Managing Change: Lessons from Corporate Culture Change, Part 3 of 3

****************************************************************************************
ACKNOWLEDGEMENT

This article was published in the July-Sept 2009 (Vol. 44, No. 3) issue of
Management – the quarterly magazine of The Malaysian Institute of Management

Reproduced here with permission from the author Dr. Victor S. L. Tan
and from
The Malaysian Institute of Management
****************************************************************************************

Too many organisations go about the wrong way in creating corporate culture change. That probably explains why many corporate culture change initiatives fail or that they cannot be sustained. And it is not too surprising that many leaders and managers are beginning to doubt whether it is possible to change corporate culture in the first place.

Corporate cultures are created by humans. Those rules whether overt or covert in terms, beliefs, thinking, feeling and behaviour are man-made and can be changed. Perhaps, the main aim of this concluding part of a series on change management is to offer change agents some valuable lessons from some of the corporate culture change efforts undertaken by various organisations. While there are many aspects and lessons that one can learn from corporate culture change work, I am taking the liberty to share here ten powerful lessons that I believe will help change agents get on the right footing.

Lesson 1: Effective corporate culture change must begin with changing mindsets

No change can be implemented without, first of all, a change in mindset. By changing mindsets, I am referring to the 5 components of mindsets: Blindspots, Assumptions, Complacency, Habits and Attitudes, more easily remembered from the acronym; B.A.C.H.A. (Source: Changing Mindsets, Victor S. L. Tan, publisher: Times International). Changing mindsets is about uncovering blindspots with regard to areas for improvement. It is about questioning assumptions of thinking, behaviour and practices that are no longer relevant or useful. It is about reducing complacency in the workplace to increase innovation, productivity and performance. Changing mindsets is about eliminating unproductive habits or work practices that do not add value to the individual or the organisation. It is about inculcating a positive attitude towards oneself, work, people, the management and the organisation as a whole.

With mindset change, one is then aware of the need to change the policies, procedures and practices accordingly. In one of our client engagements with a conglomerate in Indonesia, the culture change began with a mindset change from the top management and then cascaded down to the lower level staff. This has proved to be an effective approach to pave the way for a start of the change process as the whole organisation had been engaged in old thinking and outdated ways of managing for the last 20 years in operation. The uncovering of the blindspots and the constant questioning of assumptions helped reduce the level of complacency of the leaders and executives. This resulted in the abandoning of unproductive work practices in the workplace and overall, a more positive attitude of people towards one another, towards their respective departments, their work and the organisation as a whole.

Lesson 2: Successful organisations have corporate culture aligned to their vision, mission, strategies, goals and their environment

It is generally agreed that the purpose of corporate culture is to develop an internal environment that is conducive for people to perform effectively.

However, a corporate culture will only be relevant and useful if it is aligned to the organisation's vision, mission, strategies, goals and the external environment it operates in. What this implies is that an organisation must first get its vision and mission right before deciding on the desired corporate culture. Of course, having determined the right vision and mission, it can then formulate the relevant goals and strategies. In the case of Jaguar Cars, a luxury car manufacturer, in the 80s, the culture change led by Chairman and Managing Director, John Egan focused on aligning the culture towards the new mission for Jaguar "to become the finest car company in the world". A new set of beliefs and core values on growth, quality, market sensitivity, learning and human development, and professionalism was developed, encouraged and practised in the workplace to enable Jaguar to produce world-class luxury cars. With the new culture, what followed was an impressive turnaround of Jaguar, with a huge jump in turnover, profitability and productivity.

The reason why determining the corporate culture needs to take into consideration the environment is because the nature of the industry or the type of business often dictates certain ways of doing things to enable it to compete or stay successful. For example, in the IT industry, the speed of response is a critical factor in doing business. In financial services, integrity is an important value to win the trust of customers.

Lesson 3: To achieve credibility and win the commitment of people, policies, procedures and practices must be consistent with the new culture

Consistency is an important factor in gaining the credibility for any change programme. Saying one thing and doing another thing is the surest way of losing credibility. Once a new culture is identified and the desired core values and behaviour communicated to employees, it is important to simultaneously change the existing policies, procedures and practices in the workplace to align to the new culture. Thus, for example if a new culture promotes openness, it is important to share information and disseminate relevant information freely and openly based on needs rather than hierarchy.

