(精品)BCG’S_VALUE_MANAGEMENT_FRAMEWORK_AN_OVERVIEW_FOR_MBA_STUDENTS.ppt
THE BOSTON CONSULTING GROUPP:MasterDkBCGs Value Management Framework-An Overview for MBA Students.PPTRt rt(Ppt)Slide 1March 2,1998 2:01 PM-1 -Copyright 1996BCG/HOLT Planning AssociatesAll Rights ReservedBCGS VALUE MANAGEMENT FRAMEWORKAN OVERVIEW FOR MBA STUDENTSByRawley ThomasDirector of ResearchThe Boston Consulting Group200 South Wacker DriveChicago,Illinois 60606312-627-2618Thomas.RawleyBCG.comTHE BOSTON CONSULTING GROUPP:MasterDkBCGs Value Management Framework-An Overview for MBA Students.PPTRt rt(Ppt)Slide 2March 2,1998 2:01 PM-2 -Copyright 1996BCG/HOLT Planning AssociatesAll Rights ReservedWHAT GETS MEASURED GETS DONETHE BOSTON CONSULTING GROUPP:MasterDkBCGs Value Management Framework-An Overview for MBA Students.PPTRt rt(Ppt)Slide 3March 2,1998 2:01 PM-3 -Copyright 1996BCG/HOLT Planning AssociatesAll Rights ReservedTraditional Valuation Techniques Versus BCGs Valuation FrameworkTraditional Valuation TechniquesForecast nominal cash flows by estimating P&L line items and changes to the balance sheetEstimate terminal value with a perpetuity of the forecasted last years net cash flowDetermine cost of capital by weighting equity CAPM cost with debt costDiscount the cash flows and terminal value to present value with the weighted average cost of capitalObservations on Missing Elements No performance measure to determine if the business is achieving returns above or below the cost of capital or if the trend in those returns is up or downNo fade in performance to determine likely cash flows in a competitive environmentDiscount rates determined by past price changes,not future likely cash flowsNo extensive empirical testingBCGs Valuation FrameworkTranslate accounting statements to gross cash flows and gross cash investments in constant dollars to produce cash on cash returnsTranslate cash on cash returns to economic performance measures(CFROIs)by adjusting for asset life and mix of depreciating versus non-depreciating assetsDetermine sustainable asset growth ratesFade CFROIs and asset growth rates toward corporate averages consistent with life cycle theory and empirical evidence to estimate future cash flows(replaces terminal valuation)Estimate market derived real discount rate by equating the present value of the cash flows for a large aggregate to the sum of the prices of debt and equityApply the market derived discount rate to the cash flows derived from fading economic performance to determine market valuation;subtract debt to determine equity valuationTest model values against actual stock prices for thousands of firms for 10-40 years across many countries;refine,refine,refineTHE BOSTON CONSULTING GROUPP:MasterDkBCGs Value Management Framework-An Overview for MBA Students.PPTRt rt(Ppt)Slide 4March 2,1998 2:01 PM-4 -Copyright 1996BCG/HOLT Planning AssociatesAll Rights ReservedMANY ASSETS FOLLOW THE SAMEUSEFUL OUTPUT PATTERN AS A CAR.ConstantDollarLevelAnnuityEconomicLifeLikelyActualOutputOutput Declinewith StraightLine DepreciationTHE BOSTON CONSULTING GROUPP:MasterDkBCGs Value Management Framework-An Overview for MBA Students.PPTRt rt(Ppt)Slide 5March 2,1998 2:01 PM-5 -Copyright 1996BCG/HOLT Planning AssociatesAll Rights ReservedISSUES WITH TRADITIONAL RETURN MEASURES(*)Economic depreciation=amount of annual sinking-fund payment earning COC required to replace assets($357=0.1/1.114-1)(12,000-2,000)Investment profile of a new plantSubsequent annual measurementYr 1Yr 6Yr 12Income843843843Depreciation714714714Cash flow1,557 1,5571,557Cash invested12,000 12,000 12,000Book capital11,286 7,7163,432ROCE(%)7.510.924.6ROGI(%)131313CFROI(%)101010ROCE=Income/book capitalROGI=Cash flow/cash investedCFROI=(Cash flow-economic depreciation(*)/cash invested$12,000$1,557$2,000IRR=10%THE BOSTON CONSULTING GROUPP:MasterDkBCGs Value Management Framework-An Overview for MBA Students.PPTRt rt(Ppt)Slide 6March 2,1998 2:01 PM-6 -Copyright 1996BCG/HOLT Planning AssociatesAll Rights ReservedYr 1Yr 6Yr 12NOPAT(1)843843843Book capital(2)11,2867,7163,432Cost of capital(3)x10%x10%x10%Capital charge(4)1,129772343EVA(1-4)(286)71500Cash flow(6)1,5571,5571,557Cash invested(7)12,000 12,000 12,000Cost of capital(8)x10%x10%x10%Capital charge(9)1,2001,2001,200Economic dep.