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long-term strategy
Do you want to increase your company's value in the long term? A well-considered, long-term strategy is the key to success. Discover how you can establish a solid foundation for sustainable growth through process optimization, employee development, and strategic investments. Need support in developing your individual strategy? contact us for a non-binding consultation.
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A long-term strategy is crucial for sustainable business success as it enables the development of competitive advantages and allows a company to remain resilient 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 crucial value drivers. Companies that invest in these areas can increase 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 create sustainable competitive advantages and demonstrates resilience to market fluctuations. While short-term profit maximisation may seem attractive, it often leads to suboptimal decisions that diminish the company's value in the long run. Instead, focus should be on building resources and capabilities that endure over years and create value. This includes investing in innovation, employee development, and building strong customer relationships.
Value Enhancement vs. Short-term Profit Maximisation
The difference between pure profit maximisation and true value enhancement lies in perspective. Value enhancement requires a holistic perspective that considers all stakeholders – from customers and employees to partners and society. It's about creating an ecosystem where all involved parties benefit, which in turn promotes long-term loyalty and engagement. Investments in research and development, sustainable practices, and a strong corporate culture are examples of measures that incur costs in the short term but significantly enhance company value in the long term. Therefore, long-term planning is 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 instance, customer loyalty and satisfaction are central success factors, while optimising internal processes and structures enhances efficiency. Efficient use of resources not only conserves the environment but also reduces costs. Strategic partnerships enable access to new markets and technologies, and assuming social responsibility strengthens the company's image and reputation. According to the TCW report, a management excellence system is crucial for unlocking potential through intelligent value creation.
Value Management: Shareholder and Stakeholder Interests
A sophisticated value management 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 a more balanced and sustainable value creation. HR plays a crucial role as a value driver by promoting employee satisfaction and development. Satisfied and qualified employees are more productive, innovative, and customer-oriented, directly impacting the company's success. The article by Personio highlights that modern companies aim to create value for all stakeholders.
The value contribution serves as an overarching metric that indicates value enhancement over a specific period. It informs management, employees, investors, and analysts, and serves as an incentive system for management as it is independent of external factors like stock market fluctuations. Value-enhancing strategies should always be kept in view.
Management Excellence Systems for Intelligent Value Creation
Operational Excellence is the foundation for sustainable value enhancement. Management Excellence Systems assist in unlocking potential through intelligent value creation. This includes controlling, an efficient organisational structure, optimised process design, high employee engagement, and effective knowledge management. Optimising procurement, production, logistics, development, service, and sales processes also plays a crucial role. Through the continuous improvement of these areas, companies can boost their efficiency, reduce costs, and enhance their competitiveness. This ultimately leads to increased profitability and enhanced company value. Strategic decisions should always be based on a sound analysis of operational processes.
Production Efficiency as a Central Driver
High production efficiency is a central driver for value enhancement. Continuous improvements and investments in modern technologies directly lead to cost reductions and a stronger market position. Professional process optimisation helps identify and eliminate inefficiencies. This can be achieved 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 key factor for a stronger market position.
Cost Structure Optimisation to Increase Profitability
Optimising the cost structure is a crucial part of any successful value enhancement strategy. A detailed analysis of production costs helps to identify savings potential and develop targeted cost optimisation strategies. This can be achieved through negotiating better terms with suppliers, reducing waste and scrap, or implementing energy-efficient technologies. A lean cost structure allows companies to increase their profitability and improve their competitiveness. Thus, maximising value is supported by efficient cost management.
Liquidity Management for Growth and Resilience
Effective liquidity management is essential for the growth and resilience of a company. Optimising payment terms and precise financial planning help to improve liquidity and avoid financial bottlenecks. Healthy liquidity enables companies to invest in new projects, seize market opportunities, and overcome unforeseen challenges. It is also a key factor in gaining the trust of investors and creditors. A solid real estate strategy can also contribute to liquidity.
Utilising Tax Benefits and Funding Opportunities
Companies should take advantage of all available tax benefits and funding opportunities to improve their financial situation. In Germany, 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 in the addition for the rental and leasing of electric vehicles (§ 8 No. 1d GewStG) can also lead to significant tax savings. It is important to be informed about the current regulations and funding opportunities and to use them optimally. According to Haufe.de, a thorough understanding of these regulations is essential for accurate financial modelling and valuation.
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 allow companies to boost their efficiency, develop new products and services, and enhance their competitiveness. Technological readiness is a significant competitive advantage, enabling companies to swiftly adapt to changing market conditions and capitalise on 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 merely a trend, but a long-term value driver. Companies that responsibly manage resources and consider ESG (Environmental, Social, Governance) criteria throughout the entire value chain are not only more ethically responsible but also more economically successful. Sustainable practices can reduce costs, enhance reputation, and build trust with customers and investors. Therefore, sustainability should be an integral part of every company’s long-term strategy. FLEX Capital emphasises that sustainability drives profound and valuable changes along the entire value chain.
