Showing posts from November, 2012

Value Based Management

What gets measured, gets analyzed.And what gets analyzed, gets acted upon. It is paramount to measure a business's performance. A lot has been discussed on how to effectively manage and monitor a business. Value Based Management (VBM) is an approach that ensures that corporations are run consistently on value. VBM includes the following aspects: 1)  Creating value: Implementing strategies to generate sustainable returns.
2)  Managing for Value: by Governance, communication, leadership etc.
3)  Measuring value: by using Metrics, Dashboards etc.

Now, we need to have a clear action plan on how to implement VBM for a business. For ease of implementation, VBM can be broken into 3 sub-parts which can be individually implemented and taken care of. This post will discuss in detail on how to apply VBM in a business.

Value Based Management = Balanced Score card + Economic Value Add + Activity Based Costing or in short; VBM = BSC + EVA + ABC

Thus if a business maintains a Balanced Score Ca…