(*)(10)357357357CVA(6-9-10)000VALUE-ADDED MEASURES REFLECT RETURN,COST OF CAPITAL AND SIZEReturn on New PlantMeasured Over Time(*)Economic depreciation=amount of annual sinking fund payment earning COC required to replace assets($357=0.1/(1.114-1)(12,000-2,000)Investment profile of a new plant$12,000$1,557$2,000IRR=10%THE BOSTON CONSULTING GROUPP:MasterDkBCGs Value Management Framework-An Overview for MBA Students.PPTRt rt(Ppt)Slide 7March 2,1998 2:01 PM-7 -Copyright 1996BCG/HOLT Planning AssociatesAll Rights ReservedTHE BOSTON CONSULTING GROUPP:MasterDkBCGs Value Management Framework-An Overview for MBA Students.PPTRt rt(Ppt)Slide 8March 2,1998 2:01 PM-8 -Copyright 1996BCG/HOLT Planning AssociatesAll Rights ReservedTHE BOSTON CONSULTING GROUPP:MasterDkBCGs Value Management Framework-An Overview for MBA Students.PPTRt rt(Ppt)Slide 9March 2,1998 2:01 PM-9 -Copyright 1996BCG/HOLT Planning AssociatesAll Rights ReservedTracking the Sampleof 1970 Companiesthrough timeTracking the Sampleof 1980 Companiesthrough timeTracking the Sampleof 1987 Companiesthrough timeNote the averages&dispersions have risenbetween 1970-1987,hypothesized to berelated to supply-sidepolicy changesTHE BOSTON CONSULTING GROUPP:MasterDkBCGs Value Management Framework-An Overview for MBA Students.PPTRt rt(Ppt)Slide 10March 2,1998 2:01 PM-10 -Copyright 1996BCG/HOLT Planning AssociatesAll Rights ReservedTHE MARKET EXPECTS THE PERFORMANCEOF MERCK TO FADE.(REGRESS TOWARD MEAN PERFORMANCE)Fade=0%Fade=10%Illustrates PerpetuityTrap:Overvalues HighReturn FirmsDramaticallyTHE BOSTON CONSULTING GROUPP:MasterDkBCGs Value Management Framework-An Overview for MBA Students.PPTRt rt(Ppt)Slide 11March 2,1998 2:01 PM-11 -Copyright 1996BCG/HOLT Planning AssociatesAll Rights ReservedR2=0.13N=750R2=0.40N=750R2=0.25N=750R2=0.25N=750THE BOSTON CONSULTING GROUPP:MasterDkBCGs Value Management Framework-An Overview for MBA Students.PPTRt rt(Ppt)Slide 12March 2,1998 2:01 PM-12 -Copyright 1996BCG/HOLT Planning AssociatesAll Rights ReservedOn the 24 groups of 25 firms,Stewartclaims a 44%R2.This higher correlationrelates to the elimination of 300 companiesinstead of 31 extreme outliers and the grouping of companies that serves toeliminate the intra-group variance.N=861R2=0.27R2=0.21R2=0.67R2=0.10THE BOSTON CONSULTING GROUPP:MasterDkBCGs Value Management Framework-An Overview for MBA Students.PPTRt rt(Ppt)Slide 13March 2,1998 2:01 PM-13 -Copyright 1996BCG/HOLT Planning AssociatesAll Rights ReservedAPPROACH TO IMPLEMENTATIONWhat Full Effort Might Look LikeModule 1Analytical diagnostic:“value audit”Module 2Measure selection and tailoringModule 3Value Driver analysis of BUsModule 4Install in planning,budgeting&reportingModule 5Install in compensationModule 6Apply to portfolio managementValue analysis of company and business unitsIdentify priorities and issuesReview options against applica-tionsTailor as requiredTransfer approach to BUsLink to operating decisionsRe-examine processes and linkagesProvide training and document-ationStructureMeasuresTargetingResourceallocationPortfolio balancingExternal reportingTHE BOSTON CONSULTING GROUPP:MasterDkBCGs Value Management Framework-An Overview for MBA Students.PPTRt rt(Ppt)Slide 14March 2,1998 2:01 PM-14 -Copyright 