Groupe Schneider: Economic Value Added and the Measurement of Financial Performance

Posted: 30 Jun 1998

See all articles by S. David Young

S. David Young

INSEAD - Accounting and Control Area

Abstract

SUBJECT AREAS: Economic profit, EVA, MVA, assessment of financial performance. CASE SETTING: France 1997; electrical distrubtion, industrial engineering equipment, and industrial control and automation.

REQUESTS FOR COPIES: To receive a copy of this case please contact the following sources: In Europe, Asia and Africa, call The European Case Clearing House, Cranfield Institute of Technology, Cranfield, Bedford MK43 OAL, United Kingdom. Telephone 44-01234-750 903; (Fax: 44 01234-751 125). In the Americas, please call The European Case Clearing House (Mr. Erich Aldrich at Babson College) Telephone: 617-239-5884 (Fax: 239-5995) (MAILTO:ECCH@aol.com). Case notes are available for bonafide instructors.

Groupe Schneider is a Paris-based manufacturer of electrical distribution equipment, industrial control and automation devices, and other equipment with a broad range of industrial engineering applications. The case is set in late 1997. Schneider's CFO has just implemented a new divisional performance measurement system based on Economic Value Added. A portion of senior management bonuses is linked to the new performance measure. The case offers a vehicle for exploring Economic Value Added and other value-based metrics. The issues raised in the case include the estimation of Economic Value Added and Market Value Added, accounting adjustments such as goodwill, the cost of capital, the challenges of implementing value based metrics at divisional levels, and the use of Economic Value Added in management compensation. A teaching note is available.

JEL Classification: G00

Suggested Citation

Young, S. David, Groupe Schneider: Economic Value Added and the Measurement of Financial Performance. Available at SSRN: https://ssrn.com/abstract=96627

S. David Young (Contact Author)

INSEAD - Accounting and Control Area ( email )

Boulevard de Constance
CEDEP No. 11
F-7705 Fontainebleau Cedex, 77305
France
(33) (0)1 64 69 43 45 (Phone)
(33) (0)1 60 74 55 00/01 (Fax)

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