Analysing and Communicating Corporate Strategy in an IR Context
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A compelling investment story describes:
- The company's markets (the opportunity)
- The company's strategy (the plan) and
- Evidence of delivery (performance).
The investment story should tackle the 3 key valuation variables - growth, quality and risk. It should also deal with the characteristics of the investment, in terms of capital structure and dividend policy.
Whether or not a company is able to earn a return on its capital in excess of the cost of capital is determined by its own strategic choices - the choice of industries or set of industries in which the company operates and the manner
in which the company intends to compete with other firms.
This briefing paper focuses on the market ("opportunity") and on strategy ("the plan") and explains how investors and analysts assess corporate strategy.