2 Index Introduction to DSM Workshop Multinational Corporations OverviewCorporate OrganisationMarkets and BusinessesBusiness ObjectivesFinancial PolicyRevenue MaximizationFinancial Value MaximizationShareholder Value MaximizationAnnual ReportsCorporate Governance, Risk Management and Internal ControlStrategic Risk ManagementStrategyGrowth InvestingForeign Direct Investing (FDI)Economies of Scale - IntegrationAcquisitions and MergersValuation (finance)WorkshopCase AnalysisDebateCase QuestionsHow to Use Your Workshop ResourcesDisclaimerLearning ObjectivesClick on LogoSource: Wikipedia
3 Index Introduction to DSM Overview Corporate Organisation Markets and BusinessesBusiness ObjectivesFinancial PolicyRevenue MaximizationFinancial Value MaximizationShareholder Value MaximizationAnnual ReportsCorporate Governance, Risk Management and Internal ControlStrategic Risk ManagementClick on ImageSource: DSM
4 Index Business Drivers Click on Image Source: DSM Business Analysis Quantitative MethodsStrategic Business AnalysisFinancial Statements - The SystemFinancial Statements - AnalysisFinancial RatiosCorporate StrategyBusiness Strategy OverviewValue Based ManagementValue DriversBusiness EconomicsEconomic Value AddedMarket CapitalisationShareholder ValueShareholder Value AnalysisValue CreationValue Management ModelsCentralization, Decentralization and DelegationWhy Delegate?Click on ImageSource: DSM
5 Index Performance Assessment: Balanced Scorecard Performance Management FrameworkEconometricsBalanced ScorecardVision and StrategyCorporate CultureFinancialCustomerInternal BusinessLearning and GrowthMeasurement of Intellectual CapitalBusiness Value as a SystemSystems ThinkingOrganisational EffectivenessValue ChainChapter Annotated Lecture OutlineLectureChapter 18 - Annotated Lecture OutlineChapter 21 - Annotated Lecture OutlineClick on ImageSource: DSM
6 WorkshopThis workshop series is designed to compliment Teaching and Learning Strategies for undergraduate, postgraduate and executive level Strategic Management and related programmes and courses using the case studies featured in the ‘Strategy Analysis and Practice’ text.The overall aim is to support the learning contents offered in the relevant chapters of the book whilst expanding participants’ knowledge and skills base required to understand, review and analyse the decisions taken during the strategy development and implementation processes of DSM’s Vision 2005: Focus and Value agenda from
7 Workshop Strategy Analysis and Practice John McGee, Warwick Business School Howard Thomas, Warwick Business School David Wilson, Warwick Business School
8 Case AnalysisA case study is a particular method of qualitative research.Rather than using large samples and following a rigid protocol to examine a limited number of variables, case study methods involve an in-depth, longitudinal examination of a single instance or event: a case.They provide a systematic way of looking at events, collecting data, analyzing information, and reporting the results.As a result the researcher may gain a sharpened understanding of why the instance happened as it did, and what might become important to look at more extensively in future research.Click on ImageSource: DSM
9 Case AnalysisCase studies lend themselves especially to generating (rather than testing) hypotheses.The scope and relevance of case studiesTypes of case studyIllustrative case studiesExploratory case studiesCritical instance case studiesProgram implementation case studiesProgram effects case studiesCumulative case studiesBusiness school case studiesMedical case studiesHistory of the case studyConclusionsNotable case studiesReferencesSee alsoExternal linksClick on ImageSource: DSM
10 Workshop DebateWorkshop discussion topics have been divided into five parts according to the relevant chapters of the book:IntroductionBusiness AnalysisCorporate StrategyPerformance Assessment: Balanced ScorecardBusiness Value as a SystemYou should ensure that you have understood the contents of chapters 9, 18 and 21 prior to attending any of the above debates.Also see:How to Use Your Workshop ResourcesLearning ObjectivesLearning from Case Studies: A Short Guide for Students
11 Case Questions Please Note: At your instructor’s discretion the indicative questions below and elsewhere in this resource may be varied or deemed unnecessary for teaching and learning purposes for some courses or modules.Identify DSM’s key performance indicators and evaluate their the corporate strategic performance.What should DSM do if a business group did not meet its contract, given DSM’s historical culture of tolerance for mediocre performance?Finally, there were some more fundamental questions. Implementing the new financial metrics had led to greater emphasis on short-term performance. DSM felt that this short-term focus could be hazardous for a specialty company that heavily depended on innovation and R&D.
