Value Based Management

Paper Summary:

This paper examines value based management (VBM), a management philosophy that aims to achieve superior results. It looks at how the process measures performance by the value that is returned to shareholders. It discusses how successful implementation of VBM requires a successful change in corporate culture, as well as the adoption of VBM concepts at all levels and functions within an organization.

Outline
Introduction
About Value Based Management
VBM and Shareholder Value
Economic Value Added
Implementing VBM Strategies
Making Decisions with VBM Analysis

From the Paper:

"In today's market, managers of major corporations are now responsible to global capital markets. In the past, these firms did not consider themselves accountable to shareholders. The past few decades have seen vast amounts of cash flow wasted on unsuccessful diversification, needless defensive investment and pay and perquisites for managers of major corporations. However, a market for corporate control has come about in which predatory conglomerates and trade buyers seek to realize value from companies run by under-performing managers. In recent years, institutional investors have started demonstrating greater power as far as executive remuneration and corporate strategy are concerned. As a result, in today's market, there can be no doubt that it is the manager's responsibility to build value for the shareholders of the organization."

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