A two – day course that will set out to review Economic Value Added ( EVA ), within the context of Corporate Finance Theory and Practice, as a financial measure used by companies that pay more attention to their cost of capital and the returns that capital employed provide. This will lead to better measurement of shareholders’ value creation. A broad conceptual framework will be covered, followed by in-depth hands-on computational exercises that will address key features of how to compute Economic Value Added of the Enterprise. In addition, participants will examine the capital structure of the enterprise and understand how leveraging through debt can increase enterprise value. A concise session setting out key conceptual frameworks will start the day. Participants will then apply the concepts through a series of computational exercises and case studies. Each participant will be provided with a PC desktop to work through exercises on Excel.

Why the need to create shareholders'  value?

Capital is scarce and investors will seek out investment opportunities that will allow them to optimise the return versus risk. With the increasing adoption of the internet, the world is converging with many players competing for the same space. This has resulted in the globalisation of almost all facet of the economy, and the mega-trend is expected to continue into the foreseeable future.  

Globalisation has brought about changes in the way we compete for resources like  capital, land and labour ( intellectual capital ). With these resources becoming more mobile, stakeholders ( shareholders, customers and employees ) are exerting pressure on management to create value, and the end result is that consumers are empowered with choices. Choices compel players to compete, and in order to survive they have to adopt an outside-inside approach, meaning they must be customer -centric.

Hence, the underlying  business model, must have value proposition that a consumer can relate to.  Value proposition can be classified into product leadership, operational efficiency and or customer intimacy. It is imperative that the business model must be versatile in order to understand the ever changing needs of consumers and convert these needs into their business model. It is increasingly important for organisations to be equipped with a front-end system to track these signals. Typically known as customer relation management ( CRM ) such system entails in the processing of information from the outside into the organisation on a closed loop basis, please click here. 

With this in place, it may be possible to develop a business model with a return on invested capital that will exceed its cost of capital. Ideally, a business model should have a high market value added ( MVA ) ratio in order to compete effectively in today's context, please click here.

Even with a clear strategy, there must be a commitment  to execute the business model. As such key value drivers must be identified and mapped, and a cause-and effect analysis commissioned to understand how such value drivers will impact the end goals. It will be necessary to install a performance measurement scorecard to measure and manage resources deployed. 

What makes an entrepreneur successful? According to Robert Allen, author of The One Minute Millionaire: To dare to have a dream so compelling that you want to make it happen.  Stumbling blocks include the negative voices from within that raise doubts and fears of failure. Although the driving forces would serve to focus us to the right direction in fulfilling our dreams, there are restraining factors that prevent  us from achieving our goals. The key is to turn these restraining factors into driving forces so that these forces are aligned hence optimising the payout to the group. In order to attain a win-win outcome, it is essential that collaborators possess intrinsic qualities like integrity and competency i.e.  trustworthiness.   Without which, the temptation of opportunistic dealings may have to be countered by mutual deterrence. We are of the view that, in a knowledge-based economy where intellectual capital holds sway, any business model that leverages off domain knowledge,  technology and networking will have first mover advantage,

It will be necessary to draw up a strategy roadmap in order to identify the mission statement, value proposition and to select an appropriate strategy for the business model. please click here.

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