12 Case QuestionsFor example, in 2000 one of DSM’s most successful and profitable product was Stanyl, a product which had been 10 years in development, with negative EPs throughout all those years.How would these kinds of investment project be handled under the new approach?Also see Learning Using Case Studies for further informationAlso see A Model for Case Analysis and Problem Solving
13 How to Use Your Workshop Resources ViewingYou will need either MS PowerPoint program or PowerPoint Viewer installed on your computer. The latter may be downloaded free from Microsoft website here.NavigationThe Learning Contents (Literature Reviews) are linked to a relevant public domain on the Internet.Most, if not all pictures/images are ‘clickable’, i.e. linked to its source which provides further information on the topic or the copyright holder.
14 How to Use Your Workshop Resources If your version of PowerPoint does not show navigation buttons on the slide, right click on the screen and select your destination from the dialogue box. Alternatively use the small arrowheads, indicating ‘previous’ and ‘next’.
15 DisclaimerThis information is provided with the understanding that the authors and publishers do not assume any legal responsibility for the completeness or accuracy of the contents or any opinions or views expressed on these pages or linked destination sources.It is the nature of the media (Internet) that some of the pages may not always be available due to broken or dead links, withdrawals, etc. Whilst the publishers will be pleased to take any appropriate corrective action, for example, by replacing or removing the sources when possible, they unable to assume any legal responsibility for unavailability of any third party material for whatever reason beyond their direct control.
16 Learning ObjectivesThe main objective of the workshop is to evaluate DSM’s corporate strategic planning process and outcomes and their impact on the company’s business level operations.Participants will have an opportunity of developing and enhancing theirstrategic thinking and internet research skillsanalytical and critical thinking skills by reviewing the factors that influenced corporate centre's decisions on the businesses in their portfoliosunderstanding of distinction between scale and scope and implications that these concepts have for adding value in multi-business firms
17 Learning Objectivesawareness of the links between strategy and organizational structure and the way organizational structures have changed over timeskills to analyse and critically evaluate the different factors that can add value in multi-business firmsknowledge and understanding of the empirical research findings of work which has examined the links between strategy and performance in multi-business corporationsknowledge and understanding of a range of performance measures and the concepts of “shareholder value” and “economic value-added” and their linkage to the strategy process
18 Learning Objectivesunderstanding of the notion of a “balanced scorecard” and the ways in which this framework can be used to manage valueunderstanding of the importance of the performance feedback loop for assessing and making strategic choicesunderstand of the strategic systems perspective and the way in which this can be used to build an holistic picture of strategy context, content and processunderstanding of stakeholder theory and be able to apply this framework to gain insight into strategic issues in a range of organizationsability to identify a range of challenges facing organizations in the future and explain the ways in which a strategic systems approach can help managers to think and act strategically
19 Introduction to DSM Overview Multinational Corporations Corporate OrganisationBusiness ObjectivesStrategyCorporate Governance, Risk Management and Internal ControlSource: DSM
20 OverviewCompanyNameHistoryProductsDataClick on ImageSource: DSM
21 OverviewDSM (in full Koninklijke DSM N.V., or Royal DSM N.V.) is a multinational chemicals company. Its headquarters are in Heerlen, the Netherlands. Originally a state-owned coal mining company (Dutch State Mines/De Staats Mijnen).Click on ImageSource: Wikipedia
22 OverviewNameThe name DSM is actually derived from the English language, it is the acronym of the translation of the Dutch name; De Nederlandse Staatmijnen translated into Dutch State Mines (DSM). This company was regularly in the news in the late 1960's, because of the dutch government's decision to close all the (state)mines. In 1973, after the last mine was closed, the company decided to carry the acronym as its name.Click on ImageSource: Wikipedia
23 OverviewHistoryDSM was established in 1902 as a coal mining company. Through the years the company focused not only on mining, but also on the chemical sector. Due to the closure of all the mines and the unemployment that followed, the dutch government stimulated the chemical plants, to provide jobs for the miners.In 1989 DSM was privatized, and started its first sale of the company's common shares to public investors. In 2002 the company sold their petrochemical division (the naphtha crackers) to Sabic of Saudi Arabia.Click on ImageSource: Collection D.Visser
24 OverviewProductsIndustrial chemicals (e.g. feedstocks for plastics producers)Performance materials (e.g. automotive plastics, resins, elastomers)Life science products (e.g. antibiotics, food specialties)Nutritional products (e.g. vitamins)Click on ImageSource: Wikipedia
25 OverviewDataDSM has about 24 thousand employees, in a.o. the Netherlands, Sweden, the United States, Switzerland, Austria, Belgium, the United Kingdom, Canada, Brazil, Germany, Italy, Spain and Australia. DSM has a total of 270 production locations and offices worldwide and achieved a turnover of 7.7 billion Euros in 2004, with a net profit of 262 million Euros.
