| page 3/Management Principles Information on the Internet previous page VII. Economic Value-added Management Principles. Several websites identified in this section provide insights into the computational aspects of economic value-added (EVA) determinations. The management accountant should understand these aspects. But, broader than computing economic value added (to a project or to a company), is the understanding of how to focus an organization’s management to EVA goals. The management accountant, it seems to me, should understand about this focus, the relationship between EVA measurements and goals goals, and implementation. Websites, that can be linked to in this section, should help in this understanding. At the Stern Stewart website, www.eva.com, you can read Stern Stewart articles on EVA, reports on Stern Stewart implantation of EVA metrics in companies, and other EVA-related information. Clicking on “EVA in Action: Client Stories” and “Research Reports” will take you to links with a lot of value-related information. This link, www.business.com/directory/financial_services/investment_banking_and_brokerage/mergers_and_acquisitions_manda/business_valuation_techniques /economic_value_added_eva, takes you to a site, provided by Business.com, that has links to many sites that provide information on economic value-added principles and use. Professor Damodaran, of New York University, has a lecture, at this site, pages.stern.nyu.edu/~adamodar/New_Home/lectures/eva.html, which compares computations for determining an investment value, using both Economic Value Added (EVA) and Net Present Value (NPV) analysis. The two approaches are shown to give the same result. VIII. Knowledge Management Principles. The impact that “knowledge” can have on an organization’s welfare is undeniable, and the organizations that learn to better manage “knowledge” are likely the organizations that will thrive better. Since what can be measured can be better managed, there is likely to be an ever-increasing focus on “knowledge” measurements (including by accountants) in the future. Whether these measurements will make their way to the organization’s financial statements is not very important, it seems to me, as to whether management accountants should be interested in such measurements. Participating in measuring “knowledge or intellectual capital”, so that such capital can be better managed to increase benefits to organizations, should be of interest to the management accountant. Websites identified in this section lead to a lot of information related to knowledge management. An article “The Value of Computers, Information, and Knowledge”, written by Paul Strassman, is at this site, www.strassmann.com/pubs/cik/cik-value.shtml. The article deals with why and how “knowledge or intellectual” capital can be measured. An analysis, supported by data, is provided on costs associated with information technology, and with the information processes within a company. An information productivity metric, for measuring the productivity of using information within an organization, is suggested. Companies and countries are compared using this metric. This link, www.knowledgebusiness.com/, takes you to a site, maintained by The KNOW Network, at which you can access some knowledge management-related information at the site (full access to all information requires membership and a fee). Searching the site on “best practices” returned dozens of hits. There is also a good list of links (click “Knowledge Library”) to other knowledge management sites. A site, www.knowledge-nurture.com, maintained by Buckman Laboratories, is intended to be a learning center for knowledge management. From this site, you can access: definitions and introductions to knowledge management; articles and case studies written by Buckman personnel; a library of articles; and a search engine for searching the Buckman website. A search on “costs” yielded two articles. Juergen Darum maintains a website, www.businesscontrolling.info, which focuses on the increasing importance of intangible assets in the underlying value of organizations. Articles and reviews deal with the effects of knowledge, innovations, and other “intellectual capital” assets of a company. The emphasis is on the increasing importance of this “intellectual capital” and what managers should do about it with respect to the value of a company, whether booked or non-booked (e.g., market capitalization). IX. Theory of Constraints Management Principles. Managing an organization by finding the constraint, which has the greatest effect on keeping the organization from more profits, relieving this constraint, and then on to finding the next most serious constraint restraining profits, is, in a sense, a simple concept. However, identifying those most important constraints effecting profits, and how, quantitatively, they affect profits, is a little bit more challenging, it seems to me, and requires the type of analytical skills that accountants have. Websites identified in this section should assist the management accounting in providing analysis related to managing an organization using theory of constraints management principles. The Goldratt Institute has a library page, www.goldratt.com/library.htm, at which you can access articles and white papers dealing with theory of constraint (TOC) topics. The Iowa State Center for Industrial Research and Service has a site, www.ciras.iastate.edu/library/toc, intended to help companies learn about the theory of constraints and its applications. click here to go to the next and final page |