David Merkel
What laws, regulations, or pseudo-regulations (such as debt ratings criteria) would you most like to see changed?
This is another attempt to understand what most constrains the growth of the enterprise (see Part 1 for a different angle on the question). The answer should be something that is reasonably probable, or else the management is just dreaming. For an investment bank like Goldman Sachs(GS Quote - Cramer on GS - Stock Picks), an answer could be, "We want the ratings agencies to agree with our view of our risk management models, so that we can get a ratings upgrade and lower our funding costs." For a steel company in the early 2000s, the answer could have been, "The government needs to enforce the antidumping duties better." A media or branded goods company today might say, "Better efforts by the government to reduce piracy both here and abroad." For companies under cost pressure, such as General Motors(GM Quote - Cramer on GM - Stock Picks) and Ford(F Quote - Cramer on F - Stock Picks), the answer could be, "A better labor agreement that includes changes in the union rules, so that we can improve productivity." What technological changes are most driving your business now? Technology often benefits its users more than its creators. Prior to computers, it took a lot more people to run banks and insurance companies. Now financial companies are a lot more efficient and hire fewer people than they used to as a result of the change. You as the analyst want to know about the next technological change that will lower costs or create new products in order to forecast increases in growth of profitability.
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