Explore BrainMass

Proven Ways to Increase Share Value

The article, "Proven Ways to Increase Share Value," describes several ways to increase the value of an organization. Which of these might be applicable to an organization and why? Please provide a reference.

Solution Preview

The article "Proven Ways to Increase Share Value" by Chen, Conover, and Kensinger, describes six
ways to improve the profitability of an organization which has shareholders. Its first sentence
sets the tone of the entire article:

"Value Based incentive systems could be improved if the explicitly reward management actions that
create or enhance the firm's real options."

In other words, if you reward the managers when they do things that bring money in, they are more
likely to bring more money in and discourage actions that waste assets or prevent an increase in
profits, which will increase the retained earnings for the shareholders.

The six ways that are presented to accomplish this are:

1) Find Investment opportunities that beat the market, or expand in areas of the competitive advantage of the organization. This means that things that the firm does better than anyone else should be exploited and developed. Corollaries to this principle are to find better business unit strategies than anyone expected you would, and winning isn't enough, you have to beat the "point spread" This involves examining the entire business cycle, from ...

Solution Summary

The proven ways to increase shares value are given. How these are applicable to an organization are given.