Value Based Management [antikvár]

Preface The Financial Management Association in conjunction with the Harvard Business School Press cosponsors the publication of the Survey and Synthesis Series in an effort to bridge the gap between financial research and the practice of finance. The subject of this book is value based management (VBM), which is the generic term for a set of management tools used to facilitate managing a firm's operations in a way that enhances shareholder value. VBM is a relatively recent innovation in financial practice that has only recently begun affecting financial research. The purpose of this book is to provide a survey of the tools and practices of VBM in a way that will be useful to academics and business practitioners alike. In a sense VBM is itself a synthesis of multiple business disciplines and subjects. From finance VBM has adopted the goal of shareholder value creation along with the acceptance of the discounted cash flow valuation paradigm. From business strategy VBM has accepted the notion that value creation is a result of investing in market niches or opportunities where the firm has some comparative advantage over current and potential competitors. From accounting VBM has adopted the basic structure of the firm's accounting statements and modified them for its own purposes. And finally, from organizational behavior VBM has adopted the notion that "what you measure and reward gets done." Thus, the VBM system constitutes a measurement and reward system designed to encourage employees to focus their activities on the creation of shareholder value. The development of VBM actually hinges upon some fundamental principles that have long been a part of the world of academic finance. First, VBM adopts as a given that value creation depends on discounted cash flow valuation concepts. Second, VBM is built upon the belief that a firm's actions are of great interest to the investing public. Thus, the manager should assume the perspective of the firm's investors when deciding how best to run the business. Business practice has evolved along two avenues. Capital budgeting practice adopted the notion of discounted future cash flow valuation. However, performance evaluation of ongoing operations for most firms continues to be based on annual accounting measures such as earnings and earnings growth. The inconsistency between these Xlll