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Value Based Management

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA APM Exams › Value Based Management

  • This topic has 3 replies, 2 voices, and was last updated 1 year ago by Ken Garrett.
Viewing 4 posts - 1 through 4 (of 4 total)
  • Author
    Posts
  • August 22, 2022 at 10:09 am #663896
    rammeyy
    Member
    • Topics: 15
    • Replies: 18
    • ☆

    Hi ken, i have a doubt regarding question 3 of M/J 22 on Breac case study and need ur help on how VBM would affect performance measures like manufacturing and advertisement.

    Thanks & regards

    August 22, 2022 at 10:10 pm #663977
    Ken Garrett
    Keymaster
    • Topics: 10
    • Replies: 10333
    • ☆☆☆☆☆

    I don’t have access to this question as it is only available on the Practice Platform. However, this technical article might be of some help:

    https://www.accaglobal.com/gb/en/student/exam-support-resources/professional-exams-study-resources/p5/technical-articles/demystifying-vbm.html

    August 23, 2022 at 6:16 am #663993
    rammeyy
    Member
    • Topics: 15
    • Replies: 18
    • ☆

    Yes Ken, i have already gone through this article but i think it did not cover how VBM could impact other measures like manufacturing (eg % of goods returned or stockout) and marketing spend ( eg % of marketing spend).

    August 23, 2022 at 4:57 pm #664069
    Ken Garrett
    Keymaster
    • Topics: 10
    • Replies: 10333
    • ☆☆☆☆☆

    It won´t cover very specific effects, but the thrust is how other measures might be used to maximise the NPV of future cash inflows.

    So, if lots of goods are returned, there will be an adverse cash flow effect: cost of processing, perhaps the cost of scrapping goods, perhaps loss of customers.

    Marketing spend means spending now (outflow at time 0) in the hope of increased inflows in the future. It´s only worthwhile if the NPV of the incremental cash flows is positive.

    It,s not so much that VBM affects other measures (they will be what ever they are) but how other measures might or might not be useful in maximising value and how they should be interpreted. The focus is always on maximising the present value of future inflows.

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