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Hi,
What is the difference between Value-Based Management and Value Analysis please?
Thanks
VBM says that the value of a company is determined by its discounted future cash flows. Value is created only when companies invest capital at returns that exceed the cost of that capital. VBM focuses on how companies maximise their discounted future cash flows in both major strategic and everyday operating decisions.
Value analysis is the systematic identification and selection of the best value alternatives for designs, materials, processes, and systems. It proceeds by repeatedly asking “can the cost of this item or step be reduced or eliminated, without diminishing the effectiveness, required quality, or customer satisfaction?” It is also called value engineering. For example, if customers don’t care about a feature on the product, it is not adding value and can be eliminated.
Value chain analysis looks at all processes and tries to understand what adds value. Value analysis looks rather narrowly at the product/service provided; VBM looks at cash flows.
They probably all end up suggesting the same thing, but every academic needs his/her theory to advance their career.
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