Introduction: Why study this question and how it will be covered

This book has, from the outset, been about financial decision-making in companies. It has implicitly assumed that companies are quoted on a stock exchange and hence have as a key objective the maximisation of shareholder value. The book has shown how an approach to financial decision-making that seeks always to maximise present value, calculated via the economic value model, is the accepted means of enabling a company to achieve this objective. In the book so far, therefore, value has been king.

In the first part of this view I will remind readers of just how many situations there are where this is not the case. It will quickly become apparent that there are many organisations where value most definitely is not king. This means that, even if we work in a company that does seek to maximise value, we will often encounter as suppliers, customers or competitors, players that are working to a different rule book.

I propose to call this group ‘non-value players’ in order to distinguish them from ‘value players’ who do treat the maximisation of shareholder value as the main objective. I will also use the collective terms ‘the value sector’ and ‘the non-value sector’. I mean nothing derogatory in the placing of a player in either category. I consider the differences simply as a fact of life and as something that we must live with and learn from.

I believe that it must pay to understand the motivations of others with whom we will interact and, in particular, how they will take decisions. There are three main reasons for this.