Thesis (MBA)--Stellenbosch University, 2000. / ENGLISH ABSTRACT: Modern companies need to compete on a global level to obtain sufficient capital from
investors. That is why it is becoming increasingly important for companies to
concentrate particularly on fulfilling the expectations of the investment community.
With this in mind, companies have begun to optimise their operational business
processes in order to gain a greater degree of efficiency and in doing so greater
security. This movement started in the early nineties with intensive Business Process
Reengineering (BPR) exercises. A key enabler for increased efficiency through
Business Process Reengineering was the infrastructure provided by the
development of integrated software packages called Enterprise Resource Planning
(ERP) systems. BPR exercises are normally part and parcel of an ERP
implementation project. After the implementation of an ERP system in any business,
management will also be in a vastly better position to control the business operations
through better information delivery.
Most companies are still controlled and managed on the basis of historical financial
figures such as profit. Traditional financial statements are increasingly being viewed
with distrust due to the perceived ease with which they can be manipulated. As many
investors value companies and their performance on the basis of expected "future
free cash flows" (excess cash after investment in all positive NPV projects), many
companies are now switching from profit-based management to the more
comprehensive Value Based Management principles, that takes this into account.
A key enabler of the Value Based Management approach is the development of a
Balanced Scorecard (BSC) that contains the measures whereby the business should
be controlled and measured. With the BSC, a business strategy is translated into a
strategic measurement system that focuses on more than just the traditional financial
aspects by including measures in other areas of a business, such as customer
satisfaction or internal efficiencies. In the BSC financial view the primary indicator of
business success is Economic Value Created (EVe). Eve is a true indicator of
shareholder wealth created and takes the cost of capital into account. EVC
performance becomes the ultimate barometer of business success. Value Based Management companies that invested heavily in the implementation of
ERP systems want a good return but normally don't know how best to achieve this.
They are wondering how to best make use of the wealth of information that is
suddenly at their disposal. In driving shareholder value they are faced by the
following questions:
• How to translate investor expectations into business strategy and how to link this
strategy to day to day operations.
• How to use the acquired ERP system in support of this Value Based
Management approach to enable maximum return on the investment.
In this study project a real South African company, XX Automotive (fictitious name),
that recently implemented SAP R/3 as an ERP system is covered as an example to
illustrate how these questions can be answered. In Part I, this study project begins
by describing all the elements and basic principles of a Value Based Management
System such as a Balanced Scorecard (BSC) with EVC as prime measure. Part II
illustrates how the XX Automotive financial strategy is translated into a Balanced
Scorecard with Economic Value Created (EVC) as main financial measure and how
these defined measures were represented by SAP reports that were specifically
developed for this purpose.
The Balanced Scorecard represented by the SAP reports serves only as a one way
measurement system. The next critical step is to determine how to influence the
results. The information that populates the SAP reports in XX Automotive's Balanced
Scorecard is generated all over the business by the end users in their respective
departments. The influence on EVC through business actions by these individual
units is discussed in depth as it provides the keys that illustrate how the value of
EVC can be impacted positive or negatively by each. Giving individuals the power to
influence EVC through incentive schemes is crucial for long term success. It is
illustrated how improving EVC became the new business focus at XX Automotive
and how each individual employee can visually see his role in influencing the
outcome. Meeting the value-based "Expected EVC Improvement" targets will
generate target level bonus payments. Each XX Automotive employee is
encouraged to think and act like an owner because he is going to be paid like one. / AFRIKAANSE OPSOMMING: Moderne maatskappye moet op globale skaal kompeteer vir genoegsame kapitaal
vanaf beleggers. Daarom word dit al hoe meer belangrik vir maatskappye om te
konsentreer daarop om aan die verwagtinge van die beleggers gemeenskap te
voldoen. Met dit in gedagte, het maatskappye begin om hulle operasionele
besigheidsprossesse te optimeer om sodoende 'n beter vlak van effektiwiteit te
bereik en daardeur groter sekuriteit aangaande hul eie voorbestaan te verseker.
Hierdie beweging het in die negentigerjare begin met intensiewe
besigheidsherontwerp, die sogenaamde 'Business Process Reengineering' (BPR)
oefeninge. 'n Belangrike katalisator vir verbeterde effektiwiteit deur BPR is die
infrastruktuur wat voorsien is deur die ontwikkeling van geintegreerde besigheidssagtewarepakkette
nl. 'Enterprise Resource Planning' (ERP) stelsels. Met 'n ERP
implementeringsprojek word gewoonlik intensiewe BPR gedoen. Nadat 'n ERP
pakket geimplimenteer is behoort bestuur ook in 'n baie beter posisie te wees om
besigheidsoperasies te beheer deur die verbeterde inligting verkry uit die ERP
sagteware.
