Merits of economic value added, Strategic Management

Assignment Help:

Merits of economic value added (EVA):

-  Cash not accounting based measure therefore less distorted for performance measurement.

-  Consistent or goal congruence with profit maximisation e.g. an enforced measure of profitability.

-  Different interest charges (cost of capital) can be applied to divisions e.g. high inherent risk within different industries can have higher cost of capitals applied.

-  Forces managers to consider the cost of financing new investment and to be efficient when managing working capital e.g. minimisation of inventory and excessive cash balances.


Related Discussions:- Merits of economic value added

Develop a performance measurement system, Q. Recommended process to develop...

Q. Recommended process to develop a performance measurement system  1. Senior management need to determine a clear vision of the change that will be required and demonstrate c

Show the activity based budgeting, Q. Show the Activity based budgeting? ...

Q. Show the Activity based budgeting? Activity based budgeting (ABB) uses cost  'drivers'  for  different  support  resources consumed e.g. machining, quality control or admini

Describe the concept of virtual organisation, Question: (a) Describe th...

Question: (a) Describe the concept of virtual organisation. (b) ‘It is critical for an organisation to attain congruence between its strategy and organisational structure

Value marginal tradeoffs, Problem: Both person A and person B are purchasin...

Problem: Both person A and person B are purchasing bananas and apples from the same supermarket, where the price of a banana is $2 and the price of an apple is $1. Person A is curr

Focused factories - limited vertical integration, Focused Factories - Limit...

Focused Factories - Limited Vertical Integration Japanese companies prefer specialisation (derived from Adam Smith's theories on division of labour), with a limited or focused

e-strategy in organisations, 1 - Describe the Benefits of Having an E-Stra...

1 - Describe the Benefits of Having an E-Strategy in Organisations. 2 - Estimate the Contribution of an E-Strategy to the Achievement of an Organisation's Objectives. 3 - Tal

External buying decisions, The group consolidated financial results would n...

The group consolidated financial results would normally be effected, if an internal buyer uses their autonomy and makes a decision to buy outside the group, rather than buy interna

Contrasting strategic planning to strategic control, Contrasting strategic ...

Contrasting strategic planning to strategic control Strategic planning is a more centralised planning approach, senior management tend to focus less on implementing specific c

Importance of strategising in the success of a company, Which is more impor...

Which is more important in explaining the success or failure of companies: strategising or luck?

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd