Managing for Shareholder Value

Managing for Shareholder Value

In the long run, the only measure of business success which matters is the ability to create shareholder value. All other measures can be misleading:

• a business might grow accounting profits by constantly investing in opportunities which have a return, but too low a return for investors ever to get their money back. This business will show more profit every year until it goes bankrupt
• a business might continually grow market share through aggressive pricing. Unless this is underpinned by a real cost advantage, this business too would run out of money.
• a business might offer tremendous new value for customers but represent an investment which no-one would wish to repeat. Such a business will not thrive and grow.
• PA offers managers who want their businesses to succeed in the long-term three routes to Managing for Shareholder Value: Corporate strategy, Business unit strategy and Strategic information management.

See also:

PA’s Managing for Shareholder Value approach

Managing for Shareholder Value international survey 2003/4

Managing for Shareholder Value in the post-Enron world

Storebrand (case study)