Advantages Of Value Based Management

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Value-Based Management is the organization management approach to value creation, particularly by increasing the shareholder value. In the context of competitiveness and the pressure of increasing demands on performance of the corporate, value creation should be reflecting the sustainable development as a road map to the community, customers and employees. Value-Based Management is consisting of Creating Value (ways to maximize growth and future value). This includes defining strategies for companies on both prospective near and far future. Measuring value valuation using leadership, corporate governance, communication), all these elements are very well stated changes in the company’s objectives and especially in the management of the company.…show more content…
Moreover, companies must search for an adequate level of corporate social responsibility for their future development. Most times, profitability and responsibility are in conflict, resulting in management decisions directed toward one of the two concepts. companies must be profitable to survive and big corporates need to generate at a rate of return that exceeds its cost. This rate of return should be higher than the interest obtained in the case of risk free bank deposit in order for business development to exist. Improve profitability, and consequently a good income leads to investor confidence, reflected by increasing the stock’s demand, which makes it easier to achieve long-term business goals. Such profits are not just results, but a way in which future competitiveness and prosperity occurs. Value-Based Management depends on the goals of the corporate and company values. Economic goals can be either economic (shareholders value) and may also cover the other parts (stakeholders value). The point of view of the shareholders’ value verses the value of stakeholders’ value is discussed in the economic environment for a long time, concentrating to find the best options that a company should be centered to both…show more content…
By developing technologies and services, employees represent now most of the company 's value. To motivate employees to work more closely to company interests, the existing of trust is very important. Same level of trust needs to be created with the external environment with which the company communicate or deal with. Thus the company get daily in contact with existing customer, for whom it must design loyalty based offers to keep old customers, and new promotions to attract new clients. A direct relationship and based on the trust of suppliers is a strength in business growth. Starting from timely receipt of orders and payment methods, the connection with suppliers can make a difference in a competitive economy, influenced by globalization. Finally, the company must follow closely the connection with other categories of stakeholders (government, community and environment), so direct follow up between the company and related parties will lead to increasing profitability. The link between corporate performance, value for shareholders and stakeholders may be declared by Figure 2. We propose a model for tracing the company 's performance taking into account the various types of
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