure. I feel that it provides the reader with clarity on the issues at hand and provides the policy maker with areas of intervention. The structure helps one collate ones thoughts in a systematic manner and then helps in positioning. Since it is a bounded structure, it prevents one from getting ones thoughts go haywire. The structure helps one think logically. Although it is 2 dimensional, while many issues can be multidimensional, it is a useful presentation tool. In the following I will provide a few examples of such simple structures, some well known borrowed from various sources, and some of my own.

Example 1: The BCG matrix

Market Growth

	High	Low
High	Stars	Cows
Low	?	Dogs

Competitive Position

Example 2: The Risk Return matrix

Risk

	High	Low
High	To enter	Null set
Low	Null set	Crowded space

          Return

Example 3: Dimensions of Strategy

Quality of Strategy

	High	Low
High	Rare	Shareholders favorite
Low	Management wants it	Avoid

Ease of assessment /Easy to understand

Example 4: Decisions leading to Strategy

Control

	High	Low
High	Game theory/oligopoly	Managing to survive
Low	Making choices/casting a vote	Buying stocks

     Performance 

Example 5: Interventions for literacy

Affordability

	High	Low
High	Will shine	Society to intervene
Low	Family intervention	Socioeconomic background responsible

          Willingness

Example 1: Education/Competence mapping

Alignment

	High	Low
High	Will succeed	Can overcome and succeed
Low	Will survive in routine jobs	Will get frustrated and may fail

     Competence

VALUE INVESTING vs. GROWTH INVESTING

By

TAMAL DATTA CHAUDHURI

                                                Principal & Professor, Finance and Economics

Value Investing and Growth Investing are terms used in the stock market for identifying stocks for investment purposes. There are quite a few ways one may define value investing. The first is where the ratio of Market Price to Book Value per share is less than one. That is, the stock’s intrinsic value has not been fully realized in the market. The second is where the excess return from a stock is greater than the value given by the Stock Market Line. Growth investing on the other hand is forward looking and identifies stocks which may be highly priced today, but the prospects for further growth are there. These are stocks whose ratios of Price to Earnings per Share are high, and much higher than value stocks. In the table below we list some value stocks and some growth stocks as per the above criteria.

Name of the company	Price/Book Value per Share	P/E ratio	Price movement in the last two months (Rs.)
State Bank of India	1.19	8.64	1557-1718 = 161
Larsen & Toubro	3.47	18.19	746-965     = 219
Reliance Industries Ltd.	1.87	13.05	822-884   = 62
Tata Consultancy Services	12.47	27.65	1842-2008 = 166
ICICI Bank	1.77	12.85	802-1020  = 218
ITC	12.08	34.94	297-342  = 45
Hindustan Unilever Ltd	48.04	36.88	595-609  = 14

In the last two months, both sets of stocks have experienced appreciation in price. However, ones with already high Price to Book Value has seen smaller gains. One should take into account sectoral perception also and the effects of other macroeconomic variables. TCS with high P/E ratio and price to book value has seen significant rise as exchange rate movement aided growth in its bottom line. There is room for further appreciation in price for SBI.

MANAGEMENT EDUCATION

By

TAMAL DATTA CHAUDHURI

PROFESSOR, CALCUTTA BUSINESS SCHOOL

Principal & Professor, Finance and Economics

According to Peter Drucker, Management as an area of study is a liberal art. It is liberal because it deals with the fundamentals of knowledge, self-knowledge, wisdom and leadership and it is an art as it involves practice and application. A management student is supposed to be able to read, write, express and be modest. Any person with basic education can read and write. But what I mean by ability to read is to understand the meaning of the subject being read and critically analyze the underlying theme. By ability to write I mean to put down in simple words the essence of what is to be conveyed. By express I mean the power to verbally explain in simple and cogent terms any idea, however complicated. By modesty I mean the power to listen patiently to anyone and then provide any input, whether in support or in opposition, in as simple terms as possible. There is no point in taking a position that “I am always right!” Management students should develop the ability to keep their ears and eyes open to new concepts, alternative viewpoints, different ideas, contrasting styles etc. They should be continuously studying various subjects as in earlier times when liberal arts used to be studied. Management students need to grasp many things, need to develop a holistic approach, need to develop a macro view, push boundaries of thought, recognize talent and skill and put them to optimal use.

I am told that companies recruit management graduates because of three things. First management graduates are exposed to a wide variety of subjects like marketing, HR, finance, business ethics, operations, leadership, quality management, information technology etc. This is the “liberal” part of management training. They need to study many things to be intellectually mature. Second, management graduates are exposed to case study based teaching. They are exposed to various real life situations and are expected to develop insight and analytical power. Third, management graduates are good at making presentations. This is what I meant by the ability to express and also be modest and a good listener.  

The additional thing that I feel management students should develop is the interest and inclination to read Annual Reports of companies, and not only the balance sheet. I recently read three books namely “In Search of Excellence” by Thomas J Peters and Robert H Waterman Jr.,            “Built to Last” by Jim Collins and Jerry Porras and “Blue Ocean Strategy” by W Chan Ki and Rene’e Mauborgne. The basic methodology of the three books has been to first read about various companies from their annual reports. This is the starting point. Company interviews came later. Any management graduate has to find out from the annual report of a company its “Mission” “Vision” statement, its core values, its various strategies, the change in focus over time, areas of emphasis etc.  The purpose of a management graduate is not to focus solely on the financials of a company.