Corporate Finance

• Concept and Need Of Value

Based Management

• Guided By :-
Prof. Mrs. Saroj Dhake
 Introduction
• Value based management can be defined as a
framework for targeting those business decision that
consistently add economic value to the company.

• Value based management is the management

approach that ensure that a company is run with the
objectives of maximizing long term and sustainable
value for the shareholders.
 Definitions
• A managerial process which effectively links
strategy, measurement and operational
processes to the end of creating shareholder
value.
• It represents a synthesis of various disciplines
like finance, strategy, accounting and
organizational behavior.
It generally include understood to consists of
three key elements :

• Creating value i.e. ways to actually increase or

generate maximum future value;
• Measuring value; and
• Managaging for value, i.e., governance,
management, organization, culture,
communication.
• The briefing is divided into three parts:

• 1.strategy- for value creation.

• 2.metrics-for value measurement
• 3.management-encompassing governance,
remuneration, culture, structure and
stakeholder relationships.
• Items included in the value based
management :

missi
on

Strategy government
Communication

Culture organization decision,

performance and reward
processes and systems
 Features of VBM
• Analysis and growth
• Non traditional matrix
• Financial values
• Universal approach
• Systematic approach
• Focused
• Management tool
 Need of VBM
• Product and services.
• Base for an organization.
• Clarity.
• Compensation and conflict removal.
• Value maximization.
• Employees and managers market.