Free «Value-Based Management» UK Essay Paper
Value-based management (VBM) embodies a holistic approach to management that is based on value creation as defined by company’s shareholders as well as on priorities as defined by its management. In VBM value creation and deployment of strategies is achieved through management of various business activities and organizational structure. The approach also puts emphasis on the use of analytical methods as well as on computing and communication technology. These are integral to the success of the approach.
The values created are usually based on the expectations of different stakeholders in the business, which include business management, its customers, and even suppliers. For instance, while customers may always have high expectations regarding the quality of goods and services, which must be available at a competitive price, market owners usually expect that an economic value will be created for goods and services. Organization’s employees, on the other hand, would expect meaningful and stable employment. This should be accompanied by good working conditions and desirable compensation. Suppliers will expect a timely payment and this is very important in defining their relationship with the management. Another important stakeholder whose expectations may have a great impact on VBM is the society in which business operates. It will expect that the business will operate in compliance with social corporate responsibilities and that the business will strive to improve its general environment in the course of its operations.
The practical implementation of a value-based management strategy is an activity that must be undertaken with care to ensure that the desired results are achieved. It calls for a comprehensive analysis of performance of the business in key areas of its operation. This must be followed by the creation of relevant design assumptions before VBM strategy can be implemented.
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