Did Somebody Say Strategy?: True Value Index

BUSINESS FOUNDATION

Frank Buytendijk of Oracle has unveiled the True Value Index (TVI) in the latest issue of the Journal of Management Excellence at:

http://www.oracle.com/solutions/business_intelligence/docs/journal-of-management-excellence-2009-feb.pdf

The formula is straight forward:

TVI = (Operating margin – X) / Operating margin

X = Unfair procurement savings (X1) + intransparent margin (X2) + margin from
nonprimary sources (X3) - unnecessary cost (X4)

It's those "X Factors" that help bring us closer to true value.

Posted by Ron Dimon on March 03, 2009 at 12:49 PM in STRATEGY | Permalink

Tags: cost management, margin, Operating Margin, Shareholder Value, True Value Index, Value

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