PUTTING VALUE ON A STRATEGY

This article explores the age-old problem of appraising corporate investment decisions. The author argues that many of the problems in applying financial appraisal can be remedied by blending financial and strategic analysis. This is the result of a 4 year study at the Cranfield Centre for Strategic Management and Organisational Change into how managers see these problems at Grand Met (IDV), London Underground, the Post Office (the Counters business), Rolls Royce Aero-engines and BP. This research was conducted under the direction of Professor Gerry Johnson and with Sponsorship from KPMG Peat Marwick Management Consultants. The article contains lessons for the appraisal of capital and non-capital projects, and for the evaluation of strategic moves involving long-term financial commitments.