26 Multinational Corporations A multinational corporation (MNC) or multinational enterprise (MNE) or transnational corporation (TNC) is a corporation/enterprise that manages production establishments or delivers services in at least two countries.Annual Report on the Guidelines for Multinational Enterprises The 2005 edition includes a special focus on corporate responsibility in the developing worldCritiquesExamplesIn fictionSee alsoFostering Growth and Promoting a Responsible Market Economy - A G8 Declaration
27 Multinational Corporations Multinational corporations (MNC) are often divided into three broad groups:Horizontally integrated multinational corporations manage production establishments located in different countries to produce same or similar products.Vertically integrated multinational corporations manage production establishment in certain country/countries to produce products that serve as input to its production establishments in other country/countries.Diversified multinational corporations manage production establishments located in different countries that are neither horizontally or vertically integrated.
28 Multinational Corporations Multinationals have played an important role in globalization. Given their international reach and mobility, prospective countries, and sometimes regions within countries, must compete with each other to have MNCs locate their facilities (and subsequent tax revenue, employment, and economic activity) within.To compete, countries and regional political districts offer incentives to MNCs such as tax breaks, pledges of governmental assistance or improved infrastructure, or lax environmental and labour standards. This process of becoming more attractive to foreign investment can be characterized as a race to the bottom.
29 Corporate Organisation Overview of activitiesThe activities of DSM are grouped into four clusters: Nutrition, Pharma, Performance Materials and Industrial Chemicals.DSM is active worldwide. The company creates innovative products and services that help improve the quality of life. More ...Corporate movieDSM has created a unique movie which introduces you to a few examples of our key products and explains the benefits that they bring to people around the world.20052000Source: DSM
30 Corporate Organisation DSM had a decentralized organizational structure bult around 15 business groups (consisting of various business units) that were empowered to execute all business functions.Larger ImageSource: healthallianze.co.nz
32 Business Objectives Shareholder Value Growth Sales 60% > €10 billion by 2005Specialty Products 80%Industrial 20%Financial TargetsFinancial ValueMarket CapitalisationLarger MapClick on ImageImage by BizEd
34 Financial Policy Objectives Key Financial Data Given the dynamic nature of DSM’s markets, it has always been important for the company to have a strong financial position. This gives DSM the financial resilience to continue pursuing its strategic goals even during economic downturns.DSM aims for a net debt which is less than 40% of group equity plus net debt and an operating profit before amortization and depreciation (EBITDA) which is at least 8.5 times the balance of financial income and expense. This underlines the company's aim of maintaining its ’A’ long-term credit rating. DSM aims to achieve a cash flow return on investment (CFROI) which is higher than the weighted average cost of capital (WACC).Key Financial DataClick on ImageSource: DSM
35 Shareholder Value Maximization Creating and managing shareholder valueShareholder valueDefinitionShareholder Value MaximizationCriticismAlternative Definition based upon Criticism: Stakeholder AnalysisAlso see Value Based ManagementSource: Shareholdervalue.com
36 Financial Value Maximization Larger ImageClick on ImageSource: Return Driven Strategy
37 Financial Value Maximization Stock (Share) ValuationFundamental criteria (fair value)Market criteria (potential price)See alsoExternal linksReturn on InvestmentCalculationsArithmetic returnLogarithmic returnExamples of high yielding investmentsSee alsoExternal linksClick on ImageSource:UserStrategy.com
38 Financial Value Maximization Discounted Cash FlowDCF Analysis: IntroductionDCF Analysis: The Forecast Period & Forecasting Revenue GrowthDCF Analysis: Forecasting Free Cash FlowsDCF Analysis: Calculating The Discount RateDCF Analysis: Coming Up With A Fair ValueDCF Analysis: Pros & Cons Of DCFDCF Analysis: Conclusion
39 Financial Value Maximization Cash Value Added - CVAThe difference between the operating cash flow that a company demands and the operating cash flow it generates. Operating cash flow demanded is the cash the company requires to meet its business costs within a given period. Operating cash flow generated is all of the cash that a business generates through sales and investments without any reductions for non-cash expenses such as depreciation, amortization, deferred interest expenses and so on. Larger ImageSource: Metapraxis
40 Internal Rate of Return The internal rate of return (IRR) is defined as the discount rate that gives a net present value (NPV) of zero. The NPV is calculated from an annualized cash flow by discounting all future amounts to the present.Source: WikipediaLarger ImageClick on ImageSource: Baarns Consulting Group
41 DivestmentIn finance and economics, divestment or divestiture is the reduction of some kind of asset, for either financial or social goals. A divestment is the opposite of an investment.Divestment for financial goalsDivestment for social goalsCriticisms of divestment for social goalsExternal linksSee alsoLarger ImageClick on ImageSource: Accenture
42 Annual Reports Key Financial Data 2005 2000 Financial Statement Report by the Managing BoardReview of businessReport by the Supervisory Board to the shareholdersInformation about the DSM ShareClick on ImageSource: DSMSource: DSM
