1. MANAGING
SHAREHOLDER VALUE
SYNTHETICS  

2. Agenda 1 2 3 4 Company XXX - Current market reflections of value
Two aspects to shareholder value management – Value Creation and Market Recognition of Value 2 
What Company XXX needs to do? 3  4 

3. XXX – Current reflections of market value
Market Value/sales
Market value/ sales %

4. Company XXX – Current reflections of market value
Price / Earning Ratio
P/E Ratios
Over valued or under valued?

5. Managing Shareholder Value – Value Creation and Market Recognition of Value
“Value created” intrinsic value
Value Creation
Market Recognition
of value
Current intrinsic value
“How do we identify potential opportunities for value creation and actualize them into the business operations?
Current market value
“How do we get the market to recognize the value created?”
Understanding the distinction between these two inter-linked aspects is key to effective Shareholder Value Management.

6. Value – in today’s economy
The New Economy
Intangible Value
Knowledge
Age
Technology
Age
Industrial
Age
Agricultural
Age
Iron
Age
Stone
Age
Time
…and the Curve is Compressing

7. Value creation in the new economy
Value in today’s economy is being created by
New assets – brand, customer base, technology, intellectual property; and
New ways of doing business – outsourcing, shared services, e-business.
Business Managers cease to see themselves as industry players and instead adopt the role of owner of assets
Companies identify core assets (both tangible and intangible); and
Companies focus on these core assets and leverage them across industries to exploit their potential value
Value creation in the new economy
Value creation involves both identification of assets/opportunities and their exploitation/actualization

8. The new framework to create value
Physical
Customer
Land
Customers
Buildings
Channels
Equipment
Affiliates
Inventory
Organization
Leadership
Innovation
Strategy
Systems
Structure
Processes
Culture
Knowledge
Brand
Financial
Stakeholders
Cash
Receivables
Shareholders
Debt
Employees
Investments
Suppliers
Equity
Business Partners
The old model to measure value ...
against the new value framework

9. Value Creation - the HOW?
Revenue
Customer or Market Focused Initiatives
Gross Profit
COGS
NOPAT
Efficiency or Productivity Focused Initiatives
Selling Costs
Dist Costs
Operating Expenses
Admin Costs
Cash Flow
R&D Costs
Working Capital
Financial Re-structuring Initiatives
Capital Deployed
Fixed
COST of Capital
Debt
Cost of Capital
Equity
Creating Value

10. Value Creation - the HOW?
Customer or Market Focused Initiatives
Shared Vision, Mission and Strategy Articulation
Product portfolio review
New Product Development
Product Acquisitions
Product strategies
Distribution Network and Channel Design
CRM and Distributor/Dealer Management
Brand Management
Efficiency or Productivity Focused Initiatives
Business Process Reengineering
Operational Efficiency Improvements
Case for Shared Services/outsourcing
SCM solutions
Organization Restructuring
Development of appropriate KPIs (business and individual levels)
Performance Measurement Systems (business and individual levels)
Sales Force Effectiveness
Working Capital Management
Financial Re-structuring Initiatives
Capital budgeting and Revenue Budgeting
Debt restructuring
Raising additional equity
Area of Focus in Ispat
Creating Value

11. Having created value ………..
Customer or Market Focused Initiatives
Organization Effectiveness Initiatives
Gross Profit
NOPAT
Efficiency or Productivity Focused Initiatives
Operating Expenses
Cash Flow
Financial Re-structuring Initiatives
Capital Deployed
COST of Capital
Cost of Capital
…..it is important that market recognizes the value creation

12. Market Recognition of Value– the enablers!
Customer or Market Focused Initiatives
Organization Effectiveness Initiatives
Gross Profit
Corporate Governance / Ethical Business Practices
NOPAT
Efficiency or Productivity Focused Initiatives
Operating Expenses
Communications : Corporate, Employee and Product Engagements
Cash Flow
Financial Re-structuring Initiatives
Capital Deployed
COST of Capital
Sustainability
Cost of Capital
Creating Value
Recognizing Value

13. Managing Shareholder Value
Management of business needs to be VALUE based
Businesses need to focus on value creation and market recognition of value
Value creation involves both
Identification of core assets and leveraging them across industries to exploit value; and
Identification of value creation opportunities (e.g. outsourcing) and actualizing them into the business operations
Having maximized shareholder value it is necessary to communicate it and to ensure that the market perceives the enhanced value
To Summarize