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Value Based Management

Autor:   •  December 29, 2016  •  Case Study  •  670 Words (3 Pages)  •  871 Views

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Corporate performance Management

Value Based Management

AB Inbev

Submitted by

Kartik Lilani

IPM2012056

VALUE BASED MANAGEMENT

Value based management is a comprehensive system that engages, motivate and reward the people throughout the organisation who create shareholder value (in some cases it can be stakeholder value). Shareholder value is ultimate goal of every organisation which measures the success of the company. A VBM system encompasses, coordinates and focuses the efforts of the entire workforce that creates value for the shareholders and for themselves. It defines the system upon which the whole organisation can be built, managed and valued. The management involves determining the long term and short term perspectives of the business and striking a balance between them for future functioning. The value of the company is often determined by the financial tool like discounted cash flow analysis, equity spread and economic value added. These tools are used to assess the value creation of the new strategies adopted by the businesses. Thus, the value is created when the returns of these strategic investments exceed the cost of that capital invested.

Value Based Management aims to provide consistency for:

  • Corporate Mission
  • Corporate Strategy
  • Corporate Governance
  • Corporate Culture
  • Corporate Communication
  • Organisation of the Company
  • Decision Process
  • Reward Processes


ABOUT THE COMPANY

Anheuser-Busch InBev SA/NV (abbreviated as AB InBev) is a Belgian-Brazilian multinational beverage and brewing company headquartered in Leuven, Belgium. It is the world's largest brewer and has a 25 percent global market share.

AB InBev was formed through successive mergers of three international brewing groups: Interbrew from Belgium, AmBev from Brazil, and Anheuser-Busch from the United States. It has 16 brands that individually generate more than US$ 1 billion annually in revenue, out of a portfolio of more than 200 brands.This portfolio includes brands Budweiser, Corona and Stella Artois, Beck's, Hoegaarden and Leffe and local brands such as Bud Light, Skol, Brahma, Antarctica, Quilmes, Victoria, Modelo Especial, Michelob Ultra, Harbin, Sedrin, Klinskoye, Sibirskaya Korona, Chernigivske and Jupiler.

Total revenue for all 200 AB InBev brands in 2015 was over 43.6 billion USD. The company employs over 155,000 people in 25 countries and has a global presence in the beer market.

The present aim of the company is briefly mentioned below:

  • Increased Sales and Higher Market Share
  • Grow Asian Markets
  • 15% Cost Reduction
  • Better Distribution Channels


VBM ANALYSIS

Business Process

Change in Behaviour

Impact

Sales & Distribution

  • Shifted from Contract based distribution channels to Self Owned and Leased distribution Channels
  • Increased distribution centres in Growing markets
  • Sales and Distribution channels formed
  • Lower cost for Higher Revenue

Production

  • Increase in the batch size production by introduction of new techniques
  • Smaller Cycle Time processes initiated
  • Increased training for Employees
  • Lower cost of Production
  • Human Resource Development

Branding & Marketing

  • Products marketing expenses increased in Asian markets
  • Tie-ups with Vendors for Increased Promotions
  • Promotion Events around the World
  • Increased EBITDA margin by 38.6%
  • Increased presence in Asian Markets

Decision Process

  • Incorporated sustainable development management
  • Changed the company policy from sales oriented decision making to EVA oriented decision making
  • Increased Sales and Shareholder value
  • Increase in stock price and dividends

Inventory Management

  • Low Inventory distribution system is adopted
  • Low Inventory cost
  • Low distribution costs and increase in PAT

Reward Process

  • Performance Based management process in place
  • Rewards based on performance measures
  • Yearly Benefits for Employees
  • Better working conditions
  • Higher employee retention rates


Analysis

AB Inbev is a very dynamic, market oriented beer corporation with one of the highest market shares in the world. The company is still growing and has a very large market opportunity in Asia. The company adopted the Value Based Management Process after the merger of Anheuser Busch and Inbev. The company is efficient in using VBM Processes for its various markets and enables a better analysis and valuation of its processes. The company has a very strict use of the system and enables the company to develop further. The process though needs a little development with its techniques to ensure higher returns on their processes and need to sync the Corporate Mission, Strategy, Governance, Culture, Communication, Organisation and its Decision and Reward process to enable a better production unit and more aggressive goals.

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