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long-term strategy
Do you want to increase the value of your company in the long term? A well-thought-out, long-term strategy is the key to success. Discover how you can create a solid foundation for sustainable growth through process optimisation, employee development, and strategic investments. Do you need support in developing your individual strategy? [Contact us](/contact) for a non-binding consultation.
A long-term strategy is crucial for sustainable business success as it allows for building competitive advantages and demonstrating resilience against market fluctuations.
Operational excellence, financial optimisation and strategic innovations are the foundation for sustainable value enhancement. By continuously improving these areas, companies can increase their efficiency and enhance their competitiveness.
Innovation, Sustainability and Employee Development are key value drivers. Companies that invest in these areas can enhance their corporate value in the long term and promote a positive corporate culture.
The Importance of Long-Term Strategies for Sustainable Business Success
In today's fast-paced business world, it is crucial to think beyond short-term successes. A long-term strategy enables companies to build sustainable competitive advantages and show resilience against market fluctuations. While short-term profit maximization may seem attractive, it often leads to suboptimal decisions that diminish the company's value in the long run. Instead, focus on developing resources and capabilities that last for years and create added value. This includes investing in innovation, employee development, and building strong customer relationships.
Value Enhancement vs. Short-Term Profit Maximization
The difference between pure profit maximization and true value enhancement lies in the perspective. Value enhancement requires a holistic perspective that considers all stakeholders—from customers and employees to partners and society. It is about creating an ecosystem where all parties benefit, which in turn promotes long-term loyalty and commitment. Investments in research and development, sustainable practices, and a strong corporate culture are examples of actions that incur short-term costs but significantly increase the company's value in the long run. Long-term planning is therefore essential.
The TCW Model of Value Creation
The TCW Model of Value Creation emphasises the importance of a stakeholder-oriented approach. It identifies five key areas: Customer, Company, Resources, Partner, and Society & Politics. Each of these areas contributes to value creation in its own way. For example, customer loyalty and satisfaction are central success factors, while optimising internal processes and structures enhances efficiency. The efficient use of resources not only preserves the environment but also reduces costs. Strategic partnerships provide access to new markets and technologies, and taking on social responsibility strengthens the company's image and reputation. According to the TCW Report, a management excellence system is crucial for unleashing potential through intelligent value creation.
Value Management: Shareholder and Stakeholder Interests
A mature value management system integrates the interests of shareholders and stakeholders. While shareholders are primarily interested in financial returns, a holistic approach also considers the needs and expectations of other stakeholders. This leads to more balanced and sustainable value creation. HR plays a crucial role as a value driver by promoting employee satisfaction and development. Satisfied and skilled employees are more productive, innovative, and customer-focused, which directly impacts business success. The article from Personio highlights that modern companies aim to create value for all stakeholders.
The value contribution serves as an overarching metric that shows value enhancement over a specific period. It informs management, employees, investors, and analysts and acts as an incentive system for management, as it is independent of external factors such as market fluctuations. Value-enhancing strategies should always be kept in view.
Management Excellence Systems for Smart Value Creation
Operational excellence is the foundation for sustainable value enhancement. Management excellence systems assist in unlocking potential through smart value creation. This includes controlling, an efficient organisational structure, optimised process design, high employee engagement, and effective knowledge management. The optimisation of procurement, production, logistics, development, service, and sales processes also plays a crucial role. Through the continuous improvement of these areas, companies can increase their efficiency, reduce costs, and improve their competitiveness. Ultimately, this leads to higher profitability and an increased company value. Strategic decisions should always be based on a well-founded analysis of operational processes.
Production Efficiency as a Key Driver
High production efficiency is a key driver for value enhancement. Continuous improvements and investments in modern technologies lead directly to cost reductions and a stronger market position. Professional process optimisation helps to identify and eliminate inefficiencies. This can be achieved, for example, through the use of lean management methods or the implementation of automation solutions. Investments in modern production facilities enable companies to increase their production capacity, improve the quality of their products, and shorten their lead times. According to Leanovative Consulting, production efficiency is a crucial factor for a stronger market position.
Cost Structure Optimisation to Increase Profitability
Optimising the cost structure is an essential component of any successful value enhancement strategy. A detailed analysis of production costs helps to identify savings potentials and develop targeted cost optimisation strategies. This can be achieved, for instance, through negotiating better terms with suppliers, reducing waste and rejects, or implementing energy-efficient technologies. A lean cost structure enables companies to increase their profitability and improve their competitiveness. Thus, value maximisation is supported by efficient cost management.
