CHAPTER 6
Introduction to the Operational Filter
THE NEXT TWO CHAPTERS (Chapter 7 and Chapter 8) will discuss the operational filter of the Step-Wise Approach to Value (SWAV). The purpose of this filter is to understand how a Strategic Alternative (SA) impacts the financial performance of a company. Many companies perform an analysis on a strategic alternative in isolation. That is, they look at the incremental increase in value that a SA would potentially generate. This type of analysis looks at cash flow improvements that are mostly generated in later years. What it fails to take into consideration is the short-term impacts on the financial performance of a company, as well as the potential destruction of value from interactive effects.
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