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Managing for Value

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The CEO’s guide to corporate finance

November 2010—Four principles can help you make great financial decisions—even when the CFO’s not in the room.more

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Valuation

A better way to understand TRS
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A better way to understand TRS

July 2008—Traditional methods of analyzing total returns to shareholders are flawed. There’s a better way.more

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The irrational component of your stock price

July 2006—In the short term, emotions influence market pricing. A simple model explains short-term deviations from fundamentals.more

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Balancing ROIC and growth to build value

March 2006—Companies find growth enticing, but a strong return on invested capital is more sustainable.more

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Measuring long-term performance

March 2005—Earnings per share and share prices aren’t the whole story—particularly in the medium and long term.more

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Who’s afraid of variable earnings?

June 2002—Many companies waste effort smoothing short-term earnings. They would be better off focusing on long-term profit and return on capital.more

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Prophets and profits

October 2001—Executives should be wary of bending strategy to suit the wayward long-term earnings forecasts of equity analysts.more

commentary | McKinsey Quarterly

Valuing dot-coms after the fall

June 2001—Investment values always revert to a fundamental level based on cash flows. Get used to it.more

book excerpt | McKinsey Quarterly

What is value-based management?

August 1994—An excerpt from Valuation: Measuring and Managing the Value of Companies, second edition.more

Pricing

The power of pricing
article | McKinsey Quarterly

The power of pricing

February 2003—Transaction pricing is the key to surviving the current downturn—and to flourishing when conditions improve.more

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Pricing in a proliferating world

August 2006—Juggling thousands or even millions of price points calls for common systems, greater transparency in performance, and an organizational balance between centralization and decentralization.more

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article | McKinsey Quarterly

Pricing new products

August 2003—Companies habitually charge less than they could for new offerings. It’s a terrible habit.more

article | McKinsey Quarterly

Bringing discipline to pricing

February 2000—Different local market environments create quite different opportunities for pricing. You must understand these environments to set prices optimally.more

article | McKinsey Quarterly

Setting value, not price

February 1997—The first task is to map benefits versus price—as the customer sees them. Bear in mind that equal value doesn’t mean equal market share. The key decision: do you stay on the line of value equivalence, or get off?more

Summary

Change may be a constant today, but so are certain business fundamentals: in the long run, a business is worth the cash flows it generates, and smart pricing strategies can materially enhance them.