In the case of the culture change initiated by Ciba-Geigy where it strived to reduce its impact on the environment and pay more attention to employee concerns, the leaders started to change their policies and practices to align to the new culture. The company disposed of its photographic film business and reorganised itself to make decentralisation and autonomy a reality. It also conducted massive training to develop leadership and entrepreneurial qualities among its employees.

Lesson 4: To get a buy-in of corporate culture change requires a strong rationale

It is true that most cases of culture change take a lot of effort and time to overcome resistance. An effective way to overcome resistance is to provide a strong, compelling and sound rationale for the culture change. From our experience, such a rationale must often incorporate not just what is good for the organisation but also for individuals. Thus for example, an organisation which is promoting a performance-oriented culture should not just stress on the benefits of increasing productivity and performance to enable the company to compete and survive. It should also stress that by developing such a culture, it would also enhance the competency of individuals, help them develop a performance track record and increase their market value in terms of knowledge, skills and experience. It should also communicate to the staff that such a culture would also add meaning to their work and bring about personal satisfaction in the process.

Lesson 5: To ensure company-wide culture assimilation, culture change programmes should utilise the various culture transmission mechanisms available

To succeed in culture change, there must be prevalent practices of behaviour that reflect the new culture. Thus to ensure company-wide internalisation of the new culture, an organisation should utilise every channel of communication and every opportune occasion to promote and communicate the new belief system, core values and desired patterns of behaviour to every level of staff from the top right down to the lowest level of organisational hierarchy. Companies should use formal and informal channels of communication to influence and educate others on the new culture. Just like in advertisement, the publicity blitz should be frequent, focused and impactful to achieve maximum results.

Lesson 6: Achieving deep and sustainable culture change requires the participative approach

Culture change is by nature a deep and fundamental change. Such a change requires not just opening up minds but also touching hearts. People must really not just think it but they must really feel it before they behave in accordance to the desired culture. The way to achieve sustainable culture change is to first have people want to practise the new culture rather than being forced to do things in a certain way. A good way to do this is by highlighting the aspect of the culture that shows care for people. Thus showing how the practice of the new culture will enhance respect between one another, create a more enjoyable workplace and increase the competency and value of individuals speaks well of the care the organisation has for its people. As the saying goes, "People do not care how much you know until they know how much you care". Showing care certainly goes beyond opening one's mind; it certainly touches the heart.

Another good way of developing sustainable culture change is to get people's involvement. Involvement can come in many ways. It could be involvement through their input and suggestions on how they would translate certain core values into practice in their daily tasks. Or it could be soliciting their suggestions on how they could promote the practice of respecting one another in the workplace. Other ways of involvement could be through culture promotion activities such as a slogan competition to come up with a theme for launching the core values of the new culture. One of the organisations we worked with had come up with an essay writing competition on topics such as "How I Can Help Promote the New Corporate Culture in My Organisation" for individuals as well as for group categories. In the process of discussing amongst themselves and writing the essays, employees began to understand a little bit more of the new culture and began to see the value of the new culture, and subsequently began to want to assimilate the desired patterns of behaviour in the workplace.

Lesson 7: Top management commitment is essential to the success of culture change

The success of culture change requires company-wide acceptance. A limited change in the way of thinking and working within a small unit or department does not constitute a culture change in organisation. To have company-wide practice of a new corporate culture requires the commitment of top management. Commitment here refers to not only the initial launching but the continued support and follow-through. Support is needed to change policies and systems to align to the new culture.

In the case of British Airways (BA), a major culture change was instituted with full top management support, when the then Thatcher government decided to convert BA from government ownership to private ownership. The Chairman, Lord King and CEO, Colin Marshall provided the support to the change in organisation structures, systems and policies. In fact, the company's top management approved the change to a new performance appraisal system and compensation system which put greater emphasis on improving customer service and being market-driven. Colin Marshall's unwavering commitment was demonstrated by his personal presence in question-and-answer sessions at a series of training programmes on "Managing People First" and "Leading The Service Business" for senior and middle managers.

