Why Is It Important to Understand the Three Principles of Social

question 51

Essay

Why is it important to understand the three principles of social network theory? As a manager,you will find your network useful to the extent that you can balance the effects of the three principles.Because of similarity,it is easier to build networks with those with whom you have various things in common,though this similarity makes the network less useful if you need new ideas or other resources not in the current group.Most personal networks are highly clustered.Because ideas generated within this type of network circulate among the same people with shared views,a potential winner can wither away and die.If a connection is formed by an information broker,your idea can be exposed to a new world.And for reciprocity to work,you have to be willing and able to trade or reciprocate favors,and this means that you might need access to other people or resources outside the current network.Medium;Knowledge

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Definitions:

Capital Structure

refers to the mix of debt and equity financing that a company uses to fund its operations and growth.

Financial Leverage

Utilizing borrowed money to amplify the potential gains from an investment, but also elevating the risk of incurring losses.

DFL

Degree of Financial Leverage; a ratio that measures the sensitivity of a company's earnings per share to fluctuations in its operating income, based on its capital structure.

EBIT

EBIT stands for Earnings Before Interest and Taxes, a measure of a firm’s profitability that excludes interest and income tax expenses.