Management Effectiveness

Economic Effectiveness

Internal rate of return (IRR) – The rate, which provides the 0 of the

Net Present Value (NPV)

Economic Effectiveness

We need:

CF – cash flow

IC – Invested Capital

T – time period

Economic Effectiveness

Or

Economic Effectiveness

EVA (Economic Value Added®)

CFROI (Cash Flow Return оn Investment) CVA (Cash Value Added)

Employee Commitment Index Hurdle Rate

Shareholder Value

Total Value Management

Total-Shareholder-Returns + BCG matrix

Subsystems

 Effectiveness of resource application systems.

 Effectiveness of business projects’ coordination system.

 Effectiveness of control system in all areas of the company.

 Effectiveness of aim setting in the company.  Effectiveness of decision making system.

Subsystems

 Effectiveness of motivation systems.

 Effectiveness of delegation and responsibility distribution systems.

 Effectiveness of company’s activities evaluation system.

 Effectiveness of forecasting system.

 Effectiveness of personnel training system.

Effectiveness of Strategic Approach

 Effectiveness of implemented methods

 Effectiveness of forecasting systems for the long-term period

 Effectiveness of external environment evaluation system for the long-term period.

 Effectiveness of internal evaluation system for the long-term period.

Effectiveness of Tactic Approach

 Effectiveness of implemented methods  Effectiveness of short-term forecasting

systems

 Effectiveness of external environment evaluation system for the short period.

 Effectiveness of internal evaluation system for the short period.

Economic Effectiveness of

Management

1. Index of management effectiveness

ME = P/MC

where

P – profit

MC – costs for management