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What
are the disadvantages of Value Based Management? VBM Drawbacks??
As often the case, the
drawbacks or disadvantages of Value Based Management are the opposite of
its benefits.
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VBM is an
all-embracing, holistic management philosophy, often requiring culture
change. Because of this, large-scale VBM initiatives take considerable
time, resources and patience to be successful.
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Value creation may
sound more simple than corporate strategy, but it isn't. It is actually
more or less the same.
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Measuring for value,
performance management and balanced scorecard are very powerful management
support tools and processes, but have a cost of their own so it is not
advisable to go to deep in detail or use metrics that are over-complex.
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Extreme caution must
be made not to measure the wrong things as this may almost certainly lead
to value destruction.
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VBM requires strong
and explicit CEO and executive board support.
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Comprehensive
training and consulting support is advisable or even necessary, but can be
quite costly.
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The perfect VBM or
valuation model has yet to be invented. No matter which one you choose,
there will always be drawbacks to consider.
Compare:
Benefits of Value Based
Management |
History of Value Based
Management
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