Artificial Intelligence (AI) for Enhancing Efficiency and Innovation
Artificial Intelligence (AI) offers companies vast opportunities to increase efficiency and foster innovation. AI can be used to automate processes, reduce costs, and accelerate innovation cycles. It can also provide valuable insights in market analysis and forecasting. By leveraging AI, companies can boost their competitiveness and develop new business models. The Wirtschaftswoche reports on the value increase through digitalisation, without detailing specific technical aspects.
Employee Development as a Competitive Advantage
Employee development is a crucial competitive advantage. Companies that invest in training and expanding the skills of their employees not only foster individual growth but also enhance the innovative capabilities and productivity of the entire organisation. A positive company 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 company culture.
Value-Oriented Corporate Management: Employee Satisfaction and Learning and Development Programs
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 that their employees make a tangible contribution to value creation. Performance management and KPIs (Key Performance Indicators) help measure and manage progress in achieving value-oriented goals. Personio emphasises 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 conducted through financial and non-financial metrics. EVA (Economic Value Added) is a common metric representing the 'excess return,' i.e., 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 gains.
Proactive Market Adjustment through Market Analysis and Forecasting
A proactive market adjustment is crucial for the long-term success of a company. Through continuous market analysis and forecasting, companies can identify trends early and adapt their strategy accordingly. This ensures competitiveness and enables the identification of new business opportunities. A professional market analysis involves observing customer needs, competitive activities, and technological developments. The real estate industry is a prime example of the need for constant market adjustment.
Brand Communication for Customer Loyalty
A professional, direct, and inspiring brand presence is essential for building trust and enhancing customer loyalty. Brand communication should reflect the values and vision of the company and create an emotional connection with customers. Through consistent and compelling brand communication, companies can strengthen their brand and stand out from the competition. This ultimately leads to higher customer loyalty and increased company value. Leanovative Consulting emphasizes the importance of a professional brand presence in 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 rely on value-oriented corporate management. Mercedes-Benz Group, Henkel, BASF, and Bayer are examples of companies focused on long-term value enhancement. BASF uses ROCE (Return on Capital Employed) as a key performance indicator, while Mercedes-Benz uses RONA (Return on Net Assets). These metrics aid companies in measuring their performance and optimising their strategies. Value-oriented corporate management promotes sustainable success, taking into account factors beyond short-term profits.
FLEX Capital: Operational Value Enhancement in Software and Internet Companies
FLEX Capital focuses on the 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 business 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. In the first 100 days, FLEX Capital conducts intensive discussions with management to identify challenges and strategic steps. The strategies for portfolio value enhancement at 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 Enhancement
A long-term strategy is the key to sustainable value enhancement. Companies that focus on short-term profits risk missing out on long-term opportunities and endangering their competitiveness. A holistic strategy that considers all stakeholders and emphasizes operational excellence, financial optimization, innovation, digitalization, 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 the focus.
Future Trends and Developments in Value Enhancement
The world is constantly changing, and companies must adapt to stay competitive. Future trends and developments in value enhancement include the increasing importance of sustainability, further digitalization of processes and business models, the use of artificial intelligence, and the need to adapt to changing customer needs. Companies that identify and integrate these trends into their strategy early on will be able to enhance their value in the long run.
Do you want to sustainably enhance your company's value? At Auctoa, we support you in developing and implementing a long-term strategy tailored to your individual needs. Contact us today for a non-binding consultation and find out how we can help you secure your business success in the long term. 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 management, which creates value for all stakeholders.
Leanovative Consulting discusses which strategies bring the greatest success for increasing company value.
Haufe.de provides work materials and information on enhancing company value.
FLEX Capital highlights 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 property value over the long term.
How can Auctoa assist in developing a long-term strategy?
Auctoa offers AI-powered valuation platforms, hybrid AI-human appraisals, and comprehensive valuation reports, enabling 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 allows for more efficient management, better market analysis, and optimised customer communication, leading to a long-term increase in property value.
What significance does stakeholder orientation have for a long-term strategy?
Stakeholder orientation takes into account the needs of all parties involved (customers, employees, partners, society) and leads to a balanced and more sustainable value creation, positively impacting long-term enterprise success.
How does employee development influence long-term value enhancement?
Investments in employee development boost the company's innovation power and productivity, directly affecting the long-term success of the business.
What role do tax benefits play in financial optimisation?
The use of tax benefits and funding opportunities, 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?
Proactive market adaptation through continuous market analysis and forecasting allows businesses 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, enhance the image, and strengthen the trust of customers and investors. Companies that handle resources responsibly tend to be more economically successful.