Lesson 8: To speed up culture change, leverage on “Opinion Leaders”

Every resource is needed to help speed up the culture change process. A good way to tap into the organisation's resources is to seek out "opinion leaders" to assist in promoting the new culture. Opinion leaders can be formal or informal leaders whose opinions matter to others. Often these leaders have people who look up to them and listen to what they say and do what they say. Thus, it will make sense to first convince these opinion leaders and then involve them as change agents and as role models to help spread the new culture within the organisation.

Lesson 9: Create a powerful dream of the new culture

Every great achievement starts with a powerful dream. There is a compelling force of change in creating a powerful dream. And great changes come from powerful dreams. Martin Luther King had a powerful dream in the 60s when he said, "I have a dream that one day on the red hills of Georgia, the sons of former slaves and the sons of former slave owners will be able to sit down together at the table of brotherhood". Christopher Columbus had a powerful dream of sailing across a shorter East-West trade route. Mahatma Gandhi had a powerful dream to lead his country to independence from the British. John F. Kennedy had a powerful dream of landing man on moon. Likewise, it is important to create a powerful dream of the new culture an organisation wants to develop. It should come across as exciting, inspiring and worthwhile for everybody in the organisation.

Lesson 10: Recognise and reinforce change success early and frequently

A culture change is on ongoing process and may take a long time to see tangible results. Too often leaders wait too long before they start to recognise, reward or reinforce the motivation of people in the process of implementing culture change. If the wait is too long, people will run out of stamina, their interest will simmer down and the assimilation process will come to a halt. It is thus important to look out for "early wins" and "small wins" along the way of culture change implementation, and recognise and reward people to ensure they stay motivated. In one of our culture change engagements, for example, a celebration was held when the organisation came to a consensus on the defined core values. There was further recognition of the roles of the people involved when the new culture was launched. And every success, no matter how small was highlighted early in the process and was recognised, celebrated and rewarded.

Rewards need not be merely monetary. It can come in the form of a commendation letter recognising a particular team in recruiting the most number of change agents, or a public announcement during a family day outing where individuals are singled out for being effective role models in leading their team effectively. It is the culmination of all these small positive gestures and steps taken on a continuous and relentless fashion that ultimately lead to a culture transformation for the organisation.


Written by Dr. Victor S. L. Tan. Dr. Tan is an international authority on change management and the CEO of KL Strategic Change Consulting Group (www.klscc.com) specialising in strategic change and corporate culture. He is the author of six management books including his latest book, The Secret of Change. The author may be contacted at +603 – 9074 1129 or victorsltan@klscc.com

Securing your PC or laptop against cyber-criminals

We constantly hear about computer viruses, trojans, spyware, malware, etc that has made most of us indifferent about the need to apply the latest updates against operating system vulnerabilities, and to keep our firewall, anti-virus and anti-spyware solutions up-to-date. Most of us may feel that no matter what we do to secure our desktop PCs or laptops, viruses, trojans, spyware, malware, etc will still penetrate our computer systems. So, why bother? Thus, most PC and laptop users think that defensive efforts are futile. This basically stems from a lack of understanding or misinformation. When an unethical hacker or cyber-criminal gains access to your computer system, the potential for executing malicious acts is very high.

I will use the Microsoft Windows file system for this discussion simply because Windows is the most commonly used operating system in the world today, making it an attractive target for unethical hackers and cyber-criminals.

The Windows NT File System (NTFS)

Microsoft's NTFS file system was introduced with the launch of Windows NT, and is still the file system used by Windows 2000, XP, Vista and the new Windows 7 operating system. The NTFS file system is a major improvement over the previous File Allocation Table (FAT) file system.

The NTFS file system “was designed to include many features, including data recovery, security, fault tolerance, large files and file systems, multiple data streams, UNICODE names, sparse files, encryption, journaling, volume shadow copies, and file compression” (Silberschatz, Galvin & Gagne, 2006, p. 790).