Dit word ook duidelik dat die meerderheid van maatskappye steeds beheer en
bestuur word op die basis van historiese finansiële maatstawwe soos wins in die
inkomstestaat. Weens die feit dat baie beleggers maatskappye waardeer op grond
van hul sogenaamde "future free cash flows" (oorblywende kontant na investering in
alle NPV positiewe projekte), skakel maatskappye oor van 'n winsgebaseerdebestuurstelsel
na die meer omvattende' Value Based Management' stelsel, waarvan
'Economic Value Created' (EVC) die hoofkomponent is. 'n Belangrike skakel in die
'Value Based Management' initiatief is die ontwikkeling van 'n 'Balanced Scorecard',
'n bestuurskonsep waarin die maatstawwe opgesluit lê waarmee die besigheid
beheer en bestuur moet word.
'Value Based Management' gedrewe maatskappye wat groot investerings gemaak
het in die implementering van ERP sagteware wil 'n goeie opbrengs op die belegging
hê maar weet gewoonlik nie wat die beste manier is om dit te doen nie. Hulle wonder
hoe om die maksimum voordeel te trek uit die skatkis van besigheidsinligting wat skielik tot hulle beskikking is. In 'n strewe om beleggers waarde te verbeter kom
hulle voor die volgende vraagstukke te staan:
• Hoe om beleggers verwagtinge om te skakel in besigheids strategie en hoe om
hierdie strategie te skakel met daaglikse besigheids operasies.
• Hoe om die ERP stelsel te gebruik ter ondersteuning van die 'Value Based
Management' prinsiep om die maksimum opbrengs op belegging te kry.
In hierdie studieprojek word 'n Suid Afrikaanse maatskappy, XX Automotive (fiktiewe
naam), gedek wat onlangs SAP R/3 as 'n ERP stelsel geimplimenteer het as 'n
voorbeeld gebruik om te illustreer hoe hierdie vrae in die praktyk beantwoord kan
word. In Deel I van hierdie studieprojek word al die elemente en basiese beginsels
van die 'Value Based Management' sisteem bespreek. Deel II illustreer hoe die XX
Automotive finansiële strategie omgesit is in 'n 'Balanced Scorecard' met Economic
Value Created (EVC) as die hoof maatstaf en hoe al die finansiële maatstawwe in
die Balanced Scorecard deur middel van SAP verslae, wat spesifiek vir hierdie doel
ontwikkel is, weergegee word.
Die 'Balanced Scorecard', soos voorgestel deur die verslae in SAP, vorm net 'n
metings instrument. Wat van groter belang is, is om te bepaal hoe die resultate
beinvloed kan word. Die bestuursinligting waaruit die SAP verslae in die XX
Automotive 'Balanced Scorecard' bestaan word gevorm deur die
besigheidseindgebruiker op die SAP stelsel elke keer wanneer 'n
besigheidstransaksie uitgevoer word. Die invloed op EVC deur individuele
besigheidseenhede word in diepte bespreek aangesien dit deurslaggewend is ter
illustrasie van hoe die EVC waarde positief of negatief geraak word deur hul
besigheids aksies. Om individue die mag te gee om die waarde van EVC te
beinvloed deur middel van 'n aansporingstelsel is kritiek vir lang termyn sukses. Elke
XX Automotive werknemer word aangespoor deur 'n bonus stelsel om soos 'n
aandeelhouer op te tree aangesien hy soos een vergoed sal word.
| Identifer | oai:union.ndltd.org:netd.ac.za/oai:union.ndltd.org:sun/oai:scholar.sun.ac.za:10019.1/51681 |
| Date | 12 1900 |
| Creators | De Kock, Jacques |
| Contributors | Du Plessis Smith, J., Stellenbosch University. Faculty of Economic & Management Sciences. Graduate School of Business. |
| Publisher | Stellenbosch : Stellenbosch University |
| Source Sets | South African National ETD Portal |
| Language | en_ZA |
| Detected Language | English |
| Type | Thesis |
| Format | 89 p. : ill. |
| Rights | Stellenbosch University |
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