43 Corporate Governance, Risk Management and Internal Control The Dutch Corporate Governance Code prescribes that quite a number of documents relating to Corporate Governance should be published on the company's website. We gladly adhere to this practice in order to inform our stakeholders and other interested parties of the way our company has embedded its Corporate Governance policies. Here you can find that DSM is applying all 113 Best Practices of this code with one exception.Also see DSM managed in a controlled, consistent and balanced way, World Economic ForumAlso see Value Maximization, Stakeholder Theory, and the Corporate Objective Function2005Click on ImageSource: DSM
44 Strategic Risk Management “Despite growing sensitivity to shareholder value, most VBM initiatives fail. They simply fail to be integrated into day-to-day decision-making.This is not a new insight. Several advisors, including our former colleagues, recommend compelling behavioral change through incentives. Others, including ourselves, weave the concepts of free cash flow and Economic Value Added into corporate strategy, by making EVA ®-based targets a vital part of long-term planning. Both initiatives add value. Yet they sometimes just scratch the surface.”Shareholdervalue.comClick on ImageSource: Shareholdervalue.com
45 Financial Risk What is Financial Risk? Measuring Market Risk Interest-Rate RiskLiquidity RiskCredit RiskValue at RiskDetails of the definitionExampleCommon VaR calculation modelsCaveatsFurther readingExternal linksLarger ImageClick on ImageSource: Danmarks Nationalbank
46 Strategy Vision 2005: Focus and Value Growth Market Capitalisation DiversificationDivestmentGrowthAcquisitions and Mergers 50%Foreign Direct InvestmentOrganic Growth 6% p.a.International TradeMarket CapitalisationClick on ImageSource: netg.com
47 Growth Investing Organic Growth Organic Growth Growth investing is a style of investment strategy. Those who follow this style, known as growth investors, invest in companies that exhibit signs of above-average growth, even if the share price appears expensive in terms of metrics such as price-to-earning or price-to-book ratios. In typical usage, the term "growth investing" contrasts with the strategy known as value investing. However, some notable investors such as Warren Buffett have stated that there is no theoretical difference between the concepts of value and growth when considering ("Growth and Value Investing are joined at the hip"). Indeed, when just investing in one style of stocks, diversification could be negatively impacted.Organic GrowthOrganic growth is the rate of business expansion through increasing output and sales as opposed to mergers, acquisitions and take-overs.Organic Growth
48 International TradeInternational trade is the exchange of goods and services across international boundaries or territories. In most countries, it represents a significant share of GDP. While international trade has been present throughout much of history (see Silk Road, Amber Road), its economic, social, and political importance has been on the rise in recent centuries. Industrialization, advanced transportation, globalization, multinational corporations, and outsourcing are all having a major impact. Increasing international trade is the usually primary meaning of "globalization".
49 International Trade International trade theory Ricardian modelHeckscher-Ohlin modelSpecific FactorsGravity modelRegulation of international tradeRisks in international tradeEconomic risksPolitical risksSee alsoExternal linksDataClick on ImageSource: HSBC Bank plc
50 Growth Investing Foreign Direct Investment Foreign direct investment (FDI) is the movement of capital across national frontiers in a manner that grants the investor control over the acquired asset. Thus it is distinct from portfolio investment which may cross borders, but does not offer such control. Firms which source FDI are known as ‘multinational enterprises’ (MNEs). In this case control is defined as owning 10% or greater of the ordinary shares of an incorporated firm, having 10% or more of the voting power for an unincorporated firm or development of a greenfield branch plant that is a permanent establishment of the originating firm.Click on ImageSource: The Globalist
51 Foreign Direct Investment Policies to Attract Foreign Direct InvestmentDoing BusinessDirect Investment is Primary Strategy to Access Foreign MarketsChina and India Jockey for the Top Most Attractive Foreign Direct Investment Destination GloballyWorld Economic ForumBusiness StrategyCompetitivenessClick on ImageSource: University of Michigan Library
52 Economies of Scale - Integration This occurs when two firms join together to form one new company. Integration can be voluntary (a merger) or forced (a takeover). The figure below shows the three main types of integration.Click on ImageSource: BizEd, University of Bristol
53 Acquisitions and Mergers Financing M&AMergerAcquisitionHigh-yieldExamplesMotives behind M&AM&A and Investment BankingM&A Marketplace DifficultiesLevels and flowsClassifications of mergersIssuesWorld Economic ForumClick on ImageSource: George & CoAlso see Value Drivers
54 Valuation (finance) Valuation Valuation of companies (business valuation)Valuation using discounted cash flowsValuation using multiplesUsageAsset pricing modelsRelated MaterialClick on ImageSource: George & Co
55 Business Drivers Also see Business Prophet - C.K. Prahalad Insights and Opportunities: Transforming Procurement Capabilities in AsiaEconomic Value AddedLarger ImageSource: Metapraxis
56 Business Analysis Benefits of Business Analysis Roles of Business AnalystsBusiness Process ImprovementGoal of Business AnalystsExternal LinksAlso seeQuantitative MethodsStrategic Business AnalysisFinancial StatementsQuantitative MethodFrom Wikipedia, the free encyclopediaLarger ImageClick on ImageSource: BizEd
57 Quantitative Methods Quants Handbook Lecture 1: Functions & Economic RelationshipsLecture 2: Economic Models/Linear ModelsLecture 3: Basic Differential CalculusLecture 4: OptimisationLecture 5: Functions of Several VariablesLecture 6: Unconstrained OptimisationLecture 7: Constrained OptimisationLecture 8: Growth & DynamicsLecture 9: Introduction to Difference EquationsSource: Bob BeachillLeeds Metropolitan UniversityClick on ImageSource: Brian C. McCarthy Ohio University
