Hi Rashid,
Good question. Generally, you won't find such stuff on this site. Most postings are focused on dealing with subjects of day-to-day affairs.
First time I see such an intelligent question on this site.
Value-based Management is the management approach that ensures corporations are managed consistently on value (normally maximizing shareholders' value). Value-based Management aims to provide consistency in:
- The corporate mission
- Corporate strategy
- Corporate governance
- Corporate culture
- Corporate communications
- Organization of the corporation
- Decision processes and systems
- Performance management and systems
- Reward processes and systems
Three elements of Value-Based Management:
1. Creating Value
2. Managing for Value
3. Measuring value
Value-based Management is dependent on the corporate purpose and the corporate values.
It is important because of:
1. The market for its products and services
2. The market for corporate management and control (Competition in determining who is in charge of an organization, the threat of takeover, restructuring, and leverage buy-out)
3. Capital market (competing for investors and money)
4. The employee and manager market
Benefits of Value-based Management:
1. Can maximize value creation
2. Increase corporate transparency
3. Help organizations to deal with the global and deregulated capital market
4. Align the interests of top managers with shareholders' interests
5. Facilitate communications with investors, analysts, and stakeholders
6. Prevent undervaluation of stocks
7. Facilitate improving decision-making.
Regards,
Sawant