2000 Volume 8 Issue 1-2 Pages 169-175
Maximizing cash flow is becoming a key corporate objective in Japan. However the concept is often misunderstood that it is just a working capital management, a cash pooling or a divestment of money losing business unit. We define the cash flow management as the same as Value Based Management, which means that applying a shareholder value concept to strategic and operational decision making, is a powerful way of energizing the whole corporation in pursuit of value.
In creating a long-term strategy, we sometimes use Scenario Envisioning, an innovative technique used to develop a new vision of an industry's possible future with our clients. Then, we evaluate a client's current business model against some future scenarios and design a new business model to survive in a new environment. Shareholder value analysis is a precise tool to evaluate the long-term economic impact of environmental changes and strategic options.
To make Value Based Management a reality, we need performance measures, which can measure real shareholder value creation in a certain period, and we need to incentivize people at all levels to pursue the overriding objective of improving shareholder value. The Economic Profit is suitable for these objects.