Once a computer system is compromised, unethical hackers and cyber-criminals usually hide their malicious files, instructions or data in the hard disk, using either of two popular methods: (a) low-level formatting, and (b) partitioning.

If the low-level formatting method is chosen, unethical hackers and cyber-criminals typically target the redundant sectors and bad sectors to hide their damaging codes. In the partitioning method, the typical target locations are the partition tables, inner-partition gaps, hidden partitions, deleted partitions, unallocated spaces, and boot records. However, a competent and up-to-date anti-virus and anti-spyware application can identify and act to remove such threats.

A more subtle technique makes use of the multiple data streams (MDS) feature of NTFS. The MDS feature enables multiple independent streams of data to exist in a file. Each stream contains the complete data of the file, for e.g. .doc, .xls, .txt, .zip, etc. Furthermore, the MDS includes a data stream known as Alternate Data Stream (ADS), originally created for compatibility with the Apple Macintosh Hierarchical File System (HFS) but is also used by most application programs and native Windows operating system to store file attributes and for temporary storage of other file related information.

Alternate Data Streams (ADS)

ADS provides the ability to fork file data into other files without affecting their functionality and size or display of file information to file browsing utilities such as the DOS “dir” command and Windows Explorer.

The following steps demonstrate how an unethical hacker or cyber-criminal can make use of ADS to plant malicious codes and launch it later.

Step 1: Using Microsoft Windows XP

1. Create the folder 'ADS_Demo' in your hard disk root directory C:\
2. Copy and paste the applications Notepad.exe and Mspaint.exe into C:\ADS_Demo
3. Your result should be similar to that shown in Figure 1
4. For this demonstration, let us assume that the application Notepad.exe is the file created and planted by an unethical hacker or cyber-criminal into your PC or laptop, and contains malicious codes. In other words, assume Notepad.exe is the malicious file
5. Take note of the file sizes and date stamps as follows: Notepad.exe = 68KB, 4/14/2008 and Mspaint.exe = 335KB, 4/14/2008

Figure 1: Windows Explorer

Step 2: Create an ADS for the malicious file

1. Launch 'Command Prompt' from Start All Programs Accessories
2. Change directory to C:\ADS_Demo
3. Enter the DOS command 'dir' to list the contents of your ADS_Demo sub-directory
4. Your results should be similar to Figure 2
5. Again, take note of the file sizes and date stamps as follows: Notepad.exe = 69,120 bytes and Mspaint.exe = 343,040 bytes. No change in the date stamps
6. Now, to create an ADS, enter the command 'type notepad.exe > mspaint.exe:notepad.exe'
7. Your result at this stage should be similar to Figure 3
8. Notice that the file size of Mspaint.exe remains unchanged at 343,040 bytes although we have already embedded 69,120 bytes of the malicious file to it, but the date stamp has changed from 4/14/2008 to 10/11/2009
9. A check under Windows Explorer (Figure 4) also shows that the file sizes have not changed at all, but the date stamp of Mspaint.exe is now 10/11/2009

Figure 2: Run Command Prompt & List folder contents

Figure 3: Create an ADS for Notepad.exe (the malicious file)

Figure 4: Windows Explorer

Step 3: Launching the malicious file

1. In the Command Prompt window, execute the malicious file using the standard DOS command ‘start’ as follows 'start c:\ads_demo\mspaint.exe:notepad.exe' (Figure 5). On your Windows desktop, the Notepad program (the malicious file) will launch (Figure 6)
2. Then launch Task Manager to check which program is running. If your computer system is NOT protected by the latest updates against Windows vulnerabilities, then Task Manager will wrongly report that Mspaint.exe is running instead of Notepad.exe (the malicious file) as shown in Figure 7

Figure 5: Launch Notepad.exe (the malicious file)

Figure 6: Notepad.exe runs in your Windows desktop

Figure 7: Task Manager wrongly reports Mspaint.exe is running

Step 4: Delete Notepad.exe (the malicious file)

