Business Partner to Executive Members
Business Partner to Executive Members
Our
teams have the honor of being entrusted by Executive Members of several organizations.
These members mainly comprise of Chief Executive Officer (“CEO”), General
Manager (“GM”) as well as Senior Executive Board who act as the primary
decision-makers of the organizations. Our deliverables to the Executive Members
comprise strategy development, budget, risk management, and financial analysis
tools. Our scope of service is further extended to assisting Executive Members
in overcoming management and operational issues relating to the publicly held
company. Specific scopes of our services are outlined as follows.
New CEO/ GM
A new CEO/ GM may be externally hired or internally promoted. The underlying CEO/ GM will confront several challenges, such as how does the new CEO/ GM succeed in this role. How does the new CEO/ GM set the priorities, and what activities should the new CEO/ GM pursue first to succeed and avoid any risks to which the company is subject? We recognize the new CEO/ GM is likely to sustain an enormous amount of stress from these issues and our team could assist to alleviate their stresses via addressing his/ her immediate priorities, measurement systems, strategy and budget formulation, and other activities which the new CEO/ GM need to be responsible for during his/ her first few months on the job. The goals of our service deliverables are to assist the newly appointed CEO/ GM in gaining a good knowledge of the strengths and weaknesses of the company which could later assist the new CEO/ GM in setting a proper strategic path to follow and eventually improving his/ her chances of success over the long term.
Corporate Strategy
One of the key responsibilities of the CEO/ GM is the formation of an effective strategy to be implemented over the long term. Any business (particularly a successful one) often operates in an extremely competitive environment. Naturally, the CEO/ GM must build defenses against competitors and, more importantly, test these strategies to ascertain if a company can achieve these strategies before their formal executions. These strategies may include product or service differentiation, lower cost, focus on a Niche, internet impact assessment, and many more.
Developing effective corporate strategies require a considerable amount of thought by the CEO/ GM on a specific aspect such as the unique capabilities of the company and whether these capabilities can fit into the highly competitive environment in which it operates. Generally, an effective strategy is highly defensible whilst allowing the company to maintain an above-average profit generating ability in the long term. Our team could assist with identifying the capabilities of the company to assist the CEO/ GM to obtain a detailed understanding of the company’s strengths and weaknesses. In addition, our experiences suggest the ideal strategy builds on existing strengths, not those that attempt to ratify existing weaknesses. In this connection, we are experts in advising on strategy on the unique capabilities and strengths of the company. Furthermore, our scopes of service are extended to assisting CEO/ GM in their projections of competitive conditions within the industry in which the company operates to determine what are the foreseeable changes, threats, and opportunities in the near and medium-term. The strategy in question will be tailored to these identified forecasted conditions and not the conditions that exist today.
Financial Strategy
A significant part of the strategy held responsible by the CEO/ GM includes the strategic financial strategy. Important financial strategy decisions can be made solely that the chief financial officer (“CFO”) [note: the key leading person in charge of the accounting department does not necessarily have to be the CFO. It applies to any title as long as the person is assigned to be in charge of the accounting department and report directly to decision makers] or both CEO and CFO.
Under this connection, the CEO/ GM is required to participate in several decision areas that which a CFO is commonly held responsible and the CEO/ GM should be aware of these areas. These decision issues are generally arranged and grouped in the order which can be found on the balance sheet and the income statement. For example, when dealing with the cash of the company, the CEO/ GM should pay particular attention to the amount of risk associated with the company’s exposure to its foreign currency transactions, the company’s relationship with the banks handling its financial transactions, and other related aspects. When dealing with the investments aspect, the objective of the CEO/ GM is to maximize the return on investments without substantially increasing its investment risk exposure. The key aspect is further extended to monitoring the rates paid on outstanding corporate bonds issued and shall adopt the decision of refunding these bonds issued to bondholders if lower-cost alternatives can be found.
In addition to the individual category grouped in the order of balance sheet and income statement, other related aspects of the CEO/ GM needs to be closely monitored such as working capital, inventory reduction, fixed asset lease versus buy decisions, temporary labor decision, divestiture decisions, and many more. Our team could act as the bridge between the CEO/ GM and the CFO, assisting with the establishment of key measurements, expectation development, and financials interpretation (if necessary) to assist the CEO/ GM with better informed financial inputs which in turn assists them in the decision-making process and strategy formulation.
Tax Strategy
A major part of the financial strategy is the tax strategy which the CEO/ GM needs to be aware of and, on some occasions, the CEO/ GM is also held accountable. Although CEO/ GM does not need to acquire an in-depth understanding of the mechanics and technicality in this area, if the objective of the CEO/ GM is to reduce the overall corporation’s tax burdens, there are some aspects of which the CEO/ GM needs to be familiar with to assist them in understanding the tax strategy as proposed by the CFO. These aspects generally include accelerating deductions, utilization of tax credits, increasing deferral in tax, minimizing nonallowable expenses, maximizing tax-exempt income, and allocating income in lower-tax jurisdictions. Given the high complexity of the applicable tax laws, our tax team can assist the CEO/ GM by working closely with the CFO and legal team in formulating a strategy that is tailored to specific circumstances.
