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Chapter 5 - Advanced
Frameworks
“We aim above the mark to hit the mark.”
--- Ralph Waldo Emerson
Introduction
The various frameworks discussed in this chapter range from
the widely used NPV (Net Present Value) and CAPM (Capital
Asset Pricing Model) financial formulae, to the esoteric S-
curves which depict technology adoption / disruption paths. In
my experience working with business executives world-wide,
I came to appreciate the fact that even though a lot of them
did not have a formal business education, they routinely
applied DCF (discounted cash flow) techniques in their
business valuations. The interest rate used for calculating the
discounted value of future cash flows is frequently derived
from the CAPM formula, and CAPM is an advanced financial
concept. Otherwise, I would have placed the NPV / CAPM
framework in the chapter on Basic Strategy Frameworks.
Awareness of each of the frameworks described in this
chapter will add to the fundamentals of your business
knowledge. Further, whether you are trying to crack a case
interview in a five star hotel room or trying to be more
persuasive in your corporate boardroom, showcasing your
talent and knowledge to your interviewer / CEO by
intermingling basic concepts / frameworks with advanced
ones can be a great idea. For example, you may or may not be
comfortable with Calculus used underneath the Double
Marginalization concept; but you can always express your
appreciation of Channels, while applying the Five C’s
framework, by asking the following:
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