Ucd Sf Personal Exam Notes

Contents Page |

Value drivers………………………………………………………….. | 2 |

Asset Beta……………………………………………………………… | 3 |

NOPLAT & WACC…………………………………………………….. | 4 |

BURG Case Study……………………………………………………... | 5 |

KIBANDA Case Study…………………………………………………. | 8 |

Inherent Risks………………………………………………………… | 9 |

What are value drivers?

Value drivers are entities that increase the value of the product or service, positioning the image of the company to be at a competitive advantage, have a significant influence on shareholder value and some of its value drivers are controllable. Value drivers are often the leading indicators of a company’s performance while financial results (such as ROCE) are lagging indicators.

Most often, successful companies focus on key value drivers which are commonly intangibles and employees; however, these vary among different business industries.

For example, a telecommunication company in Singapore, M1, it is known by reputation for providing good network coverage and efficient after sales customer service. The key value drivers for the company are the employees who are able to deliver customer satisfaction and their investment in advanced technology and high skilled workers to solve the problems faced by consumers. Similarly, a restaurant key value driver includes more than just excellent customer oriented waiter/waitresses for a satisfied customer. The restaurant’s delectable food and its menu, location of the restaurant, cost control and a positive dining experience for the diners, are the value creation that generates cash flow for the restaurant. Another example is the retail industry, whereby the merchandise mix and location is an important value driver. The sales personnel, inventory management and cost control are also important key value drivers.

Therefore, it is important to retain good employees and protect the company’s intangibles like intellectual property rights and the business strategies which add great value to the business. Retaining...