Management

Name of student

Institution

Goal/target of an organization

Every organisation should have clearly set goals which are written down in the business plan. Goals keep the management focused and motivate staff to attain them. The organisation goal in this case is to create wealth or returns through improving performance to create value through Value Based Management and shareholders- value- based- management. Quality management, empowerment, continuous improvement, great team building are among the mentioned organizational goals.

Mission of the organization

To create a high value returns in terms of producing sufficient wealth to better society (Richard, 2002). Shareholder wealth maximization is a theory that states that individuals who are shareholders pursue wealth maximization for themselves, the society benefits as a whole because this produces the greatest wealth for society. While the ultimate goal of organisations is creating high returns on investment, the mission is creating wealth for the shareholders, and therefore benefiting the society. Employees are encouraged to work together to maximize positive outcome.

Goal/target variable (s)

Value Based Management unlike the usual planning systems, focuses on Better decision making at all levels of an organisations using the right information and incentives drives the company forward. It’s all about maintaining proper records, in the long run. Value Based Management has incredible impact when implemented properly eventually improving economic performance. Value based management goes hand in hand with the companies strategies otherwise it’s rendered useless to implement Value Based Management alone and forgoing the company’s strategies.

Having proper management that implement the strategies well is the overall goal towards success.

Critical success factors in the goal/target variables

Understanding the organisation’s goals, missions and strategies will make proper implementation which will create the desired results.

Putting the customer first is the fuel that drives the organisation’s vehicle because the customer has no choice than to be loyal. Most organisations base their success on entirely focussing on customer’s satisfaction.

Capital expenditures- Expenditures should be done with the assurance of greater returns than the initial capital.

Every decision made should be towards sales growth without which the organisation will nosedive and eventually collapse.

While implementing Value Based Management, the management should not forget the organization’s goals, mission and strategies they go hand in hand for Value Based Management to be effective.

Value Based Management helps supervisors and line managers to have targets and measure their performance in accordance to their particular circumstances driven by the organisations strategy and also informs the board of directors and corporate centre whether their organisation strategy, mergers, acquisitions and divestitures is valuable (Richard, 2002).

Management decisions relevant to the selected value drivers

Establish explicit, top management support. The support can also be demonstrated by making it clear to the employees what is expected of them and what their contribution is to the success of the organisation.

Focus on better decision making among operating (not just financial) personnel. Hiring qualified employees is important; therefore Human Resources Management is critical. It’s important encouraging the employees to follow the laid down strategies in the organisation (Bron, 1994).

Achieve critical mass by building skills in a wide cross-section of the company

Tightly integrate the Value Based Management approach with all elements of planning

Underemphasize methodological issues and focus on practical applications

Use strategic issues analyses that are tailored to each business unit rather than a generic approach.

Proper record keeping is important because it keeps track of the company’s progress and arrests errors in good time.

When all is said and done, great strategies are meaningless unless followed to the latter; management should accept nothing less the complete and satisfactory implementation of the strategies laid down (Bron, 1994)

To sum it all, Value Based Management can best be understood as a marriage between a value creation mindset and the management processes and systems that are necessary to translate the mindset into action, while taken together, they are bound to create massive and sustainable impact in the organisation.

Comparison

Agreement Resources

Both authors point out that organisations seek to maximize shareholders wealth and achieve maximum value. Power refers to………..(blz. 146)

Ellsworth………, blz. 162

Both authors state that value of the company is determined by its future cash flows. Power points to…. (blz. 146);

Ellsworth …… blz. 163

Both authors discuss strategies in a bid to improve organisational performance in terms of increasing wealth and value, Koller…..(blz 146)

Ellsworth ….(blz 163)

Both authors stress the importance of transparency, professional accounting practices and proper records keeping. Koller …148

Ellsworth…..164

Both authors impose the implementation of Value Based Management and Stakeholders Value Based Management to attain the desired results. Koller …150

Ellsworth…..169

Overall conclusion: Overall the similarities between the two articles are so great. This is partly because both authors focus on strategies that create more returns in the organization.

References

Bron, T. (1994). What is value-based management? : The McKinsey Quarterly, blz.

145-160.

Richard, R. (2002). Capital-market relationships: the myths of share holder wealth maximization

In. Leading with purpose,