1. Since Notepad.exe is the (assumed) malicious file, we must remove or delete it from our computer system
2. In the Command Prompt window, enter 'del notepad.exe' (Figure 8)
3. Then enter 'dir' to check whether it has been deleted. The 'dir' command shows only the Mspaint.exe file in the sub-directory (Figure 8). Thus, Notepad.exe was deleted or is it?
4. Enter the command 'more <. mspaint.exe:notepad.exe > notepad.exe' and the Notepad.exe (the malicious file) is regenerated as shown in Figure 9, and likewise in Windows Explorer (Figure 10)
5. Note that prior to deletion, the date stamp of Notepad.exe (the malicious file) was 4/14/2008 and the date stamp of the regenerated Notepad.exe (the malicious file) has changed to 10/11/2009
6. Thus, malicious programs embedded using ADS are difficult to be removed or deleted permanently. The use of appropriate anti-intrusion security solutions is usually required

Figure 8: Delete Notepad.exe (the malicious file)

Figure 9: Easily regenerate Notepad.exe (the malicious file)

Figure 10: Windows Explorer

Conclusion

From the above demonstration, we can conclude that when unethical hackers or cyber-criminals gain access to a computer system, they can easily hide malicious programs to existing files, and the file size shows no increase in size even after malicious codes have been added. Later, the malicious programs are launched to cause havoc to the computer system or take control of the computer system to further spread malicious programs to other computers via the Internet.

Therefore, it is important that as a computer user, you ensure that your computer system is:

• updated with the latest updates or patches against operating system vulnerabilities
• protected by a firewall application from a reputable security software company to prevent malicious access or intrusion
• using a firewall program that is regularly updated with any new patches released by the manufacturer (use the auto-update feature)
• protected by an anti-virus and anti-spyware program from a reputable security software company and that the program scans in real-time for viruses, trojans, spyware, malware, etc
• using the latest anti-virus and anti-spyware definition files (use the auto-update feature)

While there are good firewall, anti-virus and anti-spyware programs which are downloadable free-of-charge for use, these typically have some missing or disabled features. For e.g. in most free versions of anti-virus and anti-spyware programs, these solutions do not run in live mode i.e. they allow the computer systems to be infiltrated by the virus or spyware, and then during scheduled scans, take action to clean or remove the virus or spyware. It is highly recommended that you use anti-virus and anti-spyware programs that run live and thus, is able to intercept the incoming virus or spyware in real-time, in addition to scheduled scans.

References:

Gralla, Preston. (2005). Windows XP Hacks, Second Edition. New York: NY, O'Reilly

Silberschatz, Abraham; Galvin, Peter B. & Gagne, Greg. (2006). Operating System Principles, Seventh Edition (Wiley Student Edition). Singapore, John Wiley & Sons Asia

Sinchak, Steve. (2004). Hacking Windows XP. New York: NY, John Wiley

Solomon, David. A. & Russinovich Mark. E. (2000). Inside Microsoft Windows 2000, Third Edition. Redmond: WA, Microsoft Press

Tanenbaum, Andrew S. & Woodhull, Albert S. (1997). Operating Systems: Design and Implementation, Second Edition. Upper Saddle River: NJ, Prentice Hall

Tanenbaum, Andrew S. (2001). Modern Operating Systems, Second Edition (Eastern Economy Edition). New Delhi: India, Prentice Hall India

Value-based Marketing: A Quantitative Approach to Creating Shareholder Value (Part 1 of 2)

The dot.com crash of the late 1990’s, gross errors in business strategies, and corporate mismanagement scandals such as Enron, Tyco International, WorldCom, Parmalat, Marconi, and Daewoo had generated renewed interest in corporate governance and in the creation and sustenance of shareholder value.

Thus, it has become increasingly necessary to ensure that companies and corporations are effectively and efficiently managed for shareholder value. One approach is known as value-based management.

The Chartered Institute of Management Accountants’ official terminology defines value-based management as “a managerial process which effectively links strategy, measurement and operational processes to the end of creating shareholder value” (Starovic, Cooper & Davies, 2004, p. 2).

Value-based management attempts to identify the basics of value creation by focusing on issues that matters to shareholders, resulting in an acceptable annual return on their capital investments.

