Shareholder Value
Global Market Trends
In the course of our work, we observe the evolution of competitive strategies amongst corporates in an increasingly globalised market. With any business which appears to be attractive and globally accessible, it quickly attracts frenzied competition from established players and new entrants, all racing to dominate the field. In some maturing industries there is no clear leader. Instead, there are many players with little differentiation in services.
Fueled by fierce competition, corporates may have been solely focused on growth in market share, with insufficient regard for adequate returns on invested capital, if any, which should be re-invested into productive, high-yielding businesses.
Even where adequate returns are possible, corporates that in the past approved each and every project earning in excess of the cost of capital may have also failed to take into account the high opportunity cost of committing not just financial capital, but also talented human resources, to marginal projects.
Our Approach to Value Creation
Through research and development efforts, we have developed the Value Seek Analyser (“VSATM”), a set of tools which quickly afford us an overview of a corporate’s value drivers and performance. VSA benchmarks corporate performance and surfaces value creation opportunities.
Corporates with fundamentally sound attributes but temporary liquidity impairment may wonder where their corporate strategy has failed. The corporate may have unwittingly indulged in value destruction.
We believe the way forward is to re-focus the corporate strategy on customers’ needs and value creation principles. Here, the Exercise should entail the necessary steps (see Figure 1) :
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Figure 1 : Value Creation for viable companies ã1998 - 2005 TMA. All rights reserved.
Ensuring the stated core values, business and industry of the company is viable in the current environment;
Re-examining the company’s competitive advantages, its understanding of the customers’ needs, and its business design;
Formulating, where necessary, of “Go-to-Market” strategy of the company. Stress testing the ability of its business design to capture and entertain feedback and market sentiment from its customers
Establishing the company' s willingness and capability to continually redefine its competitive strategy and business design;
Reviewing and formulating of the key Value Drivers of the company;
Analysing the company’s use and returns on capital
Presenting our recommendations moving forward, through careful management of Customers Satisfaction, Shareholder Value and Employee Welfare.
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