Human Capital Management Achieving Added Value through People - Essay Example

VALUE ADDED Introduction Investing is a crucial way to protect the financial future of the business, but is may be challenging to choose which business to operate. One crucial way to determine the financial health of a business is to evaluate or calculate the benefit or added market value of that business. Benefit of a firm is the accumulation of all its transactions, like equity and dues of the firm. An extensive market benefit is advantageous for an organization. It implies the business has created benefits for its shareholders. Similarly, reduced added market value implies that the business has incurred some losses. The discussion will investigate different methods of calculating added market value, and determine how added market value contributes to an understanding towards the connection between the business and its products market. Discussion Within the overall framework of added market value, economist assert that value added calculation is crucial for classical business accounts. Economists interpret added market value as consisting of the ability to determine the business earnings while the turnover is not precise because the business expenses are not considered. In this perspective, value added is the subtraction of output (expenses) compared to the inputs. Therefore, outputs that are not produced by the business are not considered. Some economists calculate value added in both addictive and subtractive methods, (Berger, 1999, p.34). For instance, subtractive value added is estimated by subtracting material and services costs and from the revenue of sales. The added market value or benefits indicate revenue generation. Similarly, it can be evaluated by deducting the investment capital of the business from the business value. These represent the profit of the firm, or the total cash the organization has produced using the utilized cash. Addictive method determines value added by summing up price of labor (such as social charges) benefits from the operation and devaluation. This allows the firm to investigate the means of distributing the generated revenues. Addictive method also sums up the adjusted recorded value of equity and debts investments of the business, (Grant, 2003, p.28). These indicate the used money of the enterprise or the total cash utilized in the business. The increased method multiplies the amount of the marketplace share of stock by the accessible share numbers for public businesses. This establishes the firm’s market value, or the total amount of cash the firm can produce. If the enterprise is unknown, investigate the value of related recognized businesses to assess the worth of the market. Added market value of the business can also be calculated using the comparison method too. Through comparing the business’ added market value to that of other companies, that an entrepreneur considers an investment, one is able to calculate the profit of his business. A business is a process whereby products and services are traded while market product represents a market in which goods are sold to companies. Thus, a business and its product marketed are related because the business permits selling of products in markets. Similarly, there is a relationship between added market value and vertical integration. However, the more a business resorts to this vertical integration, the increasingly its ratio of added market value rises. In other words, added market value plays a crucial role in promoting the understanding between a company and its product market, (Baron and Armstrong, 2007, p63). In marketing, added market value is the process, function, goods or services that add the value of the products of services in the consumers’ eye. Therefore, the concept of added market value is increasingly crucial in marketing as it functions as an incentive for buyers to buy products, and subscribe to the service offered by the business. For instance, adding value to a brand entails adding additional quality process like undertaking ISO certification, to determine the quality of the main product. In these cases, the brands that succeed the certification inscribe the ISO logo on its packaging to indicate to buyers that brands are truly of high quality. Similarly, buyers that are searching for high quality rather than affordability will go for an ISO certified brand over other ordinary products, (Sherrington, 2003, p42). Added market worth brands are a popular marketing mechanism. In this perspective, value added reflects all the business services that a firm provides, which relate to its main service. Such added market value services can involve the capacity to a conference call, record voicemails, pay computer games and access internet on the mobile phone. Such values added on products allow competitive advantage of the business in the product market. The expansion of a business gives its goods and services added market value before providing the products to consumers, (Zafiris and Bayldon, 1999, p23). The added market value is crucial to explain the instance where the business offer the goods that may be defined as homogenous goods, with few variations from the competitor products, and provides anticipated consumers with a characteristics or add-on, which gives an increased value sense. An added market value can either enhance the price value of the product or reduce it thus, affecting the business operations. For instance, providing a year of free support on current product (such as computer) may a benefit feature. In addition, people can add value to products and services they offer, for instance, bring improved financial skills of modeling to a position whereby manager hiring may not have predicted the requirement for these skills. Added market value allows businesses to market their products effectively, focusing on brand strengths against commodity. Business can hike prices, attain profits and achieve competitive advantage. Higher value added brands and services are not price elastic and difficult to duplicate or copy. Added market value allows the business to be competitive in the product market. This is because it explains the value added to business services and products compared to their competitor’s products and services. Experts agree that value is the anticipated advantaged compared to commodity price. Value added implies extra gain accessible form a certain source. For instance, many businesses with the marketplace sell a certain commodity, but your business also provides gift-wrapping – an added market value service. In the mind of consumers, the business products have an increased advantage as compared to similar products available at competitor business. Added market value promotes business popularity and success in the product market. For instance, including information concerning the value added brands and services offered by the business are crucial. This is because added market value differentiates one’s business and its products from that of his competitors and changes his opportunity to a better investment in the product market. Similarly, value added goods allow the entrepreneur to raise his business sales by generating product diversity, and enhance and balanced income, (Gale and Wood, 1994, p.21). Product diversity entails providing a products range that vary from one another, cater for consumer requirements and demands in various product markets, and include product differentiation from the competitors’ products. Added market value is crucial for investors to understand so to enable them determine whether the firm is using its resources properly, (Baron and Armstrong, 2007, p66). Every investor wishes to invest in a business that reinforces the market value and runs on a profit. Conclusion In conclusion, therefore, calculating the added market value of a business and its products is crucial for survival of the business. The firm and its products market determine the benefit calculation strategy. Similarly, added market value is a multifaceted aspect, doing various functions, and explained in various ways by various individuals. The success of the firm and survival of its products in the marketplace anchors entirely on the added market value of products. Bibliography Baron, A., & Armstrong, M. (2007). Human capital management achieving added value through people. London, Kogan Page Ltd. Berger, T. (1999). Comparing valuation methods in the acquisition process. Thesis (M.S.E.M.)--Milwaukee School of Engineering, 1999. Grant, J. L. (2003). Foundations of economic value added. Hoboken, N.J., J. Wiley. Gale, B. T., & Wood, R. C. (1994). Managing customer value: creating quality and service that customers can see. New York, Free Press. Sherrington, M. (2003). Added Value: the alchemy of brand-led growth. Basingstoke, Hampshire, Palgrave Macmillan. Zafiris, N., & Bayldon, R. J. (1999). Economic value added and market value added: a simple version and application. London, Future of Work Research Group, University of Westminster. Read More