58 Strategic Business Analysis SWOT AnalysisPEST market analysis toolPorter's Five Forces ModelValue ChainManaging Your Value ChainResources and CapabilitiesOrganisational CapabilitiesFinancial AnalysisLarger ImageClick on ImageSource: Wikipedia
59 Financial Statements: The System Larger ImageLarger ImageClick on ImagesSource: Investopedia.com
61 Financial RatiosA financial ratio is a ratio of two numbers of reported levels or flows of a company. It may be two financial flows categories divided by each other (profit margin, profit/revenue). It may be a level divided by a financial flow (price/earnings). It may be a flow divided by a level (return on equity or earnings/equity). The numerator or denominator may itself be a ratio (PEG ratio).RatiosFlow-to-flowLevel-to-levelRatio-to-ratioTo cash flowTo earningsTo market capSee alsoExternal linksLarger ImageDownload Financial Ratio Analysis (177K) for Microsoft Excel.Source: Baarns Consulting Group
62 Click on Image for further information Corporate StrategySynergyLiterature ReviewsStrategic ManagementBusiness StrategyValue Based ManagementValue CreationValue Management ModelsCentralization and Decentralization and DelegationCorporate Social ResponsibilityFinancial HighlightsImage by The Knowledge Management AdvantageClick on Image for further informationAlso see Annotated Lecture Outline
63 Performance Assessment Literature ReviewsPerformance Management FrameworkEconometricsBalanced ScorecardVision and StrategyCorporate CultureFinancialCustomerInternal BusinessLearning and GrowthFeedbackMeasurement of Intellectual CapitalImage by TPGClick on Image for further informationAlso see Annotated Lecture Outline
64 Business Value as a System Literature ReviewsSystems ThinkingOrganisational EffectivenessValue ChainStakeholder TheoryTheory of ConstraintsClick on Image byAndersen ConsultingAlso see Annotated Lecture Outline
65 Business Strategy Overview Larger MapSource: BizEd, University of BristolClick on image for further information
66 Value Based Management Managing for ValueSource: Dresden International UniversityClick on Image for further informationSource: FDC
67 Value Drivers Your Customer Base Recurring RevenueProduct IntegrationGross MarginIntellectual PropertyHuman CapitalManagement Experience and ExpertiseGeneral Administrative LeverageDistribution LeverageHistory/Reputation and Operating TenureSales and Marketing EffectivenessBarriers to Competitive Entry/DifferentiationTwelve Value Drivers FOCUS has developed a unique tool that is proven to help ensure the success of your transaction. For buyers and sellers alike, the key to achieving successful M&A transactions is to identify the value components or Value Drivers of the transaction and then to make certain a plan is in place to integrate these components at the least cost.12 VALUE DRIVERS: Self Assessment Scorecard
68 Value DriversCrucial organisational capabilities, giving the firm competitive advantage. Different from Rappaport value drivers. Life Style Extrasales growth rate,operating profit marginincome tax rate,incremental investment in working capital,incremental investment in fixed capital,replacement of fixed capital,cost of financing (cost of capital)forecast duration (the planning period).Larger ImageClick on ImageSource: The Segal Group, IncTurner, R. (1998). Projects for Shareholder Value: The Influence of Project Performance Parameters at different Financial Ratios. Project Management, 4(1),
70 Business EconomicsLarger MapSource: BizEd, University of Bristol
71 Business EconomicsEconomics, which focuses on measurable variables, is broadly divided into two main branches: microeconomics, which deals with individual agents, such as households and businesses, and macroeconomics, which considers the economy as a whole, in which case it considers aggregate supply and demand for money, capital and commodities. Aspects receiving particular attention in economics are resource allocation, production, distribution, trade, and competition. Economic logic is increasingly applied to any problem that involves choice under scarcity or determining economic value. Click on Images for further information.EconomicsSource: Wikipedia
72 Economic Value Added What Does Economic Value Added Really Mean? Click on Images for further informationSource: David Harper, (Contributing Editor - Investopedia Advisor)Larger Image
74 Value Management Models Larger ImageSource: performgroupClick on image for further informationLarger ImageClick on ImageSource: Realisation
75 Value Management Models - Six Sigma Six Sigma was pioneered by Bill Smith at Motorola in 1986. Originally, it was defined as a metric for measuring defects and improving quality; and a methodology to reduce defect levels below 3.4 Defects Per (one) Million Opportunities (DPMO). Six Sigma is a registered service mark and trademark of Motorola, Inc. Motorola has reported over US$17 billion savings from Six Sigma to date.AlliedSignal and GE became early adopters of Six Sigma and reported benefits of over US$300 million during its first year of application. Their CEO's, Larry Bossidy and Jack Welch, played a vital role in popularizing Six Sigma. Other major organizations who claim to have benefited from Six Sigma implementation are Ford, Caterpillar, Microsoft, Raytheon, Quest Diagnostics, Seagate Technology, Siemens, Merrill Lynch, Lear, 3M and many more.Click on ImageSource: KETCH.ca
76 Value Management Models - Six Sigma DefinitionApplication & SuccessHealthcareBankingInsuranceConstructionMilitaryMethodologyDMAICDMADVRoles Required for ImplementationExamples of Some Key Tools UsedCriticisms of Six SigmaOf its originOf the term: Six SigmaOf statisticsOf methodsOf effectsReferencesSee alsoExternal linksClick on ImageSource: QCI International. All rights reserved.
