Cover image for Translating strategy into shareholder value : a company-wide approach to value creation
Translating strategy into shareholder value : a company-wide approach to value creation
Trotta, Raymond J.
Personal Author:
Publication Information:
New York : American Management Association, [2003]

Physical Description:
xvii, 270 pages : illustrations ; 24 cm
Value and value proposition -- External strategic alternatives -- Internal strategic alternatives -- The economic filter -- The strategic filter -- Introduction operational filter -- DuPont model -- Activity-based management -- Regression analysis -- Components of value -- Valuation.
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HG4028.V3 T76 2003 Adult Non-Fiction Central Closed Stacks

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Too often there are serious missed signals between a company's stated goals and the methods employed to try to reach them. Translating Strategy into Shareholder Value is a unique look at how the planning process relates to the achievement of shareholder value, and ways to ensure that the two directly complement each other. Using tools and a special case study to analyze past, present, and future performance, the book takes readers through a host of steps, including: * Comparing existing strategy to the competition and the economy as a whole * Analyzing productive capabilities and costs * Bringing nonfinancial metrics to test how future strategy creates value * Selecting the right analytical tool and looking at strategic solutions If corporations are to truly maximize their success, managers need to understand how to translate corporate strategy to the bottom line - and that means seeing the big picture.

Author Notes

Ray Trotta is a partner and cofounder of iValue. Mr. Trotta speaks frequently on technology and finance topics. Before launching iValue, he was a member of the Financial Services Consulting Practice of KPMG Peat Marwick, and is an expert in technology strategy, merger integration, startup advisory, business process reengineering, activity-based management, and systems assessment. He has been quoted in CFO, Information Week, Wall Street and Technology, and the Chicago Tribune. Mr. Trotta is also a member of the graduate school faculty of the Walter E. Heller College of Business Administration at Roosevelt University

Table of Contents

Prefacep. xi
Acknowledgmentsp. xvii
Introductionp. 1
Part 1 Introduction to Strategic Alternativesp. 9
Chapter 1 Value and Value Propositionp. 11
What Is Value?p. 14
Book Valuep. 14
Market Valuep. 16
Intrinsic Valuep. 19
Understanding the Value Proposition: How Is Value Created?p. 20
Revenue Increase and Maintenancep. 21
Competitive Repositioningp. 22
Efficiencyp. 25
Conclusionp. 26
Chapter 2 External Strategic Alternativesp. 29
Mergers and Acquisitionsp. 30
Outsourcingp. 49
Conclusionp. 58
Chapter 3 Internal Strategic Alternativesp. 61
Information Technologyp. 63
Business Process Reengineeringp. 76
Conclusionp. 92
Part 2 The Macro Viewp. 93
Chapter 4 The Economic Filterp. 95
What Is Market Demand and Why Is It Important?p. 96
Economic Factors that Drive Market Demandp. 99
Resource Availability: Land, Labor, Capital, and Technologyp. 103
Validation of Strategic Alternatives Using the Economic Screen Alignment with Market Demandp. 105
Equivalence of Responsep. 106
Conclusionp. 109
Chapter 5 The Strategic Filterp. 113
Introduction to the Strategic Filterp. 114
The Porter Modelp. 116
Using the Porter Model to Drive Valuep. 128
The Balanced Scorecardp. 131
Using the Balanced Scorecard to Drive Valuep. 138
Conclusionp. 140
Part 3 The Operational Filterp. 143
Chapter 6 Introduction to Operational Filterp. 145
Chapter 7 DuPont Modelp. 149
Introduction to the DuPont Modelp. 149
Cash Flow Marginp. 151
Asset Turnoverp. 154
A Combination of Factorsp. 155
Financial Leveragep. 155
A Comprehensive Examplep. 156
Strengths of the DuPont Modelp. 160
Conclusionp. 161
Chapter 8 Activity-Based Managementp. 163
Attaching Costs to Your Business Processp. 164
Building an ABM Modelp. 168
Strengths of ABMp. 180
Weaknesses of ABMp. 181
Using ABC Make Strategic Decisionsp. 181
Conclusionp. 182
Part 4 The Valuation Filterp. 185
Chapter 9 Regression Analysisp. 187
An Overview of Regression Analysisp. 187
Why Use Regression Analysis?p. 188
Types of Regression Analysisp. 190
The Regression Analysis Processp. 191
Interpreting Regression Analysis Resultsp. 192
Applying Regression Analysis: A Case Examplep. 193
Regression-Based Forecasting Using the DuPont Modelp. 200
Conclusionp. 201
Chapter 10 Components of Valuep. 203
Cash Flowp. 205
Benefitsp. 206
Costsp. 206
Noncash Items: Impact of Taxes on Cash Flowsp. 209
Risk Analysisp. 210
Recognition of Benefitsp. 212
Timingp. 213
Cost Overrunsp. 213
Accounting for Risk in Shareholder Value Analysisp. 220
Conclusionp. 220
Chapter 11 Valuationp. 223
Portfolio of Analytical Toolsp. 224
Discounted Cash Flow Analysis (DCF): The Analytical Foundationp. 225
Applying DCF Analysisp. 227
Assessing Value Under Uncertain Conditionsp. 234
Financial Modeling Techniquesp. 234
Conclusionp. 248
Final Thoughtsp. 251
The Dark Side of Valuationp. 252
Organizational Considerationsp. 254
Process Issuesp. 256
Bibliographyp. 259
Indexp. 261