1996BCG/HOLT Planning AssociatesAll Rights ReservedCOMPARISON OF COST OF CAPITAL MEASUREMENT METHODSCAPMMarket DerivedAssumes investor discount rate risk premiums did not change during the past measurement period.Therefore,future risk premiums equal past risk premiums.Assumes future cash flows can be estimated so that the discount rate equates the present value of those cash flows to the price.BondInterestRatesDividendDiscountModelsBCGMarket DerivedCost of CapitalTHE BOSTON CONSULTING GROUPP:MasterDkBCGs Value Management Framework-An Overview for MBA Students.PPTRt rt(Ppt)Slide 15March 2,1998 2:01 PM-15 -Copyright 1996BCG/HOLT Planning AssociatesAll Rights ReservedSTUDIES USING MARKET DERIVED METHODSBlanchard,Oliver J.,“Movements in the Equity Premium”,Brookings Paper on Economic Activity,2:1993,pp.75-138.Corcoran,Patrick J.and Leonard G.Sahling,“The Cost of Capital:How High is It?”,The Federal Reserve Bank of New York:Quarterly Review,Summer 1982,p.23-31.Farrell,James L.,“The Dividend Discount Model:A Primer,”Financial Analysts Journal,1985,v41(6),pp.16-19,22-25.Fuller,Russell J.,“Programming the Three-Phase Dividend Discount Model,”Journal of Portfolio Management,1979,v5(4),28-32.Gordon,Myron J.and E.Shapiro,“Capital Equipment Analysis:The Required Return of Profit,”Management Science,3 pp.102-110(October 1956).Holland,Daniel M.and Stewart C.Myers,“Trends in Corporate Profitability and Capital Costs”in Robert Lindsay,ed.The Nations Capital Needs:Three Studies,Committee for Economic Development,New York,pp.103-188.Rozeff,Michael S.,“The Three-Phase Dividend Discount Model the ROPE Model,”Journal of Portfolio Management,1990,v16(2),pp.36-42.Williams,J.B.,The Theory of Investment Value,Harvard University Press,Cambridge,Mass.,1938.THE BOSTON CONSULTING GROUPP:MasterDkBCGs Value Management Framework-An Overview for MBA Students.PPTRt rt(Ppt)Slide 16March 2,1998 2:01 PM-16 -Copyright 1996BCG/HOLT Planning AssociatesAll Rights ReservedBCG/HOLT RESEARCH USING MARKET DERIVED METHODSby Rawley ThomasHOLTs Discount Rate,April 25,1986,122 pagesCovers cash estimation,market derived methodology,tax premiums,leverage,comparison to other academic research,and CAPMNew Electric Utility Discount Rate,September 6,1987,40 pagesShows discount rates for utilities that are higher than industrials.Postulates government regulation and the risk of unanticipated inflation may cause the higher risk.Valuation Model Improvements,March 3,1989,5 pagesCovers leverage researchNew System Adjustments,May 3,1989,4 pagesCovers revised leverage adjustmentsReal Equity Rates,October 1,1989,21 pagesUpdates cost of capital research on tax premiums and leverageReal Equity Discount Rates-Data,October 2,1989,23 pagesDisplays IRS,Federal Reserve,and HOLT data underlying discount rate research 1950-1988.Effect of Proposed Change on Stock Prices,October 3,1989,38 pagesAccounts for 200 point drop in market by analyzing effect of capital gains indexation versus lower capital gains tax ratesResponses to Equity Discount Rate Research,November 2,1989,4 pagesCongressional response to HOLT researchAnother Response to Discount Rate Research,December 4,1989,10 pagesDepartment of Treasury response to HOLT researchVolatility“Risk”Versus Inflation Risk,July 25,1990,11 pagesCompares CAPM volatility risk to inflation riskInvestors Discount Rate for Oil Companies,March 22,1991,63 pagesCorrelates oil industry market derived equity discount rates to government ownership and leverageTHE BOSTON CONSULTING GROUPP:MasterDkBCGs Value Management Framework-An Overview for MBA Students.PPTRt rt(Ppt)Slide 17March 2,1998 2:01 PM-17 -Copyright 1996BCG/HOLT Planning AssociatesAll Rights ReservedMARKET DERIVED DISCOUNT RATEPrice =Discounted Present Value of Expected Future