77 Value Management Models - Value Chain Source: Themanager.orgClick on images for further information
78 Shareholder Value What is Shareholder Value? What Drives Shareholder Value?Shareholder Value AnalysisLarger ImageSource: Accenture
79 Shareholder Value Analysis Larger ImageSource: agility.com.auRediscovering Shareholder Value: A Proven ApproachHow to Build Value into a MergerShareholder Value Tool
80 Market Capitalisation Valuation"Float"Categorization of companies by market capExamplesLevelsSee alsoListsExternal linksDataClick on ImageSource:
81 Centralization, Decentralization and Delegation Advantages of CentralizationClose control of operationsUniformity of policies, practices, and proceduresBetter use of centralized expertsAdvantages of DecentralizationFaster decision-makingDecision better adapted to local conditionBetter management experience for managers that are considered for promotion to higher level managementClick on ImageCopyright: Cornell University
82 Why Delegate?At a certain point, there are just too many facets to running a successful business to continue doing it alone.In an increasingly complex business environment, with all the trends affecting business today, such as globalization, the information technology explosion, strategic alliances, increased mergers and acquisitions, heightened competition, and higher expectations of nearly every customer, it just isn't possible to still be that one person in control of everything. Bringing in others to manage is an absolute necessity for survival now.Source:
83 Performance Management Framework HistoryWhat is BPM?Metrics / Key Performance IndicatorsApplication software typesDesigning and implementing a business performance management programmeVendorsSee alsoPerformance Management: Making it Work: Achieving the Right Value BalanceAdvocating ProductivityLarger ImageClick on ImageSource: SourceMedia and DM Review
84 EconometricsEconometrics literally means 'economic measurement'. It is a combination of mathematical economics, statistics, economic statistics and economic theory.Undergraduate EconometricsGraduate EconometricsOnline Resources for Econometric StudentsClick on ImageSource: econ101.com
85 Balanced Scorecard Literature Reviews Balanced Scorecard A comprehensive view of business performancePublic sector Balanced ScorecardPurpose of the Balanced ScorecardEvolution of the Balanced ScorecardSee alsoReferencesBalanced ScorecardClick on Image by PA Consulting Group
86 Vision and Strategy Organization's Vision Mission Statement People sometimes say that it is pointless to develop a sense of purpose for a company. There already is a purpose: "To maximize return on investment to shareholders." Obviously, making money is important. But to confuse the essential requirement for advancing in the game with the deeper rationale, is a profound confusion. Focusing on the purpose of making money at the expense of other purposes, will naturally distract an organization's competitive advantage." (P. Senge)Click on ImageSource: Psylon
87 Corporate Culture Influences on organizational culture Strong/Weak culturesClassifying organizational cultureHofstedeDeal and KennedyCharles HandyEdgar ScheinElements of cultureCritical Views on Organizational CultureFigures in Organizational CultureSee alsoSourcesImage by Matsushita Electric Industrial Co. Ltd.
