Finance and Cost Accounting - Strategy and Organization

Improve the valuation of your strategic investments	When initiating costly investment projects, it is generally seen as a good idea to evaluate the probable return on investment beforehand. This is the purpose of Net Present Value (NPV), the main valuation tool used by most companies. However, NPV does not give the full picture. Two recent advances in strategic research offer ways to improve the valuation of your strategic investments, namely, real option theory, which integrates the fact that the content of projects can be adjusted depending on the situation or initial results obtained, and game theory, which takes account of the impact of competitive moves on the value of a project.
Strategic Investment, Han T.J. Smit, Lenos Trigeorgis, Princeton University Press, 2004

Value-Based Management	Value-based management has mobilized a great many companies in the past decade. Managing based on indicators like EVA has been touted as the best way to improve the market value of a company. Value-Based Management warns readers of the limitations of this approach. In practice, value-based management has a real impact only in the specific case of capital intensive companies, provided that certain key success factors are observed to boot!
John D. Martin & J. William Petty. Harvard Business School Press, 2000.

Profit Beyond Measure	Stock market pressure has encouraged many companies to adopt management by financial results, particularly since setting stretch objectives pushes employees to perform. Yet, Profit Beyond Measure reveals that this approach often generates hidden costs and can be demoralizing. The authors instead recommend management by means, an approach used by Toyota and Scania. They show how focusing on operational improvement produces better long-term results. They also offer the keys to the successful implementation of this management method.
H. Thomas Johnson & Anders Bröms. Simon & Schuster, 2000.

Beyond Greed and Fear	Theory postulates that financial markets are perfect reflections of economic reality. Beyond Greed and Fear invites readers to reconsider this hypothesis, since observation effectively shows that markets often behave irrationally. The author focuses on the many psychological biases and interpretive errors that influence market players. Corporate executives and financial managers are encouraged to take a step back from the advice and forecasts of financial analysts, and carefully prepare financial communication in light of investor psychology.
Hersh Shefrin, Harvard Business School Press, 2000.

The Quest for Value	This book is a work of reference on the concept of EVA (Economic Value Added), which aims to provide a more faithful reflection of how well companies create value than traditional profit or dividend measures. The author specifically recommends using EVA as the basis for calculating the variable portion of executive compensation, and suggests that financial restructuring can create value in two ways, by promoting aggressive debt utilization and delegating financing to business units.
G. Bennet Stewart, III, Harper Business, 1992.

EVA	In recent years, EVA has become an indicator of choice to evaluate the value created by companies. However, beyond the rankings published in magazines, how can EVA be used as an operational management tool? EVA, published by one of the executives of the firm that invented the concept, offers an update on the subject. The author shares his conclusions on the first experimental years of using tools based on EVA, and offers practical advice on applying these methods within the company.
Al Ehrbar, Wiley, 1999.

Valuation Measuring and Managing the Value of Companies	This book presents the tools to measure the shareholder value that companies create, and particularly stresses the importance of business tracking based on present cash flow, which effectively helps: identify which strategic units create value; coordinate restructuring; evaluate dismantlement risks by measuring company attractiveness to potential raiders.
Tom Copeland, Tim Koller and Jack Murrin, John Wiley & sons, 1991.

Relevance Regained	This book sheds new light on operational management systems, and begins by focusing on the dangers of traditional accounting-based management, which can lead to bad decisions. The author seeks to demonstrate that ABC (Activity-Based Costing) is only half the answer, and just as dangerous if misused. The conclusion underlines the critical importance of using management indicators that go beyond mere cost-related data.
H. Thomas Johnson, The Free Press, 1991.

Le Management Par les Contraintes	This book holds that companies can improve their financial performance by rethinking production management methods and tracking indicators. The author suggests that companies refrain from trying to utilize all of their industrial assets at every stage of production and instead manage production around bottlenecks, in order to minimize materials and unfinished product stocks. Batch order and size would then be determined by maximum throughput capacity at these bottlenecks.
Philip Marris, Les Éditions d'Organisation, 1994.

The Balanced Scorecard	This book goes further than “Relevance Regained” and proposes that companies go beyond mere corporate accounting systems and use a tracking system that monitors performance in four complementary arenas: economics; customer satisfaction; process functioning; supporting infrastructures.
Robert S. Kaplan and David P. Norton, Harvard Business School Press, 1996.

When Lean Enterprises Collide	This book, principally devoted to cost control techniques, offers interesting thoughts on the strategic impact of lean production methods. The author shows that it is illusory for companies to pursue sustainable differentiation, and consequently recommends that they acquire management skills required to succeed in a context of direct competition.
Robin Cooper, Harvard Business School Press, 1995.

CFO	Written by Price Waterhouse, this book describes the major challenges with which financial executives are or will be confronted, e.g. creating value, managing resource allocation choices, managing strategic risks, communicating with investors, etc. The authors examine these respective challenges and propose adapted principles and approaches.
Price Waterhouse Financial and Cost Management Team, Wiley, 1997.

Cost & Effect	This book provides guidelines for building an effective cost management system. The authors begin by describing the general steps for moving toward an ideal system that integrates accounting reports into an ABC (Activity Based Costing) system, then proceed to explain the key drivers that must be utilized to complete each step.
Robert S. Kaplan and Robin Cooper, Harvard Business School Press, 1997.

Real Options	Certain strategic investments pose real dilemmas, for example, when economic projections show mediocre profitability for a project, while executives cannot help intuitively feeling that it has a promising future. Based on the theory of financial options, «Real Options » helps reconcile economic valuation and strategic intuition. The authors show why traditional valuation methods sometimes underestimate the real value of a given project, and provide an analysis framework to improve understanding of the economic mechanisms at work.
Martha Amram and Nalin Kulatikala, Harvard Business School Press, 1998.