Competitive Value Management Summary
4 min read ⌚
Achieving competitive advantages using a Finance Intelligence Radar
Sometimes, you need to compare your company with the other ones, to see where it is positioned.
You also need to improve some things and learn other essential ones.
You have just found yourself a somewhat helpful guide to running your company.
Who Should Read “Competitive Value Management”? And Why?
It comes in quite handy for CEOs and directors, as well as for individuals wanting to hear and learn something extra from renowned finance experts. And perhaps the ones wishing to increase their companies’ values.
It is not your regular finance and strategy book.
Find out why!
About Hermann J. Stern
Hermann J. Stern is an author and a manager of the CFO Intelligence Force Obermatt. He used to work as a financial manager, as well as a CFO for a telecommunication provider.
“Competitive Value Management Summary”
In order to make your business grow, you should stop thinking just about the financial plan and start improving your work so you can surpass your rivals.
Here is the thing.
If you want to be better, first you should ask yourself where your business stands when compared to the others in the related categories. Don’t be biased while answering this question.
Then start collecting as much information as possible for the other companies to gain insights on your strengths and weaknesses. Third, take action to improve your work on the market.
However, when comparing values, be very careful not to make a mistake. If you give the investor irrelevant information, he won’t be willing to put his money into your business. So we recommend you to use the Capital Asset Pricing Model (CAPM) for that purpose.
This can help you see the real situation on the market and how it may evolve. It can also help you know the possible profit, and whether it’s enough to cover your expenses.
But wait, there’s more.
You should always strive to see the things from the investor’s point of view. What they are interested in the most is money they can make in the future, so give them that information. Show them how valuable your business is in comparison to your competition.
When you have more information about the worth of your peer companies, you can easily predict the favorable or unfavorable outcome.
Having the statistics that tell you how well or badly different businesses have performed on the market, you can easily see if you are in the right direction. It can show you what your weaknesses are so you can work on them to improve your performance.
While you are making plans for the future, we advise you not to impose strict goals to your employees. Also, you shouldn’t make plans that don’t fit into your financial plan for that period because it can be harmful to your business.
Although you might be better than your competition, the others won’t believe your words unless you prove that to them. The best way to show them your worth is to allow them to see how big you have grown and how far you have come.
“Stern radar” is here to help you out. Using Stern diagrams, you can show them your whole business’s accomplishments, or the results just for a specific division, during the years.
The strategy is the key to everything. When you determine your goals, you need to have a plan of action of how you are going to achieve them. For this purpose, you can use the balanced scorecard.
It is a tool used by organizations to get a clear view of their goals put into performance measures. Using this they are also able to keep an eye on their employees’ actions and what may be the possible outcome of their work.
Key Lessons from “Competitive Value Management”
1. Difference brings you success
2. Weaknesses can help you grow
3. Get to know your rivals well
Difference brings you success
On a market full of competitors difference plays a huge role. No one will be interested in investing money in your business if you don’t show them what makes you different from the others. So, don’t be afraid to be one of a kind. People like it.
Weaknesses can help you grow
If you find out what your weaknesses are then nothing can stop your growth and success. Successful are those who are aware where they are making mistakes. Make mistakes and learn from them. That’s the only way to improve your performance on the market.
However, don’t show your negative aspects to the others because nobody wants to see them. Everyone else is interested in the money you make, not the problems you have.
Get to know your rivals well
Never underestimate your competition. Even though it may seem weak on the outside, it can be stronger than you think.
If you want to surpass your peers, then you have to know every little detail about their work. That will help you oversee where you need an improvement or what are you doing better. Get to know as many peers as possible, and at the end, everything will turn out in your favor.
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“Competitive Value Management” QuotesEvery company has peers or competitors with whom they can compare themselves. That sounds obvious but it is denied by most companies. Click To Tweet Most important for the measurement of performance is graphical portrayal, so that trends can be better determined and changes in relationships can be better understood. Click To Tweet Competitive value management is based upon the consequential and systematic evaluation of data. Click To Tweet The value-added calculation is frequently misunderstood and, hence, done in an overly complicated way. The following rule of thumb is sufﬁcient: value added = proﬁt after deduction of the capital costs. Click To Tweet When implementing value-based management, it should not be overlooked that the basis of every approach for accretion is a deep understanding of a company’s actual value drivers. Click To Tweet
Our Critical Review
“Competitive Value Management” is really that good, that it’s hard to find any negatives about it. With its 300 pages (about economy) it may not be the easiest and most fun read, but come on, it’s certainly worth it.
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