Nowadays there are a lot of discussions about creating company value. Because of the financial crisis and caused by that the economic crisis a lot of partially old models are being discussed again. The thesis should investigate whether it is possible to generate company value through lean management. There are a lot of tools to measure company value but in this thesis the operating cash flow will be used as other methods have too many levers to influence the result (e.g. WACC). In the subsequent part the different practical tools of lean management will be described to create a basic understanding of the methodology. The practical part of the thesis deals with qualitative interviews with specialists, consultants and researchers to get a variety of answers. The specialists are people who are doing lean management in their company on a daily basis but have only experience in their company. Consultants sell the methodology and could tend to promote lean management in this thesis and the researchers work on a scientific basis and are necessary to prove or adjust the results achieved. Lean management has a lot of influences on company value. A decrease in stocks, space, failures and the throughput time can be achieved. Furthermore an increase in productivity and even an increase of turnover are possible. Certainly the results depend on the industry, size and culture of the company. That is the reason why there are no calculations about the effects of company value. As it is that difficult to calculate these effects, the master thesis deals with the ability of increasing turnover and on the cost side of decreasing costs. Costs of the employed capital are not considered as they
are not related to the operating cash flow.
Table of Contents
1. INTRODUCTION
1.1. OBJECTIVES OF THE MASTER THESIS
1.2. COMPOSITION OF THE MASTER THESIS
2. INTRODUCTION BUSINESS VALUATION
2.1. DISCOUNTED CASH FLOW –EQUITY APPROACH
2.2. CALCULATION OF FLOW TO EQUITY
2.3. CAPITAL COST RATE – CAPM: CAPITAL ASSET PRICING MODEL
2.4. MARKET MULTIPLIER METHOD
3. INTRODUCTION LEAN MANAGEMENT
3.1. OBJECTIVES OF LEAN MANAGEMENT
3.2. TOOLS AND METHODS
3.2.1. Value Stream Mapping
3.2.2. Kaizen
3.2.3. Kanban
3.2.4. One-piece flow
3.2.5. 5-S-systematics
3.2.6. Standard operation sheet
3.2.7. Poka-yoke
3.2.8. Single minute exchange of die – changing tools in one minute
3.3. CHALLENGES REGARDING LEAN MANAGEMENT
3.4. POTENTIAL EFFECTS ON COMPANY VALUE
4. PRIMARY RESEARCH
4.1. QUALITATIVE RESEARCH – INTERVIEWS
4.2. DECISION OF INTERVIEW-TYPE
4.3. INTERVIEW AGREEMENT
4.4. INTERVIEW CHECKLIST
4.5. ANALYSIS OF THE INTERVIEWS
4.5.1. Qualitative assessment of the interviews
4.5.2. To which extent is an increase of turnover possible through lean management (specification in %)?
4.5.3. To what extent is a decrease of variable cost possible (specification in %)?
4.5.4. What are the outputs of lean management regarding fixed costs (specification in %)?
4.5.5. Can the above mentioned percentages and information be used for all industries and sizes of companies?
4.5.6. Which tools are the ones you would suggest for a company trying to implement lean management?
4.5.7. What are the reasons for a failure of a lean management implementation?
4.5.8. At which point of the process can a failure be determined?
4.6. SIGNIFICANT POINTS OF THE INTERVIEWS
4.7. EFFECTS OF LEAN MANAGEMENT ON COMPANY VALUE
5. CONCLUSION
5.1. CONCLUSION REGARDING OBJECTIVES
5.2. EFFECTS ON COMPANY VALUE – THEORY AND PRACTISE
5.2.1. Porsche
5.2.2. Toyota
5.2.3. Anonymous company
5.3. RESUME OF THE AUTHOR
Objectives and Research Themes
This master thesis investigates whether the implementation of lean management principles can effectively increase company value. The primary research goal is to develop a robust calculation model based on operating cash flow to measure these effects, addressing the challenge that traditional valuation methods often involve too many external variables. By analyzing lean management tools and conducting qualitative interviews with specialists, consultants, and researchers, the thesis aims to establish a verified link between lean process improvements and financial performance.
