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    Strategies For Value Creation: Costin Ciora - Business Strategy & Analysis

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    Natalia Matu
    The document discusses strategies for creating value. It presents several methods and tools for calculating and maximizing value in the long term, including value-based management, value creation, and value contribution. Specific indicators are presented for measuring value creation, such as economic profit, economic value added (EVA), market value added, total shareholders return, and cash value added. EVA is defined as invested capital multiplied by the difference between return on investment and cost of capital. The document provides examples of how to calculate EVA and its components.

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    Strategies For Value Creation: Costin Ciora - Business Strategy & Analysis

    Uploaded by

    Natalia Matu
    37 views15 pages
    The document discusses strategies for creating value. It presents several methods and tools for calculating and maximizing value in the long term, including value-based management, value creation, and value contribution. Specific indicators are presented for measuring value creation, such as economic profit, economic value added (EVA), market value added, total shareholders return, and cash value added. EVA is defined as invested capital multiplied by the difference between return on investment and cost of capital. The document provides examples of how to calculate EVA and its components.

    Original Title

    Lecture 11&12r

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    The document discusses strategies for creating value. It presents several methods and tools for calculating and maximizing value in the long term, including value-based management, value creation, and value contribution. Specific indicators are presented for measuring value creation, such as economic profit, economic value added (EVA), market value added, total shareholders return, and cash value added. EVA is defined as invested capital multiplied by the difference between return on investment and cost of capital. The document provides examples of how to calculate EVA and its components.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    37 views15 pages

    Strategies For Value Creation: Costin Ciora - Business Strategy & Analysis

    Uploaded by

    Natalia Matu
    The document discusses strategies for creating value. It presents several methods and tools for calculating and maximizing value in the long term, including value-based management, value creation, and value contribution. Specific indicators are presented for measuring value creation, such as economic profit, economic value added (EVA), market value added, total shareholders return, and cash value added. EVA is defined as invested capital multiplied by the difference between return on investment and cost of capital. The document provides examples of how to calculate EVA and its components.

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    You are on page 1of 15

    Lecture 11

    Strategies for value creation

    Costin Ciora - Business Strategy & Analysis 1


    Value creation

    Costin Ciora - Business Strategy & Analysis 2


    • Maximizing value on the long
    Value creation
    term

    Value based
    management
    Calculating
    created
    • Governance value
    • Change management
    • Leadership
    • Specific methods and tools

    Costin Ciora - Business Strategy & Analysis 3


    Applying Value-Based Management

    Value – based Value Value


    management creation contribution

    Costin Ciora - Business Strategy & Analysis 4


    Questions ?

    5
    Indicators for value creation
    measurement
    Economic Profit - Alfred Marshall (1890)

    EVA –Economic Value Added– Bennet Stewart ( Trademark of Stern


    Stewart)

    MVA –Market value added- Stern Stewart

    TSR –Total Shareholders Return- Boston Consulting Group

    CVA –Cash Value Added - Boston Consulting Group

    CFROI – Cash-Flow Return on Investment–Holt Value

    EVA Momentum - Bennet Stewart (Trademark of EVA Dimensions)

    WAOK –Wealth Added on Capital model developed by Costin Ciora

    Costin Ciora - Business Strategy & Analysis 6


    EVA – Economic Value Added
    EVA = Invested capital x (Return on Investment – Cost of capital)

    EVA-
    Economic
    Value Added

    Operating
    profit after
    tax
    Cost of
    capital

    7
    EVA – Economic Value Added
    EVA = Invested capital x (Return on Investment – Cost of capital)

    Invested capital = Shareholders’ EQUITY + Financial DEBT

    Return on Investment (%) = Operating profit after tax/Invested capital x 100

    Cost of Capital - a weighted average of the cost of equity and cost of debt

    8
    9
    10
    Source: Harvard Business School, Institute for Strategy & Competitiveness,
    http://www.isc.hbs.edu/creating-shared-value
    Source: Harvard Business School, Institute for Strategy & Competitiveness,
    http://www.isc.hbs.edu/creating-shared-value
    How to create Shared Value Opportunities

    1. By reconceiving needs, products, & customers


    – Meeting societal needs through products
    – Serving unserved or underserved customers

    2. By redefining productivity in the value chain


    – Utilizing resources, energy, suppliers, logistics, and employees
    differently

    3. By improving the local and regional business environment


    – Improving skills, the supplier base, the regulatory environment,
    and the supporting institutions that affect the business
    – Strengthening the cluster on which the company depends

    Source: Harvard Business School, Institute for Strategy & Competitiveness,


    http://www.isc.hbs.edu/creating-shared-value
    References
    • ACCA P3 – Business Analysis, Kaplan Publishing, 2012

    • Vaughan Evans – Key strategy tools, Pearson Publishing, 2013

    • Martin Reeves, Knut Haanaes, Janmejaya Sinha - Your strategy


    needs a strategy. How to Choose and Execute the Right
    Approach. Harvard Business Review Press, 2015

    Costin Ciora - Business Strategy & Analysis 14


    Thank you for your attention!

    15

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