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This paper seeks to analyze the applicability of the time‐tested margin of safety principle from value investing to corporate strategy.

The main source of this paper is the book Margin of Safety, supplementation materials, including a discussion with the book's author, Seth Klarman, were also referenced.

The paper finds that the margin of safety principle is broadly applicable to corporate strategy in areas such as M&A, hedging, balance sheet management, share buybacks, special dividends, divestments, and cash management. Each of these areas is discussed in the paper and illustrated by way of timely examples as part of the analysis.

Further research could be conducted into valuation methods in general, including the method practiced by noted value investors. Research could also be conducted into the margin of safety principle and its applications in corporate strategy, corporate finance, strategic risk management, shareholder communications, and operations management.

This is the first paper that the author is aware of that analyzes the applicability of the investment‐based margin of safety principle to corporate strategy and strategy‐related initiatives.

Expansion of large international hotel chains into the Polish hospitality market has radically changed hotel management practices in Poland. The article investigates the impact of these changes on hotels’ economic performance. This impact is assessed by monitoring changes in the break‐even point, the percentage share of variable costs in sales, margins of safety, operating leverage, and other indicators reflecting economic effects of applied management methods. The research results indicate that cost reduction resulting from the introduction of new management methods must in the future be replaced by measures aimed at stimulating revenue growth.

WE concluded Part II of this series with the remark that a different outlook is needed for problems of control surface flutter than for those of wing flutter. There are two reasons for this. Wing flutter must be investigated carefully early on in the design of an aircraft so as to provide a safe aircraft without a severe weight penalty, whereas the weight penalty of avoiding control surface flutter is usually small, although not negligible, and modifications can often be made at short notice, so it is important to make a full investigation as late as possible before flight when all the data are available in a reliable form. The second reason is that with wing flutter, as with aileron reversal and divergence, it is usual to think of safety margins in terms of forward speed or possibly wing torsional stiffness; with control surface flutter, on the other hand, quite different types of safety factor become the rule.

Bicycle industry, emerging markets, competitor analysis, financial forecasting.

This case can be used as a teaching tool in the following courses: MBA/post-graduate programs in management in management accounting, management control systems and strategic cost management; executive training programs for middle and senior level employees; and under-graduate/post-graduate programs in entrepreneurship. It can be used to explain and test the concepts of SWOT analysis, Porter's five forces model and PEST analysis. It introduces the technique of breakeven analysis and its relationship with operating leverage. Moreover, it demonstrates the application and analyses of the Du Pont equation.

Hero Cycles Ltd was established by the four Munjal brothers in pre-independence India. It started off as a business of bicycle spare parts, but quickly expanded in post-independence India, with Ludhiana as its base. The company later joined with foreign firms like Honda Motors, Japan to become the largest manufacturers of bicycles in the world. It dominates domestic markets with a market share of around 40 percent. Ananth Munjal, a learned, ambitious and cautious individual, is the next generation, ready to take over the reins of the company. Being someone who believes in learning from past mistakes, he forms a team to critically examine the decisions made by his predecessors. This team is also directed to utilize forecasting techniques for determining the expected profitability given the existing state of affairs that prevail. Additionally, Du Pont analysis is to be performed for studying the efficiency of the company on the facets of operating performance, asset turnover and associated financial leverage. Also, Ananth's risk-averse nature compels him to study the past with regard to the relationship between operating leverage, breakeven sales and corresponding margin of safety. Furthermore, he wishes to inspect the historical cost structure of the firm, and its influence on company performance.

These include the use of: SWOT analysis to identify the strengths, weaknesses, opportunities and threats to a company; PEST analysis to identify the political, economic, social and technological factors that affect the operations of a company; Porter's five forces model to analyse an industry. The case also helps students: by identifying fixed costs and variable costs that are a part of operating expenditure of a business; in the use of forecasting the financials of a company for the sake of predicting the future outcomes of certain business strategies; by application of Du Pont analysis to examine the efficiency of the various processes and strategies; in determining quantitative terms like contribution margin, breakeven sales, operating leverage, margin of safety, their significance, and the relationship between these terms.

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A Summary by Dr. Alexander Klemin of the Papers Presented Before the Fourteenth Meeting of the Institute held at Columbia University, New York, on January 29–31, 1946. AERODYNAMICS IN spite of increased wing loadings, the use of full span wing flaps has been delayed, because of inability to find a suitable aileron. The Development of a Lateral‐Control System for use with Large‐Span Flaps by I. L. Ashkenas (Northrop Aircraft), outlines the various steps in the aerodynamic development of a retractable aileron system well adapted to the full span flap and successfully employed on the Northrop P‐61. Included is a discussion of the basic data used, the design calculations made, and the effect of structural and mechanical considerations. Changes made as a result of preliminary flight tests are discussed and the final flight‐test results are presented. It is concluded that the use of this retractable aileron system has, in addition to the basic advantage of increased flap span, the following desirable control characteristics: (a) favourable yawing moments, (b) low wing‐torsional loads, (c) small pilot forces, even at high speed.

The purpose of this paper is to optimize the design of a hybrid tether using probabilistic approach considering inherent random variation in the stress developed and the strength it has. The variation in strength is mostly because of variation in diameter of the tether and the properties of the material along the length of the tether. As a result, classical design approach for the tether may not serve the purpose. For this purpose, a reliability-based design of hybrid tether is discussed in this paper.

A literature review was carried out on the design of tether and its operational reliability. It has been shown that the classical design approach does not serve the purpose, as the strategic operation has to be reliable enough, often requiring a measure of reliability required. A reliability-based approach has been presented to achieve the optimum design of a hybrid tether.

The optimization problem was carried out for different values of the safety factor to investigate the effect on the optimal design of tether. An analysis is carried out to show that one should not target a very high value of reliability or factor of safety, as it causes the self-weight of the tether to increase tremendously and its cost significantly.

The present work has been carried out considering the limited data and can further be extended to determine more accurate reliability measures by considering more number of sample test data. The measured data is collected from limited required trials for demo; do not represent the exact population data.

Lab strength test and flight trials were conducted to acquire data for the present analysis. In field use, it was noticed that the tether degraded from top portion attached toward the balloon end because of maximum exposure and repeated usage.

The effects of ultrasonic agitation on electronic components during PCB cleaning has long been the subject of controversy. This paper summarises the results of a series of studies into these effects for a range of components using CFC, aqueous and semi‐aqueous cleaning media. The variations with exposure time and power density under various ultrasonic stress conditions (loose, mounted on PCBs, or on purpose‐built test boards) are discussed. The results are encouraging and suggest that there is a large margin of safety when employing currently accepted regimes of operation and good quality components. However, the strong dependence of the damage accumulation on power density emphasises the need to specify and tightly control the power density used.

Offers, as a contribution to the debate on probabilistic engineering design, the suggestion that quality problems in development and manufacture can be anticipated and resolved before they occur by applying variance synthesis to the basic design. Only after a satisfactory design has been established should engineering tolerances be applied to control the manufacturing process. Identifies dominant sources of variability variance synthesis in addition to providing a statistical basis for calculating a safety factor. Gives two illustrative examples.

“It is generally accepted that the food industry must be scientifically based to cope with the problems, particularly of public health, which arise as new processes of growing, manufacturing, packaging and preserving food depart even further from traditional ways.”