When managers consider alternative strategies, those expected to develop the
greatest sustainable competitive advantage will be those that will also create the
greatest value for shareholders.
Companies can choose excellence in operations that is closely related to the
profitability. They can get their financial structure right, which is closest to free
cash flow among the fundamental drivers. They can also choose to be focused
and this is linked most closely to profitability. Those are areas of comparative
advantage. They can also create value through credible earnings growth, which
matches the fundamental driver growth and many other ways are in place to
create shareholder value.
The research issue arises from this variety of different ways to create value.
There is always scope for creating value in companies and they avail themselves of value-creating advice. The strategies are put in practice within the framework of that scope. We then find it worthwhile to investigate how strategies are handled in practice in some selected Swedish companies. However, it is not enough to have strategies in place, there is need for some indicators to ensure whether value had been created. Thus the companies need to measure and make sure that they are being successful in creating value for shareholder. “What gets measured gets done” this was a famous statement by Percy Barnevik’s (Dalborg, 1999). That statement underlines the importance of measurement.
In order to better answer the research issue, creating shareholder value will be studied in general as background to the research issue. The research issue will cover the different valuation methods used by companies to measure shareholder value creation and also the advantages and shortcomings of those methods whenever identified.
Objective of the study
The purpose is to conduct an analytical study of different methods used by companies to measure shareholder value creation. The study also aims to give a
general picture of how shareholder value is created as a background to measuring shareholder value. Furthermore all that will be done will be based on an empirical study.
Scope and limitations
Creating and measuring shareholder value can be studied from different perspectives. When studied from the shareholder or other stakeholder perspective, the research is mostly based on the information collected from the shareholder or stakeholders. When it is the stock market perspective, the information used in the study is collected mainly from the stock market. If the study is based on the company perspective then the information used will mainly be collected from the company. Every perspective is very important to investigate. However due to the time limit and the scope of the problem we are obliged to make some limitations.
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greatest sustainable competitive advantage will be those that will also create the
greatest value for shareholders.
Companies can choose excellence in operations that is closely related to the
profitability. They can get their financial structure right, which is closest to free
cash flow among the fundamental drivers. They can also choose to be focused
and this is linked most closely to profitability. Those are areas of comparative
advantage. They can also create value through credible earnings growth, which
matches the fundamental driver growth and many other ways are in place to
create shareholder value.
The research issue arises from this variety of different ways to create value.
There is always scope for creating value in companies and they avail themselves of value-creating advice. The strategies are put in practice within the framework of that scope. We then find it worthwhile to investigate how strategies are handled in practice in some selected Swedish companies. However, it is not enough to have strategies in place, there is need for some indicators to ensure whether value had been created. Thus the companies need to measure and make sure that they are being successful in creating value for shareholder. “What gets measured gets done” this was a famous statement by Percy Barnevik’s (Dalborg, 1999). That statement underlines the importance of measurement.
In order to better answer the research issue, creating shareholder value will be studied in general as background to the research issue. The research issue will cover the different valuation methods used by companies to measure shareholder value creation and also the advantages and shortcomings of those methods whenever identified.
Objective of the study
The purpose is to conduct an analytical study of different methods used by companies to measure shareholder value creation. The study also aims to give a
general picture of how shareholder value is created as a background to measuring shareholder value. Furthermore all that will be done will be based on an empirical study.
Scope and limitations
Creating and measuring shareholder value can be studied from different perspectives. When studied from the shareholder or other stakeholder perspective, the research is mostly based on the information collected from the shareholder or stakeholders. When it is the stock market perspective, the information used in the study is collected mainly from the stock market. If the study is based on the company perspective then the information used will mainly be collected from the company. Every perspective is very important to investigate. However due to the time limit and the scope of the problem we are obliged to make some limitations.
Download Full Project Report
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