88 Financial Finance Examples of some basic financial concepts Business financeFinance of statesFinancial economicsFinancial mathematicsFinancial analysisSee alsoExternal linksClick on ImageSource: PPARC
89 Customer Types of Customers Needs and Expectations The Loyalty Effect Larger ImageClick on ImageSource: Forward Analytics
90 Internal Business Stakeholder Stakeholder view Common usage Examples of common stakeholdersShareholder Concept - Maximising Shareholder WealthStakeholder Concept - A Wider Range of ObjectivesSee alsoExternal linksLarger ImageClick on Image for further information
91 Learning and Growth Learning Organization What was intended! Feedback TaxonomyRoles and flowsChallenging assumptionsAccountingLarger ImageClick on Image for further information
92 Training and Development Systematic strategiesMeasuring the return on investment of your training programs, beyond the classroom and the bottom line, creates a learning environment that can make any company strongerReturn on InvestmentSource: Managementmag.com
93 FeedbackIn cybernetics and control theory, feedback is a process whereby some proportion or in general, function, of the output signal of a system is passed (fed back) to the input. Often this is done intentionally, in order to control the dynamic behaviour of the system. Feedback is observed or used in various areas dealing with complex systems, such as engineering, architecture, economics, and biology.Click on ImageSource: Vensim
94 Feedback Types of feedback In electronic engineering In mechanical engineeringIn economics and financeIn natureIn organizationsIn gamingSourcesSee alsoClimate Feedback LoopSource: geocomplexity.net
95 Measurement of Intellectual Capital The Structure of Intellectual CapitalWhy Care about ICTracking ICMeasurement of ICRelated ArticlesIntellectual Property Gaining Protection in the Muslim WorldIntellectual Property Rights in IslamResourcesSource: QuantAA
96 Systems ThinkingSystems thinking involves the use of various techniques to study systems of many kinds. It includes studying things in a holistic way, rather than through purely reductionist techniques. It aims to gain insights into the whole by understanding the linkages and interactions between the elements that comprise the whole "system". Systems thinking can help avoid the silo effect, where a lack of organizational communication can cause a change in one area of a system to adversely affect another area of the system.Why use systems thinking techniques?What is a system?ExamplesMethodologiesApplicationsSee alsoBibliographyExternal linksClick on ImageSource: systems-thinking.org
97 Organisational Effectiveness The external environment and shareholder value expectationsBusiness StrategyBuilding leadership and management capabilityAchieving strategic readiness of intangible assetsStrategic success measuresCultureLarger ImageClick on ImageSource: Perform Group
98 Value Chain The Hidden Costs of a Forgotten Business System Larger ImageClick on ImageSource: Expert Views, Inc.
99 Stakeholder TheoryAs originally detailed by R. E. Freeman (1984), stakeholder theory attempts to ascertain which groups are stakeholders in a corporation and thus deserve management attention. In short, it attempts to address the "Principle of Who or What Really Counts."Click on ImageSource: San Diego University
100 Theory of ConstraintsTheory of Constraints (TOC) is a body of knowledge on the effective management of (mainly business) organizations, as systems. The author is Eliyahu M. Goldratt, with many others contributing to the body of knowledge.Theory of Constraints SummaryLarger ImageClick on ImageSource: de.lge.com
101 Theory of Constraints The thinking process (TP) Throughput Accounting Application-specific TOC solutionsOperationsSupply Chain / LogisticsFinance and AccountingProject ManagementMarketing and SalesThe Six Necessary and Sufficient Questions relating to TechnologyDevelopment and practiceAlso SeeReferencesLarger ImageClick on ImageSource: Osaka Gakuin University
102 Corporate Strategy Lecture Outline 1/4 IntroductionThe move from a focus on competitive strategy to a focus on corporate strategy. A discussion of the growth in multi-business firms with illustrative examplesSlide: Definition of corporate strategy.Click on Image for further information
103 Corporate Strategy Lecture Outline 2/4 Changes in Organisational Structures over TimeAn explanation of the ways in which organizational structures have evolved and developed over time and a discussion of the advantages and disadvantages of U versus M forms of organization.Slide: Figure 9.2 plus bullet points outlining strengths and weaknesses of this form of organizationSlide: Figure 9.3 bullet points outlining strengths and weaknesses of this form of organizationClick on Image for further information
104 Corporate Strategy Lecture Outline 3/4 Strategy and StructureA discussion of the two-way relationship between strategy and structure and Alfred Chandler’s work. A consideration of the questions raised by the rise of M forms of organizationSlide: Bullet points of issues (page 343)Managing the Multi-business Firm 1: The Corporate-Business InterfaceAn introduction to issues of business unit boundaries, groupings of businesses and headquarter/business unit relationships. An exposition of common corporate-business interface styles.Slide: Bullet points relating to three different styles (p.347)Managing the Multi-business Firm 2: The Role of the Corporate HeadquartersAn explanation of the different ways in which the centre can add value and a description of Gold and Campbell’s work on parenting stylesSlide: Figure 9.7Slide: Figure 9.8
105 Corporate Strategy Lecture Outline 4/4 Managing the Multi-business Firm 3: Managing the PortfolioA brief review of portfolio models such as the familiar BCG matrix plus an explanation of the limitations of these models and the reasons why they are no longer popular.Slide: Figure 9.9Evidence and ExperienceA brief review of the finding of some of the empirical work in the area, emphasizing the difficult of measuring relatednessSlide: bullet points on concept of ‘relatedness’Concluding CommentsLink back to the resource-based view highlighting the connection between core competences and relatedness. A summary of the key tensions in managing portfolio businesses including centralization v decentralization, vertical v horizontal focus and co-operation v competition.