Information Technology Strategy
CEO/ GM may place significant emphasis on the information technology (IT) area. However, our experiences suggest companies tend to overspend on IT or invest in the wrong projects. The main reason for making the wrong decision is the lack of investing sufficient time upfront to determine how the proposed IT function can be merged more effectively into the business strategy of the company. Conversely, there are abundant benefits for the company and possibly prepare the company in devising a successful overall business strategy all of which can be accomplished via proper selection and implementation of IT strategy.
In most IT strategies, the key to success in this aspect is to select a proper set of IT project priorities. This objective requires considerable time to understand the key strengths and weaknesses of the company, its competitors, and the industry in which it operates. Furthermore, it requires the participation of all parts of the company in ensuring good use of limited capital to support the core business activities of the business. If the IT strategies are created with targets to specific competitors, a company is likely to establish a strong competitive position in the long term. Our team could assist the CEO/ GM in the process of determining whether the IT strategy is important to the company, which may vary according to the overall business strategy, the industry it operates in, and the initiatives adopted by its key competitors. If it is, our service could further be extended to how to develop and prioritize IT strategies, and what specific IT projects are likely to be of value, which it is largely depending on the overall business strategy of a company that intends to adopt.
Outsourcing Strategy
Outsourcing a specific function is a common strategy adopted by the CEO/ GM. Despite the gradual decline in the use of outsourcing in recent years in tandem with the breaking down of globalization and the rise of localization, many companies are still using it primarily to drive down their costs. Furthermore, the mechanic behind outsourcing a specific function to a foreign and local supplier is largely similar. Depending on the specific requirements of the CEO/ GM, our team is equipped with complete expertise and experience in assisting the CEO/ GM in the outsourcing function. Generally, the scopes of our service include but are not limited to an assessment of reasons for considering outsourcing a specific function, assisting with identifying the relevant risks associated with moving a function to a supplier, establishing key performance measurements, supplier controls, reporting, and many more. For more of our service provision in outsourcing functions, please refer to Outsourcing Core Functions.
Budgeting
A budget is an extremely useful planning tool used by The CEO/ GM. Depending on the specific organizational and group structure of the company, it is commonly used as a high-level monitoring and control mechanism to establish the basis of business activities across an organization. A properly created budget with strong support from management forms the basis of resource allocation since it will funnel funding into specific activities which the management perceived to be most important to the business, which is finalized in the business strategic planning process that takes place before the budgeting process. In addition, the budget acts as a bridge between strategies and key initiatives since a range of precise key initiatives that support overall business strategies will be funded. Examples of these key initiatives include setting up a branch and/or new department, major mergers and acquisitions projects, purchases of new machinery and equipment, outsourcing of specific functions, hiring specific personnel, adopting services from specific consultants, etc. all of which represent new activities of which CEO/ GM intend to adopt in the new fiscal year. The moment the budget has been approved, it shall act as a control mechanism on expenditures to ensure the actual spending amount and timing match the approved funding amount and timetable. Furthermore, the performance of specific departments can be compared to their budgets to determine the performance of department managers. CEO/ GM commonly rely heavily on budget systems as one of their primary tools in setting targets, driving business growth, cost control, performance measurements, risk management, and many more. Our team has acquired comprehensive knowledge in assisting CEO/ GM in this aspect, from developing an effective budgeting system, equipping CEO/ GM and relevant departmental heads who are held accountable for their respective budgets with relevant mechanics of constructing a budget, to identifying weaknesses in existing company budget and improve on it.
Capital Budgeting
Our experiences suggest the extent of funds allocated to capital improvement is at a large proportion scale to sales amount during a fiscal year. Therefore, the CEO/ GM is often assigned by shareholders to conduct a series of analyses to ensure the funds are invested wisely in this aspect. Our team could assist the CEO/ GM in introducing multiple approaches to evaluating capital investments. Our service scope is further extended to other related aspects such as the capital investment approval process, cash flow modeling issues, and post-completion project analysis, which encompass the complete process of evaluating a capital project, from its acquisition, and installation to formal operation execution.
Risk Management
Risk is a common aspect of operation which often overlooked by senior executive members of an organization. We have evidenced the fallen of perfectly healthy companies as a result of their failures in paying sufficient attention to the risk aspect. Risk occurrence may perceive to be rare but its impact can be catastrophic which could potentially fail the company to recover from the incidents. The results in this connection are the destruction of a perfectly healthy organization, massive workers layoff, and the destruction of the equity stake of the owners.
Examples of company failures caused by risk occurrence vary from large-scale incidents of failing to recover from severe damages caused by the fire that destroys a production facility or a data center to minor damage such as theft that includes cash and one’s securities. Other more common risk exposure may include lawsuits that almost every company may confront daily. Some examples of lawsuits comprise customer or supplier claims regarding contracts, office and/or worker-related lawsuits such as unlawful employee layoff, employee injuries, worker discrimination, and more. Depending on the scale of the awards, these lawsuits may not necessarily end a company’s existence but they may further deteriorate a company’s financial position if the company is not in good financial health, to begin with. Furthermore, the positive corporate branding of the company which takes years to build may be ruined in a relatively short period, and the situation will be worsened if key competitors see this as an opportunity to eliminate its key opponent.
