Services
Value-based strategy
Value-based strategy programs are developed at two distinct levels of a business: the corporate level and the business unit level.
Corporate strategy
PA’s approach to resolving the questions of corporate strategy is based on building an understanding of:
- The ability of each business in the portfolio to create shareholder value in the future
- The ability of the corporation, as parent, to add value to those businesses.
This approach quickly gives management clarity about how to find the value-maximizing strategy for the whole corporation:
- Which businesses should we be investing in for growth?
- In which businesses should we be intervening to improve performance?
- Which new businesses should we enter?
- Which businesses should we sell or exit?
- What should be the relationship between parent and subsidiary?
- How should we develop the parent itself?
Using this approach, our clients have been able to increase the strategic potential of their businesses enormously: one Scandinavian business had strategic plans which would have delivered an 11% pa shareholder return over the lifetime of the plans. By working with PA, they uncovered an alternative strategy which could deliver 18% pa return – a dramatic increase in long-term value creation.
Business unit strategy
PA’s approach to defining business unit strategies which really create value is based on four key tenets:
- For any given management team, there are a small number of key strategic uncertainties – on which attention should be focused
- Any successful strategy has to identify an attractive market
- Any successful strategy has to identify a source of real, differentiated, competitive advantage
- The value-creation must be clearly demonstrable.
This highly-structured, transparent approach provides real confidence to management teams, and prevents them being swept along by industry ‘received wisdom’ into making ill-considered and value-destroying investments.
One PA client used this approach to completely reverse its ‘one-stop-shop’ strategy, focusing instead on ‘profitable, quality products and services’. The new strategy showed where to target growth and how to increase value by a factor of two over five years.
|
For further information on value-based strategy, please contact:
Carol Briggs
MSV Marketing Manager
Telephone: +44 (0) 20 7333 6144
E-mail: carol.briggs@paconsulting.com
PA Consulting Group
123 Buckingham Palace Road
London SW1W 9SR
United Kingdom
|
|