106 Performance Assessment 1/5 LectureIntroduction - placing this set of lectures in context by explaining the links between value creation and capture and strategic management. An explanation of the central importance of performance assessment and feedback in the strategy process.Slide: Figure 1.6The Domain of Business Performance - a brief review of some of the different domain’s business performance emphasizing the distinction between operational, financial and effectiveness measures.Slide: Figure 18.1
107 Performance Assessment 2/5 Concepts of Value - an exposition of some alternative concepts of value and related performance measures including accounting, economic value-added and shareholder based approaches. Students may have covered some of these concepts in greater depth on other modules so it may be necessary for the lecturer to refer to work undertaken in other modules.Slide: Concepts of Value and performance management: bullet point list of sub-headings from pagesThe link between shareholder value and business models - an explanation of Yip's characterisation of business models and the way this links with 'value-based' management techniques. Undergraduate lecturers may select to omit this section.Slide: Figure 18.2
108 Performance Assessment 3/5 The Balanced Scorecard - an introduction to the balanced scorecard framework and a discussion of its economic value-added (EVA) and shareholder value added (SVA) roots. A discussion of the basic building blocks of the models and the way measures are derived.Slide: Figure 18.3The Balanced Scorecard as a Strategic Management System - linking the balanced scorecard to the strategy concepts, including key success factors, to provide an overall map.Slide: Figure 18.4Larger ImageClick on Image for further information
109 Performance Assessment 4/5 The Strategic Management System in Practice - a discussion of the roles and responsibilities of the senior management team in the light of the links between the balanced scorecard and the strategic management system.This could include a discussion of the advantages and disadvantages of linking the top team's performance to balanced scorecard outcomes.Slide: Figure 18.5Click on Image for further information
110 Performance Assessment 5/5 Concluding Comments - a recap on how the building blocks that have been constructed in previous lectures can be brought together through the use of value-based management techniques such as the balanced scorecard.The lecture could conclude with a return to the emergent versus planned strategy debate, a theme throughout the module, by discussing the role of performance feedback in the strategy process.Larger ImageClick on Image for further information
111 Business Value as a System 1/5 LectureIntroduction - the aim of this lecture is to pull together a number of themes that have emerged throughout the course. Emphasis is placed on an integrated, systems view of strategy. Lecturers may choose to introduce some systems theory concepts such as but this is optional.The main point is to show how prior lectures have acted as a series of building blocks to build a view of the organization as part of an integrated web of relationships.Slide: Figure 21.1Click on Image for further information
112 Business Value as a System 2/5 Stakeholder Theory - The concept of the organization at the heart of an intricate web of relationships leads naturally to a discussion about stakeholders.The main elements of stakeholder theory need to be explained but again the emphasis in this final lecture should be on the firm as a locus of contacts and contracts. Lecturers may choose to allude to learning theories at this point, showing how learning allows the firm to adapt to change within its network.Slide: Table 21.2 p783Larger ImageClick on Image for further information
113 Business Value as a System 3/5 Creating Value for Whom? - Once the firm is viewed from a stakeholder perspective, the next question becomes whose interests do the firm serve? Much of the traditional strategy literature takes for granted that shareholders have primacy and the main goal of business organizations is to maximize shareholder value.Once the existence of multiple stakeholders is recognized then it makes sense to look to a wider set of objectives, including corporate social responsibility i.e. themes that have been developed in earlier sessions.Slide: Bullet points in two columns list main principles of shareholder and CSR perspectives (taken from page 786)Larger ImageClick on Image for further information
114 Business Value as a System 4/5 Creating and Capturing Value - the authors argue that the integration of a strategic systems approach with the goal of maximizing shareholder value offers the best practical insight into managing a business.Lecturers may agree or disagree but, whatever viewpoints are adopted, the main purpose of this session is to draw together key themes from prior lectures and to show how the pieces fit together.The key messages of the text are that strategy is highly context specific and that competitive advantage most commonly lies in the space where strategy and practice meet. Intangible assets are of vital importance to the attainment of competitive success and reputation and image and identity are particularly important elements within the resource portfolio.Slide: Pulling it Together: The Example of HP - bullet points drawn from top of page 788
115 Business Value as a System 5/5 Concluding Comments - lecturers will want to give this last session their own flavour but may care to use Sundaram and Inkpen (2004) quote 'All of us seek a path to a promised land in which accountable firms managed by ethical decision-makers create the greatest value for the greatest number of stakeholders' and weave their own critical argument around this theme.
Your consent to our cookies if you continue to use this website.