- The influence of Lean Management on corporate value creation.
- Methodological application of operating cash flow for business valuation.
- Exploration of Lean Management tools (e.g., Value Stream Mapping, Kanban, 5S).
- Analysis of implementation success factors and causes of failure in different organizational cultures.
- Integration of practical insights from specialists and scientific perspectives into a calculation model.
Excerpt from the Book
3.1. Objectives of lean management
This section should be a summary to clarify the objectives of lean management.
Lean management is the approach to generate value with concerted processes without any wastage. Value is always defined through the customer and not through the company itself. A lot of companies define their value but the customer perceives value in a different way. Each company has to strive for elimination of non-value-added activities to gain the optimum for the company as well as for the customer. Through the application of lean management principles a company is able to do so. According to the author it is essential to concentrate not only on the shop floor but also on the administration area – the whole company so to speak. In practice there are a lot of enterprises which think that the focus on production will help them to become lean. Certainly lean management is easier to implement on the shop floor but without applying lean management in the whole company, the results are limited. Lean management has to take place in the whole entity to become a lean company.
Summary of Chapters
1. INTRODUCTION: Outlines the research focus on the effects of lean management on company value, defining the master thesis objectives and the composition of the study.
2. INTRODUCTION BUSINESS VALUATION: Explores various business valuation methods and selects the Discounted Cash Flow (DCF) equity approach as the most transparent indicator for analyzing lean management effects.
3. INTRODUCTION LEAN MANAGEMENT: Provides a comprehensive overview of lean principles, history, and key tools such as Value Stream Mapping, Kaizen, Kanban, and Poka-Yoke, while discussing implementation challenges.
4. PRIMARY RESEARCH: Details the methodology of the qualitative study, including in-depth interviews with specialists, consultants, and researchers to assess potential turnover increases and cost reductions through lean initiatives.
5. CONCLUSION: Reflects on the findings regarding the link between lean management and company value, confirming the positive impact through the developed calculation model and real-world company examples.
Keywords
Lean Management, Company Value, Business Valuation, Discounted Cash Flow, Operating Cash Flow, Kaizen, Value Stream Mapping, Kanban, SMED, Process Optimization, Corporate Culture, Change Management, Qualitative Research, Efficiency, Waste Elimination
Frequently Asked Questions
What is the core subject of this thesis?
The thesis explores the relationship between lean management practices and the resulting impact on a company's market value, specifically focusing on the operational aspects that drive value.
Which valuation methodology is applied?
The author uses the Discounted Cash Flow (DCF) equity approach, as it offers the most transparency when isolating the effects of lean management from other financial external factors.
What is the primary objective of this research?
The goal is to determine if lean management truly influences company value and to create a calculation model that verifies this influence using practical data and expert insights.
How is the primary research conducted?
The research uses a qualitative approach, consisting of semi-structured in-depth interviews with a panel of three international consultants, three industry specialists, and two academic researchers.
What are the main thematic areas covered in the practical section?
The main themes include evaluating the extent of potential turnover increases, reductions in variable and fixed costs, and identifying common reasons for the failure of lean implementations.
Which lean management tools are analyzed?
The thesis examines Value Stream Mapping, Kaizen, Kanban, One-piece flow, 5-S-systematics, Standard operation sheets, Poka-yoke, and Single minute exchange of die (SMED).
Why are cultural differences considered in this research?
The author emphasizes that European and Japanese cultures differ significantly in their approach to problem-solving and failure tolerance, which directly impacts the success of lean initiatives.
What conclusion does the author draw regarding company value?
The author concludes that lean management generates measurable company value, provided that the implementation is not treated as a temporary tool kit but as a long-term cultural transformation.
Does the model account for external market fluctuations?
No, the model purposefully focuses on internal operating cash flow factors to maintain a clear connection between lean activities and financial outcomes, acknowledging that stock prices are influenced by exogenous factors.
- Quote paper
- Mag.(FH), MA IBA Sasha Petschnig (Author), 2009, Effects of Lean Management on company value, Munich, GRIN Verlag, https://www.grin.com/document/134408
