Value Creation Index

Knowledge Center

   

Quantifying the link between an organization's non-financial performance and its valuation in the markets. Explanation of Value Creation Index of CGE&Y.

Contents

  1. Summary
  2. Forum
  3. Best Practices
  4. Expert Tips
  5. Resources
  6. Print

What is the Value Creation Index. Description

The Value Creation Index is a tool that was designed to quantify the link between an organization's non-financial performance and its valuation in the markets.

Traditional methods of assessing organizational performance are no longer adequate in today's economy. The price of a stock is less and less determined by earnings or its asset base. Value creation in today's companies is increasingly represented by the intangible drivers like innovation, people, ideas, and brand.

But these non-financial factors for creating value are difficult to quantify. Also they are rarely acknowledged in accounting methods. Finally they are not adequately measured, not adequately managed, and not adequately reported, by organizations.


The Cap Gemini Ernst & Young (CGE&Y) Center for Business Innovation (CBI) created a tool to quantify the link between an organization's non-financial performance, creating value and a firm's valuation in the markets. Their so called "Value Creation Index" not only quantifies the impact of non-financial performance on market value, but also identifies the specific intangibles that drive value for a given industry. Models have been created for a number of industries, including financial services, airlines, pharmaceuticals, telecommunications, and other sectors.


While the crucial non-financial value drivers vary for each industry, the value creation research team has settled upon some critical categories of intangible performance that determine corporate value creation.


Categories of intangible performance that determine corporate value creation

  • Innovation.

  • Customer relations.

  • Management capabilities.

  • Alliances.

  • Technology.

  • Brand value.

  • Employee relations.

  • Environmental and community issues.

As of 2002, the Center for Business Innovation (CBI) was discontinued unfortunately.


Value Creation Index Forum
  Quotes on Value Creation. Quotations
Hi, do you know of a remarkable, humorous quote by a famous person or a proverb related to value creation?
Please enter a reaction to share it for other people to enjoy! Please use this template:
Author Name Year of Birth - Year of Death, short...
     
 

Value Creation Index Special Interest Group


Special Interest Group

Value Creation Index Education & Events


Find Trainings, Seminars and Events


Best Practices - Value Creation Index Premium

Expert Tips - Value Creation Index Premium
 

Value Creation in Cross-Border Mergers and Acquisitions

Cross-border M&As are subject to a set of factors that affect the value created by international M&As. These factors are listed below:
- M...
Usage (application): International M&A, Value Creation
 
 

Resources - Value Creation Index Premium

Managing Intangible Assets in Higher Education

1. Agenda
2. Growing Importance of Intangible Assets
3. Necessity to Actively Manage IPR
4. Research on Intangible Assets
5. Defin...
Usage (application): Intellectual Capital, Higher Education, Higher Education
 

Value Framework

Achim Seisreiner and Sebastian Traeger argue that a multi-dimensional value framework will help Value Based Management (VBM) to return on the right tr...
Usage (application): Multi-Dimensionality of Value
 

Beyond Financials

Research by Marcelo J. Rossi DBA concludes that 8 determinants (quality of management, quality of products and services, financial soundness, long-ter...
Usage (application): Determinants of value creation
 
 

News

Value Creation Model
     
 

News

Value Creation Method
     
 

Videos

Value Creation Model
     
 

Videos

Value Creation Method
     
 

Presentations

Value Creation Model
     
 

Presentations

Value Creation Method
     
 

More

Value Creation Model
     
 

More

Value Creation Method
     

Return to Management Hub: Decision-making & Valuation  |  Finance & Investing  |  Human Resources  |  Knowledge & Intangibles  |  Strategy


More Management Methods, Models and Theory

Special Interest Group Leader

You here


About 12manage | Advertising | Link to us | Privacy | Terms of Service
Copyright 2016 12manage - The Executive Fast Track. V14.1 - Last updated: 11-12-2016. All names tm by their owners.