Among the key activities and resources being focused around value creation is marketing, and the ability to identify the contribution of marketing and evaluate or measure its effectiveness is necessary in value-based management.

An approach to creating the ability is via value-based marketing. Value-based marketing defines the central objective of marketing as contributing to the maximization of shareholder value by aligning customer focus marketing to the interests of shareholders (Doyle, 2000a, p. 4).

Many companies realize that the key to sustainability and profitability lies with customers. Thus, we see an increasing shift of companies to become more customer-focused in order to increase customer value, and managing customer loyalty to create higher shareholder value (Best, 2009, p. 36).

What is Shareholder Value?

What is shareholder value? How do we measure it? Shareholder value is a financial concept under the ownership of the financial management discipline. Shareholder value is determined by four factors:

• The level of cash flows
• The time value of money or cash
• The durability of cash generating assets i.e. the concept of net present value
• The risks of future cash flows i.e. the opportunity cost of capital (Doyle, 2000b, p. 300)

In non-financial terms, shareholder value can be created when corporate actions result in the:

• Introduction and sales of new products or services, or variations of existing products or services, clearly differentiated from competitors’ offerings
• Adoption of new technologies that will create or enhance its core competencies
• Developing and implementing entry barriers against potential rivals
• Reduction of operating costs or the increase in efficiency of resource utilization (Subbrayan, 2008, pp. 13 – 14)

Consistent successes in creating shareholder value are typically reflected in a company’s share price. In Value-Based Marketing, Doyle says, “The basic principle of shareholder value is that a company’s share price is determined by the sum of all its anticipated future cash flows, adjusted by an interest rate known as the cost of capital” (2000a, p. 33).

Thus, companies that adopt the shareholder value approach will need to maximize returns for shareholders by developing and executing marketing strategies that maximize the value of cash flows over time.

Quantifying Shareholder Value: Basic valuation methods

a) Shares and Shareholder Returns

Shareholder return is derived from the capital appreciation on the value of the stock, and the dividend distribution by the company.

Let us consider a simple example at the personal shareholder level – assuming that the stock of Malaysian Airline System Bhd (MAS) is trading at Malaysia Ringgit 10 per share, and you decide to buy 1,000 shares. Your investment amounts to RM10,000. Five months later, the share is trading at RM10.95 per share, and the company declares a RM2 per share dividend.

What is the current market value of your shares?
Current market value = RM10.95 x 1,000 = RM10,950

How much is the capital gain?
Capital gain = (RM10.95 – RM10) x 1,000 = RM950

How much did you benefit from the RM2 per share dividend?
Dividend income = RM2 x 1,000 = RM2,000

Thus, the total shareholder return = RM950 + RM2,000 = RM2,950. In other words, the original RM10,000 investment has grown into RM12,950 through capital gain and dividend income.

What is the total percentage of shareholder return?
Total percentage return = RM2,950 / RM10,000 = 29.5%

How much of 29.5% is due to capital gain and how much is due to dividend income?
Capital gains yield = (10.95 – 10) / 10 = 9.5% i.e. each Ringgit invested has returned 9.5 sen in capital gains.

Dividend yield = (RM2 / RM10) x 100% = 20% i.e. each Ringgit invested has produced 20 sen in dividends.

In total, each Ringgit invested in MAS’ stock has returned 29.5 sen.

b) Discounted Cash Flow (DCF) and Net Present Value (NPV)

Using a simple example, let us assume that investment analysts have projected that MAS is to produce annual cash flows of RM100,000 for the next five years due to its business transformation plan of implementing a value-based marketing strategy. Will it be worthwhile to invest in MAS now?

We will need to compute the Net Present Value (NPV) of the projected cash flows over the five year period. For this purpose, let us assume the required rate of return is 10 percent.

Referring to a Present Value Table http://www.studyfinance.com/common/table3.pdf for the Present Value Factor, we can create the following Table 1.

