Creating Value Internal and External Factors - 1257 Words

Discussion Board 2: Valuation Charles E. Sullins, Jr. Managerial Finance – BUSI 530_B10 Liberty University INTRODUCTION The purpose of this thread is to discuss the factors that lead to a valuation of a company’s worth compared to that of the financial statements, and how company executives create the most value for all stakeholders. Value is formed by different internal and external factors. This discussion will examine some of these factors in an effort to determine how a company’s worth is measured. This discussion will also include views from a faith-based standpoint and how human success must glorify God. â€Å"Love not the world, neither the thingsthat are in the world. If any man love the world, the†¦show more content†¦When this is the case, its usually because the market has lost confidence in the ability of the companys assets to generate future profits and cash flows. In other words, the market doesnt believe that the company is worth the value on its books. Value investors often like to seek out companies in this category in hopes that the market perception turn s out to be incorrect. After all, the market is giving you the opportunity to buy a business for less than it’s stated net worth. 1. Market Value Greater Than Book Value: The market assigns a higher value to the company due to the earnings power of the companys assets. Nearly all consistently profitable companies will have market values greater than book values. 2. Book Value Equals Market Value: The market sees no compelling reason to believe the companys assets are better or worse than what is stated on the balance sheet† (para. 6). CREATING VALUE FOR SHAREHOLDERS Executives play a major role in creating value for stakeholders. Creating value for stakeholders is the primary role of an executive. The first thing executives must do is build trust. This element is essential to all positive aspects of value. Gaining trust is accomplished through strong work ethic, sound values, accountability, and leading by example. Not only will this develop strong working relationships, it will also aid in ushering in the next generation of managers. It will help gain confidence in the financial markets asShow MoreRelatedInternal Environment Resources and Capabilities of an Organization1034 Words   |  4 Pagespaper mainly focuses on the internal environment, resources and capabilities of an organization. It highlights the two main analyses which are essential for any organization and which plays a main role in the formulation of a strategy. In addition to this, it also describes the primary and support activities of an o rganization. Two key factors, which are important in doing an internal analysis, are Resource Based View framework (RBV) and Porters Value Chain. These factors are also described. The ResourceRead MoreHow to Conduct Strategic Analysis Essay1099 Words   |  5 PagesOne critical piece of the Strategic Planning process is Strategic Analysis. It is an integral part of a company’s evaluation program; it provides managers with a comprehensive assessment of the organization’s capabilities and market factors; revealing growth opportunities and vulnerabilities. With this information, managers can more effectively choose from strategic alternatives and create the greatest future reward potential. A) Company Mission – Vision The first step I would take as part of myRead MoreThe System Dynamics Diagram Below Illustrates The Interactions And Activities Of The Business769 Words   |  4 Pagesmanagement and purchasing are two closely linked internal factors in the business vital to providing quality products. Purchases are reliant on stock levels and must have management approval. 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Internal factors mean that the company hasRead MoreEssay about Airstar Case Study1139 Words   |  5 Pagesmanagers is not working effectively and employees have been working up their own job description. Because of that, goal accomplishment is fast becoming obsolete and decisions are being made on the basis of practicality. Also, the company is facing external threats from major competitor such as General Electric and Pratt amp; Whitney. The stagnation from top managers is causing chaos internally, because business environment is constantly changing and most managers have been in the company for moreRead MoreCan Organisational Culture Be Changed?1376 Words   |  6 Pagessame time, it is a very difficult and demanding task. This is where the four main functions of managing come into play; planning, controlling, leading and organising. Robbins at al (2009, p.94) defines organisational culture as â€Å"a system of shared values, principles, traditions and ways of doing things that influence the way organisational members act.† This essay will further look into how and if an organisation’s culture can be changed, weighed up against organisation’s resisting change, how thisRead MoreExternal Factors And The Business Model1545 Words   |  7 Pages External Factors and the Business Model In order to build a successful business model, the organization must analyze the business environment for external forces. Osterwalder and Pigneur (2010) discuss the importance of understanding the external factors in the business environment when developing a business model; the organization must be able to adapt quickly to the changing environment. External factors of demand play a critical role in developing a business model, an organization