Shareholder Value Being Eroded

Major Reasons

Symptoms

Under-managed

• No comprehensive and understandable business plan and strategy;

• Lack of timely decision-making;

• High turnover of capable employees;

• Inadequate or untimely management information;

• Limited knowledge about customers and market conditions;

• Inadequate or unrealistic assessment and projection of cash needs

• Excessive corporate politics ;

• Inadequate delegation of authority.

Over-diversified

· Lack of clear core business;

· Operating executives managing more than one business unit;

· Extensive vertical or horizontal integration;

· Inadequate time or interest from senior management;

· Lack of response to deterioration in performance.

Lack of emphasis on all level of the buying and or spending decisions

· Inadequate costing and reporting system;

· Inadequate budgeting;

· Lack of forecasting and comparison to actual results;

· Ineffective or non-existent efficient tracking systems and related incentive plans;

· Backlog build up;

· Missed delivery schedules

· Excessive returns;

· Low bid success rate

· Production bottlenecks

· Excessive out-of-stock occurrences or downtime;

· Excessive rework

· Lack of a constant pursuit of cost measurement and improvement

Under-capitalized

· Stretched payments to suppliers;

· High debt/equity ratio;

· Excessive debt principal repayments;

· Use of trade line to make principal payments;

· Declining availability on credit lines

· Defaults on lender covenants