BUSINESS ORGANIZATION & MANAGEMENTTEACHER: Ms. Geeta mishra
BALANCED SCORE CARD ECONOMIC VALUE . . ... ADDED(EVA) MARKET VALUE ADDED(MVA) KNOWLEDGE MANAGEMENT
Balanced Scorecard is a management tool that providesstakeholders with a comprehensivemeasure of how the organization is progressing towards the achievement of its strategic goals.
Managing Performance with Balanced Scorecard Balances financial and non-financial measures Balances short and long-term measures Balances performance drivers with outcome measures . Leads to strategic focus and organizational alignment.
FINANCIAL PERSPECTIVE CUSTOMER PERSPECTIVE BUSINESS PROCESS PERSPECTIVE LEARNING GROWTH PERSPECTIVEPERSPECTIVES OF BALANCED SCORE CARD
In private companies, the financial perspective is the main objective (ultimate goal) – without having to sacrifice the interests of other relevant stakeholders (community, environment, government, etc.) In the financial perspective, the strategic goal is the long-term shareholder value. This goal is driven by two factors, namely : revenue growth and cost efficiency.
Customer Perspective This perspective is very instrumental, because without customers, how can a company survive? Customer perspective covers the following elements: • Customer acquisition • Customer retention • Customer profitability • Market share • Customer satisfaction
This perspective reflects the processes in key business that should be optimized in order to meet the needs of the customers. There are four main themes in this perspective, namely: •Operations Management Process •Customer Management Process •Innovation Process •Regulatory and Social Process
This perspective reflects the capability that a company should have, namely: • Human Capital •Organization Capital •Information Capital This perspective shows us that good human resource development system, organizational system and information system forms a solid foundation for improving company performance.
Acquisition of materials that are likely to be used Prompt response to user requests Control of unit costs Acquisition of more digital materials
Economic value added is a financial performance method to calculate the true economic profit of a corporation
Continued… Economic value added can be calculated as net operating after taxes profit minus a charge for the opportunity cost of the capital invested. Economic value added is an estimate amount by which earnings exceed or fall short of the required minimum rate of returns for shareholders or lenders at comparable risk.
Continued… Unlike market-based measures, such as MVA,EVA can be calculated at divisional (strategic business unit)level. Unlike stock measures, EVA is a flow and can be measured for performance evaluation over time. Unlike accounting profit, such as EBIT, net income and EPS, EVA is economic and is based on the idea that a business must cover both the operating costs and the capital costs.
Setting organizational goals. Performance measurement. Determining bonuses. Communication with shareholders and investors. Motivation of managers. Capital budgeting. Corporate valuation. Analyzing equity securities.
Market value added is the difference between the equity market valuation of a listed/quoted company and the sum of the adjusted book value of debt and equity invested in the company. It is the sum of all capital claims held against the company; the market value of the debt and the market value of the equity.
The higher the market value added (MVA),the better. A high MVA indicates the company has created substantial wealth for the shareholders. MVA is equivalent to the present value of all future expected EVAs.
Negative MVA means the the value of actions and investments of management is less than the value of capital contributed to the company by the capital markets. This means the value or the wealth has been destroyed.
NOTE: The aim is to maximize MVA , not to maximize the value of the firm, since this can be easily accomplished investing ever-increasing amount of capital. MVA does not take into account the opportunity cost of the invested capital MVA cannot be calculated at divisional(strategic business unit) level and cannot be used for private held companies.
We define knowledge management as a business activity with two primary aspects: 1).Treating the knowledge component of business activities as an explicit concern of business reflected in strategy, policy, and practice at all levels of the organization.
2).Making a direct connection between an organization’s intellectual assets — both explicit [recorded] and tacit [personal know- how] — and positive business results.
Knowledge management often encompasses identifying and mapping intellectual assets within the organization. Generating new knowledge for competitive advantage within the organization. Making vast amounts of corporate information accessible. Sharing of best practices, and technology that enables all of the above — including groupware and intranets.
Marketplaces are increasingly competitive and the rate of innovation is rising Reductions in staffing create a need to replace informal knowledge with formal methods. Competitive pressures reduce the size of the work force that holds valuable business knowledge. The amount of time available to experience and acquire knowledge has diminished. Early retirements and increasing mobility of the work force lead to loss of knowledge. Changes in strategic direction may result in the loss of knowledge in a specific area.
Categorization of knowledge management approaches Management of Information: Objects that can be identified and handled in information systems. Management of People: For researchers and practitioners in this field, knowledge consists of "… processes, a complex set of dynamic skills, know-how, etc., that is constantly changing."
T.R JAIN (INTRODUCTION TO ECONOMICS) BOOK. MANAGEMENT BOOK KOONTZ. POONAM GANDHI BUSINESS STUDIES BOOK. FOR IMAGES GOOGLE IMAGE SEARCH.