Under the adverse impact of the lack of risk management, it is of no surprise risk management is commonly identified as one of the key responsibilities (maybe a key performance measurement) of the CEO/ GM. Our team is equipped with relevant proficiency in of establishment of risk management policies and procedures that keep a company from being seriously injured by these and other types of risk-related problems. We further assist in mitigating a company’s risk via introducing internal systems modifications as well as acquiring specific insurance. In the aspect of insurance purchase, we shall specify the types of insurance that suit the company’s needs, guidance in broker selection, or an underwriter who could assist with servicing a company’s needs.
For more of our service provisions in Risk Management, please refer to Corporate Risk Management.
Managing Foreign Exchange Exposure Risk
The risk of foreign exchange exposure is gradually becoming a notable issue over recent years in conjunction with aggressive Quantitative Easing (“QE”) monetary policy adopted by major central banks in multiple countries followed by lowering interest rates and geopolitics instability. Companies that operate on a global basis are even more so in exposing themselves to a high level of foreign exchange risks since when companies accept foreign currency in return for their goods and/or services deliverables, the value of currency accepted from sales of goods and/or services as opposed to the home country currency of the company may fluctuate significantly from the beginning of the transaction (e.g. contract signing) to transaction completion (e.g. receipt of funds). The significant foreign exchange fluctuation may potentially destroy the profit of the sale transaction.
Our team can assist the CEO/ GM in mitigating the foreign exchange risk via determining its level of exposure, creating a plan for how to mitigate that risk, and providing training to in-house personnel who are in charge of daily activities to implement the plan, and how to properly account for each transaction type. For more of our service provisions in managing foreign exchange exposure risk, please refer to Corporate Risk Management.
Performance Measurements
Under the heavily loaded workloads and schedules of the CEO/ GM, he/ she relies on performance measurements to provide them with insights into all major aspects of the business. These performance measurement ratios comprise operating performance, asset utilization, cash flow, solvency, liquidity, return on investment, and market performance. Each group of performance measurements is supported by several ratios to reach an accurate conclusion on specific performance. For example, the Operating Performance measurements ratio consists of core growth rate, gross profit percentage, operating profit percentage, net profit percentage, and many more. Depending on the industry and the circumstances of each company, our team could assist with developing key measurement ratios that are most relevant to monitor. We are confident these ratios could form the core of a comprehensive set of performance measurements not only for a diligent CEO/ GM but also for specific groups of outsiders such as shareholders, investors, bankers, and analysts. It is relevant to note that some metrics require a brief review at long intervals while others are indicators of such key issues that the CEO/ GM has to review daily. Therefore, this mission will be accomplished jointly with the CFO who will be responsible for presenting this information in the format and intervals which the CEO/ GM has requested.
Cost Reduction Analysis
One of the major and yet common issues faced by the CEO/ GM especially when the business is experiencing a contraction phase is he/ she will want to find out which expenses should be reduced and/or what approaches are available on hand. In our experience, the worst possible approach is the across-the-board cost reduction because it affects both the core functions and less crucial ones on an equal basis. In other words, the direct outcome of this approach is the weakening of core functions which could lead to further deterioration of the business performance. Unfortunately, this approach is commonly adopted by most companies according to our observations. We recommend the approach of undertaking a carefully targeted analysis that results in identifying business functions that a company can afford to lose most easily. Our team could assist the CEO/ GM in this aspect by introducing various techniques for cost reduction analysis. This exercise includes spending analysis, supplier consolidation, workforce reduction, and many more. Please refer to Cost Control & Reduction for more information on our services.
Mergers and Acquisitions
“Merger” and “Acquisitions” are entirely different concepts. In an acquisition transaction, both acquirer and the acquiree remain separate entities at the end of the transaction. On the contrary, the results of a merger exercise are the dissolution of one of the companies in the transaction, followed by a consolidation which results in dissolve of both parties, then a new entity is created to accommodate the previous entities that are merged. CEO/ GM often favors mergers and acquisitions because a successful one can direct the company to rapid and sustainable future growth. Conversely, a failed acquisition can lead to bankruptcy. In this connection, the CEO/ GM must be utterly certain that the target acquiree is a good fit and whether the target acquiree is over or underpriced. Our team could assist the CEO/ GM by introducing different types of acquisition analyses and methods of calculating an appropriate purchase price for the target acquiree. For more information on our service provision in this aspect, please refer to Mergers and Acquisitions.
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When connected with us, you aren’t growing your business alone. We have your back and put in our best to contribute to the growth of your entire team and organization. So, if you are looking for the right consultant that’ll help you overcoming business and operational challenges, and bring in more conversions and revenue, we are right here!