Publications
Managing for Shareholder Value – International survey 2003/04
Management: the key to competitive advantage
PA Consulting Group has been conducting international research into Managing for Shareholder Value (MSV) for five years. This research has shown that the importance of MSV is well accepted. However this year’s survey saw a reduction in the number of top executives world-wide who agreed with the statement: ‘we believe that the overarching objective of our business is to maximize long-term shareholder value’.
Managers have had an unusually demanding environment to cope with in the last couple of years. Indeed, it is clear that much of this variation is market-wide and that individual companies have been swept off course by these overall variations. We suspect this is one of the factors that has led managers to question how much impact they can really have on the performance of their business by adopting approaches such as managing for shareholder value.
In this year’s survey we decided to focus on understanding the answer to this issue in as much detail as possible. The results are startling. Even in this time of enormous uncertainty and market volatility, it is still clear that the impact of MSV is so large that is should be at the top of every CEO’s agenda:
- companies that have fully deployed MSV achieved a dramatic 5% of additional total shareholder return per annum.
- the difference is large in comparison with other determinants of performance: it accounts for around 45% of the variation in performance between companies – ie half their relative competitive advantage
- in particular, the impact of adopting value-based strategy is enormous.
We therefore conclude that, for the majority of companies which have not yet fully implemented managing for shareholder value, there is an important gap they need to close if they are not to be left behind their competitors.
Each of these points is examined in more detail in the report, which can be requested by pressing the red button at the top of this page.
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