Please enable JavaScript.
Coggle requires JavaScript to display documents.
🅱️7️⃣ & 🅱️8️⃣ (Creating value in the long-term (Shareholder value…
🅱️7️⃣ & 🅱️8️⃣
Creating value in the long-term
Shareholder value
For-front of management decisioons
Varies
Should have
More prominent role
In business objectives
Want
Financial returns
Conflict
Between
Stakeholders
Managers
Short term
Can destroy
Long-term value
Measuring issues
Short-term
not a good indicator of
Value creation
Financial reporting
Controversal
Moved away from traditional
#
To new
#
Monetary terms =
Value
Accounting term
Value = different things
Misunderstanding
Impressions of
Certainty
Objectively
Physical characteristics
Tools record objectively
Measurement choices
Historical cost accounting
HCA
Long-term returns
Fair value accounting
FVA
Actual market value
Deprival value
📖 :4️⃣ options for measuring value creation
Flawed measures of value creation
Accounting profit measures
Highly dependant
Choice of measurement method
Ignore
Risks
Changes in risk
The cost of equity capital
Accounting measurement rules
Conservatively bias
Accounting systems transaction-orientated
Accounting rules ignore
Economic value
Value changes
Can not be measures
Accuretly
Objectively
With conventional accounting measures
Not anticipated
Future
Expenditure
Revenue
Approaches: addressing the problem
Improvd, non-GAAP profit measures
Extensions of the measurement window
Market measures
Combination of measures
📖 :🔟 ways to create shareholder value
🔟 principles
4️⃣
Carry assets that only ⬆️ value
5️⃣
Return 💰to shareholders
No credible value-creating opportunities to invest in the business
3️⃣
#
Make acqusitions that ⬆️ expected value that maximise expected value
6️⃣
Reward
CEO's
Other senior execs
Delivering long-term returns
2️⃣
Make strategic decisions that ⬆️ expected value that maximise expected value
Even if at the expense of ⬇️ near-term earnings
7️⃣
Reward operating-unit execs
Adding supioror multiyear value
1️⃣
Dont manage earning
Provide earnings guidence
8️⃣
Reward
Middle managers
Frontline employees
Delivering superior performance
Key value drivers
They influence directly
9️⃣
Senior execs to bear the risk of ownership
As shareholders do
🔟
Provide value-relevant info to investors
CSV
Broader perspective
📖
Porter & Kramer , 2011
Conection between
Competitive advantage
Social issues
Programme
Benefits
Organisation
Society
Company productivity
Employee skills
Worker safety
Supliers access & viability
Environmental impact
Employee health
Water use
Energy use
Redefine productivity in the value chain
Procurement
Distribution
Resource use
Employee productivity
& logistics
#
Location
Cluster development
Drive
Productivity
Competiveness
Innovation
Capable local suppliers
Foster
Greater logistics efficiency
Ease of collaboration
Benefit
Emerf=ging economies
Advance countries
CSV differs to CSR
Capitalism: next evolution
Holds the 🔑
#
#
Unlock next wave of business innovation and growth
Reconnect
Success
Company
Community
Been lost in
Narrow management approches
Short-term thinking
Deepening divides
Shared values
#
Focus companies
Right type of profit
Move beyond CSR
Gain competivite advantage
Incorporate
Considerations
Social
Environmental
Into strategy
Significant
Treat social challenges
As susiness opportunities
Add new dimensions
Of corporate strategy
Adds to portfolio
Contributes to
Social progress
Encompass into aspects of operations
Ecosystem of CSV
Pursue financial success
Benefit society
Regain public trust
Look for economic opportunities
Societal conditions
May
Curtail markets
Ristrict productivity
Impendements
Cultural norms
Gov policies
Initiate efforts collectively
Involve all key players
NGO's
Rivals
Gov
Capture
Economic benefits
Of social progress
Contesting the value of "CSV
Strengths
CSV
Elevetes social goals to a strategic level
Articulates a clear role for Gov in responsible behaviour
Appeals to
Practitioners
Scholars
Adds rigorous ideas
"Conscious capitalism"
Provides and ☂ construct for loosely connected concepts
Waeakneses
CSV
Ingnores tensions between
Goals
Social
Economic
Naive about the challenges of business compliance
Unoriginal
Based on a shallow conception of the corporations role in society