The Four Elements of Values
The role of “Value” in business management and strategic planning is comprised of 4 distinct elements.
The Four (4) Elements of “Value” Impacting Business Management and Strategic Planning:
- Financial Value
- Financial data, metrics, and statistical analysis done at the corporate or company level
- Strategic Value
- Strategic planning, management vision and longer-term business direction
- Market Value
- On-going information gathering and analysis at the product/technology and market segment levels
- Image Value
- Market segment driven tactics and activities that enhance a company’s position in the markets they serve
In general, all companies, regardless of the size and breadth of their business, must deal with each of these elements in the process of managing their business. The importance of each and the level of effort required, however, significantly varies organization-to-organization.
Financial value determination is a quantitative activity. It involves gathering extensive detail on the company’s present business situation. It also includes analysis of the data in relation to past performance as well as adding perspective to future business goals and objectives. In addition, it is a necessary component of the decision-making process when some course corrections in strategy may be required.
Strategic value can be described as planning and implementing the longer-term direction for the company. Strategic value is both a qualitative and a quantitative activity. Depending on the composition of the company’s business and the different elements that comprise it, the balance between these two activity types can vary significantly. Among the many determinants of this balance are business fragmentation, channel-to-market, regulatory/compliance issues, geographical complexities, … and many others.
Market value determination and monitoring is fundamental to most every business strategy, regardless of how large or small the company may be. Assessment of market value is a mixture of quantitative analysis and qualitative elements. The importance of understanding and monitoring market value is an essential component to maintaining the health of a business.
Examples of both quantitative and qualitative elements of market value which are often monitored by a company.
The importance of image (relative to other values) shifts considerably depending on the industries and markets which constitute a company’s business portfolio. While this value element clearly is highly qualitative, for some markets the increased use of analytics has added a quantitative component to image value.
For coatings, there are two separate categories where image value is a key element of a successful business strategy. First, there are those industries/markets where the coating manufacturer comes into direct contact with the consumer. Second, there are those markets that involve a high level of performance and carry with them elements of liability that elevate the need for quality, consistency, and support from the supplier.