What Is Success?
participants cite the use of Twitter and Facebook, tools that did not exist even five years before, with facilitating the wave of revolutions. Political upheavals, even in distant parts of the world, can bring both threats such as the disruption of oil supplies and the rise in the price of gasoline in all countries, and opportunities like the opening of new markets and sources of materials. Businesses must be attentive to seemingly unrelated events happening in faraway places.
Many legislative and regulatory changes affect business. Building codes get updated so that build- ings might withstand earthquakes or hurricanes. Environmental safety regulations mandate reduc- tion in non-biodegradable plastics, new limits on air and water pollution, and promote an increase in recycling. The pace of such change is increasing.
Ethical behaviors by both individuals and businesses are also changing, but perhaps in the wrong direction. It appears that corruption, bribery and kickbacks, conflicts of interest, and greed are ram- pant in the United States and, regrettably, becoming more like the norm than the exception (Fis- man, 2009). Spreading like the plague, it has infected politics at every level, the highest echelons of business, and industries like pharmaceuticals, real-estate development, health care insurance, and banking and financial services. People are far more motivated now by money (gained legally or covertly) than what’s good for the company, the public good, or other people. This trend, unset- tling as it is, has profound implications as to how companies are run and even how they compete.
1.5 What Is “Success”? Most companies have one or more purposes they are trying to achieve, even though their pur- pose may never be expressed in writing or conveyed to the employees. These purposes can be construed to represent what the companies consider “being successful.”
The most common purposes are to survive, to increase shareholder value, and to make a profit. Surviving means enduring. While survival cannot be measured, it is at the back of all executives’ minds, simply because many companies don’t survive.
Shareholder Value Shareholder value is a computed value based on a company’s projected cash flows for the next 10 years, discounted to the present time using discounted-cash-flow (DCF) analysis and an appropriate