Table 1

Since the sum of all present values of cash flows is RM379,070, thus, an investment amount today that is lesser than RM379,070 would constitute a prudent investment.

c) Economic Value Added (EVA)

A measure of shareholder value that has gained popularity is the Economic Value Added (EVA) model, established by Joel M. Stern and G. Bennett Steward III.

The proponents of EVA claim that it is a measure of a company’s true economic value creation, but presently, there is wider acceptance of cash flow as indicator of shareholder value and wealth creation. The fundamental percept of EVA is that true shareholder value is only created if a surplus is created over the total capital invested in the business.

Using data from the 2006 and 2007 Annual Reports of MAS, the EVA is computed as follows:

EVA = EBIT(1-t) – (Capital x WACC)

Table 2: Economic Value Added (EVA) of MAS

* To simply the discussion, we assume that WACC = 15%

Since MAS was loss making in the financial years 2005 and 2006, the EVA reflects that negative shareholder value was created (i.e. the destruction of shareholder value) during those financial years. For the financial year 2007, MAS was profit making again, and positive shareholder value was generated.

We have identified that shareholder return is derived from capital appreciation on the value of the stock, and dividend distribution by the company. The capital appreciation of the value of the stock i.e. creation of shareholder value is determined by the sum of all its anticipated future cash flows, adjusted by an interest rate known as the cost of capital.

Figure 1: Relationship between Marketing and Shareholder Value

Then, how is future cash flows generated? Obviously, the primary source is from sales revenues (Figure 1). Activities such as operational costs reduction and the efficient use of cost resources are indirect means of enhancing cash flows. The higher the sales revenues, the higher the potential for the company to generate more cash flows. In turn, higher sales revenues can be achieved through the successful execution of strategic marketing plans and marketing activities that create higher customer values. Thus, marketing is related to and central to the creation of shareholder value.

References:

Best, Roger J. (2009). Market-Based Management: Strategies for Growing Customer Value and Profitability (5th Edition). Upper Saddle River, New Jersey: Pearson Education Inc.

Creating the Lexus Customer Experience. (2009). The Executive Issue, No: 34, January. Management Centre Europe. Downloaded from http://www.mce-ama.com/downloads/cases/MCE_cat09_CCS-Lexus.pdf

Doyle, Peter. (2000). Value-Based Marketing: Marketing Strategies for Corporate Growth and Shareholder Value. Chichester, England: John Wiley & Sons Ltd

Doyle, Peter. (2000). “Value-Based Marketing.” Journal of Strategic Marketing, Vol. 8 (4), pp. 299 – 311

Hodge, Richard & Schachter, Lou. (2006). “Accelerate Your Customers' Success: The Lexus Sales Story.” CustomerThink.com, September 5. Downloaded from http://www.customerthink.com/article/accelerate_your_customers_success_the_lexus_sales_st

Lexus Earns Best-Selling Luxury Brand Title for Sixth Consecutive Year – Surpasses 300,000 Sales in Record-Breaking Year. (2006). Lexus.com, January 4. Downloaded from http://www.lexus.com/about/news/articles/2006/1/20060104_1.html

Malaysian Airline System Bhd (MAS) 2006 and 2007 Annual Reports. Downloaded from http://www.malaysiaairlines.com/hq/en/corp/corp/relations/info/reports/annual-reports.aspx

Starovic, Danka; Cooper, Stuart & Davis, Matt. (2004). “Maximising Shareholder Value: Achieving clarity in decision-making.” The Chartered Institute of Management Accountants. Downloaded from http://www2.cimaglobal.com/cps/rde/xbcr/SID-0A82C289-AA3CDFE4/live/tech_techrep_maximising_shareholder_value_0105.pdf

Subbrayan, Radhakrishnan. (2008). How a Company Creates Shareholder Value. Petaling Jaya, Malaysia: Leeds Publications

The Chartered Institute of Management Accountants. (2005). “CIMA Business Talk: Creating Shareholder Value.” New Straits Times - Appointments, July 2, p. 12

Wilson, Richard M. S. & Gilligan, Colin. (2005). Strategic Marketing Management: Planning, Implementation and Control (3rd Edition). Oxford, England: Butterworth-Heinemann / Elsevier