value dynamics

Value?

businnew economy

What is

barry.d.libert@arthurandersen.com

1© 2000 Arthur Andersen. All rights reserved.ValueDynamics

Agenda for Today

nWill the Real Economy...

nDo Profits Matter?

nWhat’s a Business, Anyway?

2© 2000 Arthur Andersen. All rights reserved.ValueDynamics

Introducing Our New Book

3© 2000 Arthur Andersen. All rights reserved.ValueDynamics

Will The...Real Economy Standup

4© 2000 Arthur Andersen. All rights reserved.ValueDynamics

Bull or Bear - $100 Invested in 1982

n$1,200 in a market basket

n$31,700 in software

n“Real estate is a hedge...

nAgainst making money”

nLess than $400

5© 2000 Arthur Andersen. All rights reserved.ValueDynamics

And It is Just the Beginning...

0

20

40

60

80

buyers sellers

2000

2002

6© 2000 Arthur Andersen. All rights reserved.ValueDynamics

...Both in US and Abroad!

0

100

200

300

400

Japan Europe US

B:CB:B

$ B in 2002 - 4

7© 2000 Arthur Andersen. All rights reserved.ValueDynamics

The Rules Are Changing!

nIntangibles drive Value

nGlobalization is Key

nNew Technologies expanding

nThe War ... is for Relationships

nVolatility is here to stay!

8© 2000 Arthur Andersen. All rights reserved.ValueDynamics

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180

3/31

/92

9/30

/92

3/31

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9/30

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Mar

ket V

alue

($

billi

on)

How Do Businesses Create Value?

1993 1999

AOL vs Time Warner

9© 2000 Arthur Andersen. All rights reserved.ValueDynamics

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20

40

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1803/

31/9

2

9/30

/92

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Mar

ket

Val

ue (

$ bi

llion

)

AOL Simon Property

Business Models Determine Value

1993 1999

10© 2000 Arthur Andersen. All rights reserved.ValueDynamics

Business Models Determine Value

0

10,000

20,000

30,000

40,000

1993

1995

1997

1999

Yen

(bill

ions

) NTT

NTTDocomoShinnittetsu

Softbank

11© 2000 Arthur Andersen. All rights reserved.ValueDynamics

Do ProfitsMatter?

12© 2000 Arthur Andersen. All rights reserved.ValueDynamics

How Do YOU Calculate Value?

Liabilities

Assets

Balance Sheet

Net Worth

Revenues

Expenses

Income Statement

Net Income

Cash Flow

13© 2000 Arthur Andersen. All rights reserved.ValueDynamics

You are Your Assets, All of Them!

Physical

Financial

Tangible Assets

Customer

Employee& Supplier

Organization Intangible Assets

14© 2000 Arthur Andersen. All rights reserved.ValueDynamics

New Economy

Old Economy

Business Models Drive Success

15© 2000 Arthur Andersen. All rights reserved.ValueDynamics

BusinessNot as Usual

16© 2000 Arthur Andersen. All rights reserved.ValueDynamics

Leaders asking Same Questions

nPeople, People everywhere, but not a…!

nWill Increasing Return Models Dominate?

nHow will Risk be calculated & Managed?

nWill the Sources of Capital Recalibrate?

nWhat will be the NEXT NEW, NEW thing

nHow will Measurement & Reporting change?

17© 2000 Arthur Andersen. All rights reserved.ValueDynamics

Val

ue

Transformation

Time

P - Markets

D - Markets

How Will You Create Value?

18© 2000 Arthur Andersen. All rights reserved.ValueDynamics

Implications For You

nWhich New Assets?

nWhat New Technologies?

nWhat New Partners?

19© 2000 Arthur Andersen. All rights reserved.ValueDynamics

Systems & Processes

Measurement &Reporting

Total RiskManagement

Business Model Design

BUT, Don’t Forget all the Issues

ValueDynamics