|
With our objective defined (intrinsic value), we must focus on how to get there (value creation). Based on the SWAV, adding value would be increasing intrinsic value, which is increasing future cash flows. In the introduction to this chapter we mentioned hackneyed expressions like "adding value". The way SAs increase value is called the value proposition. The SWAV will test whether value propositions are increasing or adding value using the successively more stringent filters. There are three types of value propositions:
Revenue increase and maintenance (RIM)
Competitive repositioning
Efficiency
The goal is to turn these value propositions into a stream of cash. The objective of the SWAV is to increase the probability of creating a cash stream that will increase intrinsic value. Let's explore these value propositions in detail.
|