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  • Group 4 - CFO Strategy Article 2

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    vaibhav
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    The document discusses two camps of corporate strategies - increasing shareholder value and gaining competitive advantages. While both aim for long-term productivity, there can be conflicts between the two. Some managers assume shareholders only value short-term results, so they depart from the shareholder value model to improve competitive advantages. However, the document argues that markets are actually driven by long-term company prospects and investors prefer strategies that strengthen competitive advantages long-term. It concludes managers should maximize long-term shareholder value through delivering interim results that demonstrate sustainable competitive advantages over time which can translate to increased cashflows.

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    Best Strategy of CFO

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    Group 4_CFO Strategy Article 2

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    The document discusses two camps of corporate strategies - increasing shareholder value and gaining competitive advantages. While both aim for long-term productivity, there can be conflicts between the two. Some managers assume shareholders only value short-term results, so they depart from the shareholder value model to improve competitive advantages. However, the document argues that markets are actually driven by long-term company prospects and investors prefer strategies that strengthen competitive advantages long-term. It concludes managers should maximize long-term shareholder value through delivering interim results that demonstrate sustainable competitive advantages over time which can translate to increased cashflows.

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    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
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    2 views6 pages

    Group 4 - CFO Strategy Article 2

    Uploaded by

    vaibhav
    The document discusses two camps of corporate strategies - increasing shareholder value and gaining competitive advantages. While both aim for long-term productivity, there can be conflicts between the two. Some managers assume shareholders only value short-term results, so they depart from the shareholder value model to improve competitive advantages. However, the document argues that markets are actually driven by long-term company prospects and investors prefer strategies that strengthen competitive advantages long-term. It concludes managers should maximize long-term shareholder value through delivering interim results that demonstrate sustainable competitive advantages over time which can translate to increased cashflows.

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    © All Rights Reserved
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    of 6

    CFO Strategist : Forgoing

    a Common Framework
    Corporates – Two Camps
    1. Increase Shareholder Values
    2. Gaining Competitive Advantages

    Both derived from common framework – Long-term Productivity

    Conflict – Why they can’t Coexist


    The company with competitive advantage might not produce better result for the
    share holders.
    What's manager assumption ?
    1. The market values short term result over long term result
    2. Manager depart from Shareholder value model to improve competitive advantage

    Shareholder Value : Management vs Stock Market


    Manager feels that the stock prices are not fairly priced because
    1. Manager understand business better than the market
    2. Market assign a finite period to company ability to create value
    Disparity : Long Term Vs Short Term
    The manager started believe that market relies on the short term results
    Three factors which decide the Market Prices
    1. Cash Flows
    2. Long term forecast of Cash Flows
    3. Cost of Capital

    But what market shows that


    1. Investors drives market prices with company's long term prospects
    2. Investor prefer the long term investment which provide strength to company
    competitive advantage.
    Message for Mangers :
    Maximize the long term share holder value and deliver interim result attest the
    credibility to sustainable competitive
    Prefer those strategy which provide competitive advantage.
    Value creation for shareholder depend on translation of competitive advantage to
    the cashflows

    Example – Apple
    Thank you
    Group 4
    Ashvini Kumar (177044)
    Dhiraj Lokhande (177066)
    Vaibhav Singh (177227)

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