DOI: https://doi.org/10.18371/fcaptp.v3i26.144365

EVOLUTION OF BASIC VALUE-BASED MANAGEMENT CONCEPTS

V. V. Ievdokymov, N. V. Valinkevich, T. O. Zavalii

Abstract


Historical aspects of the development of the concept Value-Based Management has been presented. It has been established with the help of the program The Google Ngram Viewerthat the first mention of the term «Value-Based Management» was in 1984 and the first mention of the term «Value Based Management» was in 1975. The basic stages of the development of the concept Value-Based Management has been determined (creating the model Shareholder Value Added(SVA); creating models such as Economic Value Added (EVA), Market Value Added (MVA), Cash Flow Return on Investment (CFROI), Cash Value Added (CVA); adaptation the consulting products of the main participants of strategic consulting to the new ideas and to the competition for the right to manage the investment capital; the spread of approaches of Value-Based Management to the activities of financial analysts and their practices, aimed at increasing the value of companies through the effective management of customer capital). The authors have argued that the main role in the emergence and development of the concept Value-Based Management has been played by the world’s leading consulting companies such as «McKinsey & Co», «Boston Сonsulting Group», «Marakon Associates», «Alcar Group Inc.», «Stern Stewart & Co», «L.E.K. Consulting», «HOLT Value Associates». Value-based management consulting is one of the main activities of these companies. Two approaches in the evolution of the value-based management have been defined such as basic. The main argument of the this approach opponents was the statement that the absolute concentration on the growth of share value does not solve such urgent issues as problems of employment, the environment, ethics in business. The fact that the value of the company is formed not only thanks to shareholders and their capital, but also due to other stakeholders was facilitated by the second approach — Stakeholder-Based Management, which aims to harmonize the interests of different groups of stakeholders.


Keywords


value-based management; consulting company; shareholder-based management; stakeholder-based management.

References


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Copyright (c) 2018 V. V. Ievdokymov, N. V. Valinkevich, T. O. Zavalii

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ISSN (print) 2306-4994, ISSN (on-line) 2310-8770