Liquidity Management for Growth and Resilience
Effective liquidity management is crucial for the growth and resilience of a company. Optimising payment terms and precise financial planning help improve liquidity and avoid financial bottlenecks. Healthy liquidity allows companies to invest in new projects, seize market opportunities, and overcome unforeseen challenges. It is also an important factor in gaining the trust of investors and creditors. A solid real estate strategy can also contribute to liquidity.
Utilising Tax Benefits and Subsidies
Companies should make use of all available tax benefits and subsidies to improve their financial situation. In Germany, for example, there are KfW loans and BAFA grants for energy-efficient refurbishments. The restructuring clause (§ 8c para. 1a KStG), the participation exemption for foreign dividends (§ 9 no. 7 GewStG), and the reduction of the addition for renting and leasing electric vehicles (§ 8 no. 1d GewStG) can also lead to significant tax savings. It is important to stay informed about the current regulations and funding opportunities and to make the most of them. According to Haufe.de, a thorough understanding of these regulations is essential for accurate financial modelling and evaluation.
Strategic Investments in Modern Production Facilities and Digital Solutions
Innovation and Digitalisation are crucial value drivers in today's economy. Strategic investments in modern production facilities and digital solutions empower companies to enhance their efficiency, develop new products and services, and boost their competitiveness. Technological readiness is an important competitive advantage, enabling businesses to swiftly adapt to changing market conditions and seize new business opportunities. The strategy should always be based on a sound analysis of technological trends.
Sustainability as a Long-term Value Driver
Sustainability is no longer just a passing trend but a long-term value driver. Companies that manage resources responsibly and consider ESG criteria (Environmental, Social, Governance) throughout the entire value chain are not only ethically more responsible but also more economically successful. Sustainable practices can reduce costs, enhance image, and strengthen the trust of customers and investors. Therefore, sustainability should be an integral part of every long-term business strategy. FLEX Capital emphasises that sustainability drives profound and valuable changes along the entire value chain.
Artificial Intelligence (AI) for Efficiency and Innovation
Artificial Intelligence (AI) offers companies enormous opportunities to increase efficiency and innovate. AI can be used for process automation, cost reduction, and the acceleration of innovation cycles. It can also provide valuable insights in market analysis and forecasting. By deploying AI, companies can enhance their competitiveness and develop new business models. Wirtschaftswoche reports on the value enhancement through digitalisation, without specifying technical details.
Employee Development as a Competitive Advantage
Employee development is a crucial competitive advantage. Companies that invest in the training and skill enhancement of their employees not only promote their individual growth but also boost the innovation and productivity of the entire company. A positive corporate culture based on appreciation, collaboration, and open communication also contributes to employee satisfaction and retention. Engaged and motivated employees are a key success factor for any company. According to Leanovative Consulting, employee development is a key factor for a positive corporate culture.
Value-Oriented Corporate Management: Employee Satisfaction and Learning and Development Programs
A value-oriented corporate management focuses on employee satisfaction and learning and development programs. HR plays a central role as a value driver. By setting SMART goals (Specific, Measurable, Attainable, Relevant, Time-bound) in value driver management, companies can ensure their employees contribute concretely to value creation. Performance management and KPIs (Key Performance Indicators) help to measure and control progress towards achieving value-oriented goals. Personio highlights the importance of employee satisfaction and learning and development programs as HR-related value drivers.
Performance Management and KPIs
The measurement of progress in achieving value-oriented goals is carried out through financial and non-financial metrics. EVA (Economic Value Added) is a common metric representing 'excess return', indicating whether profits exceed capital costs. Other metrics include ROE (Return on Equity), ROCE (Return on Capital Employed), RONA (Return on Net Assets), and CFROI (Cash Flow Return on Investment). These metrics help companies assess their performance and identify areas for improvement. Value-oriented corporate management promotes sustainable success and considers factors beyond short-term profits.
Proactive Market Adaptation through Market Analysis and Forecasting
A proactive market adaptation is crucial for the long-term success of a company. Continuous market analysis and forecasting allow companies to identify trends early and adjust their strategy accordingly. This ensures competitiveness and enables the identification of new business opportunities. A professional market analysis includes monitoring customer needs, competitor activities, and technological developments. The real estate industry is a good example of the necessity for constant market adaptation.
Brand Communication for Customer Retention
A professional, direct, and inspiring brand presence is essential for building trust and increasing customer loyalty. Brand communication should reflect the company's values and vision and create an emotional connection with customers. Through consistent and compelling brand communication, companies can strengthen their brand and stand out from the competition. Ultimately, this leads to higher customer retention and an increased corporate value. Leanovative Consulting emphasizes the importance of a professional brand presence for building trust.