Net Cash FlowsCorporate Sector Cash Flowsvary with the structuralcharacteristics of an economyInvestors Discount Rateis volatileS&P 400DJIA 30etc.THE BOSTON CONSULTING GROUPP:MasterDkBCGs Value Management Framework-An Overview for MBA Students.PPTRt rt(Ppt)Slide 18March 2,1998 2:01 PM-18 -Copyright 1996BCG/HOLT Planning AssociatesAll Rights ReservedBCGS METHOD FOR DERIVING INVESTOR DISCOUNT RATES(WACCs)DIFFERS FROM TRADTIONAL CAPM METHODS.WE START WITH A SAMPLE AND A VALUATION MODEL TO DERIVE A WACC.THEN WE SPLIT THE WACC INTO ITS DEBT AND EQUITY COMPONENTS.FROM THE EQUITY RATE,WE CALCULATE THE RISK PREMIUM OVER GOVERNMENT BOND RATES.Sample of CompaniesCaculate CFROI for SampleCalculate Growth rates for Country EconomyEmploy Present Value Valuation ModelDetermine Market Derived Investor Discount Rate(WACC)Cost of DebtMarket LeverageMarket Derived Real Equity RateInflationary ExpectationsMarket Derived Equity Risk PremiumGovernment Bond RatesTHE BOSTON CONSULTING GROUPP:MasterDkBCGs Value Management Framework-An Overview for MBA Students.PPTRt rt(Ppt)Slide 19March 2,1998 2:01 PM-19 -Copyright 1996BCG/HOLT Planning AssociatesAll Rights ReservedCFROIS CORRELATE HIGHLY WITH THE FUNDAMENTALS OF INFLATION,AND CORPORATE TAXES1996 DISCOUNT RATE SAMPLE10.8596 Actual11.4197 Forecast“Best Fit Line”Fundamental CFROI=14.65-0.438*GDP Deflator Inflation-0.122*Corporate Tax Ratet-Statistics:-9.54 on GDP Deflator Inflation;-7.00 on Corporate Tax RateCorrelation between Inflation and Tax Rates:0.00%CFROI ActualR2=0.76THE BOSTON CONSULTING GROUPP:MasterDkBCGs Value Management Framework-An Overview for MBA Students.PPTRt rt(Ppt)Slide 20March 2,1998 2:01 PM-20 -Copyright 1996BCG/HOLT Planning AssociatesAll Rights ReservedTO SMOOTH ECONOMIC CYCLES,BUT INCORPORATE STRUCTURAL SHIFTS,BCGS VALUATION MODEL ASSUMES CURRENT CFROI LEVELS FADE TOWARD THE 5-YEAR PAST MEDIAN OF THE DISCOUNT RATE SAMPLE AT A 10%RATEAnnual CFROIs5-Year Past Median CFROIsTHE BOSTON CONSULTING GROUPP:MasterDkBCGs Value Management Framework-An Overview for MBA Students.PPTRt rt(Ppt)Slide 21March 2,1998 2:01 PM-21 -Copyright 1996BCG/HOLT Planning AssociatesAll Rights ReservedBCGS VALUATION MODEL ANTICIPATES THAT THE GROSS ASSET GROWTH RATE OF ALL COMPANIES IN THE USA FADE TOWARD THE LONG TERM ECONOMY AVERAGEAnnual GDP Growth Rates3.2%Compounded Annual Growth Rate in GDP from 1950-1996Unlike CFROIs,where clear trends are evident,there does not appear to be a clear trend in growth rates for the economy.Consequently,a long term average smooths out the annual fluctuations with no loss in investor anticipated trend.THE BOSTON CONSULTING GROUPP:MasterDkBCGs Value Management Framework-An Overview for MBA Students.PPTRt rt(Ppt)Slide 22March 2,1998 2:01 PM-22 -Copyright 1996BCG/HOLT Planning AssociatesAll Rights ReservedPrice=Discounted Present Value of Expected Future Net Cash FlowsTHE INVESTORS DISCOUNT RATE IS THAT RATE WHICH EQUATES THE PRESENT VALUE OF CASH FLOWS FROM BCGS VALUATION MODEL TO THE MARKET VALUE OF DEBT AND EQUITYMarket Value of Debt andEquity of S&P 400 Sample$3,474 Billion$1,903 Billion of AssetsReturning 11.1%and Growingat 3.2%per yearFading 10%toward10.8%CFROISolve for the Rate at WhichPresent Value of Cash FlowsEquals PriceSeptember=5.77%(Weighted Averaged Real After-Corporate-TaxCost of Capital)Answer tells us what the Marketis presently requiring as aRate of ReturnTHE BOSTON CONSULTING GROUPP:MasterDkBCGs Value Management Framework-An Overview for MBA Students.PPTRt rt(Ppt)Slide 23March 2,1998 2:01 PM-23 -Copyright 1996BCG/HOLT Planning AssociatesAll Rights ReservedCALCULATION OF FUTURE CASH FLOWS AND PRESENT VALUES1996 DISCOUNT RATE SAMPLETHE BOSTON CONSULTING GROUPP:MasterDkBCGs Value Management Framework-An Overview for MBA Students.P
