The Analysis Of EVA Evaluation In Corporate Strategy

In the strategic management times, there has been some difficulty for the traditional financial performance evaluation system to adapt to the needs of enterprise development. This is especially difficult for some large enterprises which play a crucial role to play in the development of the national economy. Its large-scale, complex structures ask for a comprehensive and suitable performance evaluation system which adapts to the requirements of the strategic management to evaluate the perfonnance of its business, standardize and guide the development of the company group. This will give the corporations long-term competitive advantages in the strategic operations.This paper is mainly based on dealing with the shortcomings of the traditional financial performance evaluation and the needs of the strategic management of the modern corporation. According to the requirements of Chinese reality and Chinese current state capital performance evaluation system, especially Economic Value Added, the article adds some special indicators, absorbs the advantages on the model of several existing strategic perfonnance evaluation and overcomes its shortcomings. This article focuses on raising a Strategic perfonnance evaluation system which is more perfect and suitable for company group of our country.There are mainly five sections in this paper.The opening of this paper is the introduction, which totally introduces the background, meaning and specific measures of the study. EVA is called into existed by the social demand, thus it will base on the value and strategy to show evaluation and leadership in each department of a enterprise. This will contribute to an appropriate decision-making and will also be beneficial to the evaluation of a enterprise. A strategic evaluation measure is not a systematic way of performance evaluation, but a crucial section of contemporary enterprise management.The second part is mainly about the connotation and requirements of evaluation in native enterprises. With the strategic management times coming, the disadvantages of traditional financial evaluation system is being exposed, which will be a shortcoming for the further development of the enterprise. Thus, a total, objective and genuine systematic performance evaluation is in great need to combine the management condition and the corporate strategy. Therefore, a new sophisticated performance evaluation system is being called into existed. Nowadays, the government authority exerts an overall influence over the performance evaluation of State-owned enterprises and State-controlled enterprises. The evaluation is mainly based on the specific law, such as Rules of Performance Evaluation of State-owned Capital and Operating Rules of Enterprise Performance Evaluation (Amendment).Following the performance evaluation standards promulgated by the Ministry of Finance, State-owned enterprises and State-controlled enterprises have a basic measure to get evaluated. Apparently, it shows a significant shortage in evaluating the enterprises.The third part is the focus of the paper which gives a general application of EVA and some practical suggestion of it. The establishment and improvement of the overall vision of our group companies of strategic performance evaluation index system has the following thrusts. The very focus is EVA, along with the basic theory of Balanced Scorecard. In such way, performance evaluation system can not only represent the interests of shareholders, but also combine the convergence of corporate strategic objectives, which has become a significant part of the implementation of strategic management.The fourth section is the practical function of EVA in the.enterprises in the case of Changhong Corporation in Sichuan, which definitely indicates the exact performance. The majority of large enterprises in China are the financial indicators of performance evaluation, which mainly bases on the indicators of profit. This is liable to lead the enterprises to the blind expansion of investment as well as the pursuit of the scale with the neglect of quality.The last part is the conclusion of the paper. As strategic performance measurement theory in China is still in the exploratory stage, the practical appliance is seldom realized.Thus; this paper doesn’t go far enough for the specific application of the Strategic Performance Evaluation Corporation of China. In addition, as the design of each index of the performance evaluation is so complicated that a brief description is given in the fifth section and little further discussion is made. These issues need to be in-depth study and exploration in the future to get a better solution.With the assistance of EVA, if EVA is negative, even if there is a substantial increase in the profits, the evaluation in the assessment period is the "virtual surplus real loss". Nowadays, EVA is increasingly widely used all over the world. Since2010, EVA has become an important indicator of the performance assessment of central enterprises, accounting for more than40%of the central enterprises performance evaluation.In conclusion, the introduction of the EVA will have a profound impact on China strategy enterprises.