Key Benefits of Strong Brand Communication
Here are some of the key benefits you'll gain:
Increased Customer Loyalty: A strong brand builds trust and encourages repeat business.
Improved Brand Recognition: Consistent messaging helps customers remember and recognize your brand.
Competitive Advantage: A well-defined brand differentiates you from competitors and attracts customers.
Examples of Value-Oriented Corporate Management in DAX Companies
Many DAX companies focus on value-oriented corporate management. Mercedes-Benz Group, Henkel, BASF, and Bayer are examples of companies that align their strategy with long-term value enhancement. BASF uses ROCE (Return on Capital Employed) as a key metric, while Mercedes-Benz utilises RONA (Return on Net Assets). These metrics help the companies to measure their performance and optimise their strategy. The value-oriented corporate management promotes sustainable success and takes into account factors beyond short-term profits.
FLEX Capital: Operational Value Enhancement in Software and Internet Companies
FLEX Capital focuses on operational value enhancement in small and medium-sized software and internet companies in the DACH region. They differentiate themselves through active operational involvement, made possible by their commercial structure. This enables direct intervention in operational development. A core strategy is the structured development and professionalisation of operational structures to accelerate growth through optimised processes and customer acquisition. FLEX Capital engages in intensive discussions with management within the first 100 days to identify challenges and strategic steps. The strategies for portfolio value enhancement by FLEX Capital include data-driven decision-making and the iterative development of the Value Creation Team.
The Importance of Long-Term, Holistic Strategies for Sustainable Value Creation
A long-term strategy is the key to sustainable value creation. Companies that focus on short-term profits risk missing out on long-term opportunities and jeopardising their competitiveness. A holistic strategy that considers all stakeholders and focuses on operational excellence, financial optimisation, innovation, digitalisation, sustainability, employee development, market adaptation, and brand communication is the best way to increase corporate value in the long term. Long-term planning should always be at the forefront.
Future Trends and Developments in Value Creation
The world is constantly changing, and companies must adapt to stay competitive. Future trends and developments in value creation include the increasing importance of sustainability, further digitalisation of processes and business models, the use of artificial intelligence, and the need to adapt to changing customer needs. Companies that recognise these trends early and integrate them into their strategy will be able to increase their value in the long term.
Do you want to sustainably increase your company's value? We at Auctoa can help you develop and implement a long-term strategy tailored to your individual needs. Contact us today for a no-obligation consultation and discover how we can help secure your business success in the long run. Register here for a free initial consultation!
The TCW Report offers strategies and methods for successful corporate management and value enhancement.
The article by Personio emphasises the importance of value-oriented corporate governance that creates value for all stakeholders.
Leanovative Consulting discusses which strategies bring the greatest success in increasing corporate value.
Haufe.de provides resources and information on enhancing corporate value.
FLEX Capital emphasises that sustainability drives profound and valuable changes along the entire value chain and offers strategies for portfolio value enhancement.
The Wirtschaftswoche reports on value enhancement through digitalisation.
What is meant by a long-term strategy in the context of property valuation?
A long-term strategy in property valuation involves the continuous adaptation to market changes, the use of technological innovations, and the consideration of sustainability aspects to enhance the value of properties over the long term.
How can Auctoa assist in developing a long-term strategy?
Auctoa provides AI-powered valuation platforms, hybrid AI-human assessments, and comprehensive valuation reports that enable property investors, banks, and agents to make informed decisions and develop long-term strategies.
What role does digitalisation play in the long-term value enhancement of properties?
Digitalisation facilitates more efficient management, better market analyses, and optimised customer communication, leading to a long-term value enhancement of properties.
What is the significance of stakeholder orientation for a long-term strategy?
A stakeholder orientation takes into account the needs of all parties involved (customers, employees, partners, society) and leads to more balanced and sustainable value creation, positively impacting long-term business success.
How does employee development influence long-term value enhancement?
Investments in employee development enhance the innovative capacity and productivity of a company, which directly affects the long-term business success.
What role do tax benefits play in financial optimisation?
The use of tax advantages and financial incentives, such as KfW loans and BAFA grants, can lead to significant tax savings and improve the company's financial situation.
How important is market adaptation for a long-term strategy?
A proactive market adaptation through continuous market analysis and forecasting enables companies to identify trends early and adjust their strategy accordingly to ensure competitiveness.
What role does sustainability play in long-term value enhancement?
Sustainability is a long-term value driver that can reduce costs, improve the brand image, and strengthen the trust of customers and investors. Companies that manage resources responsibly are more economically successful.
