Our Investment Strategy is a high-level plan describing what we hope to accomplish with our investments and how we plan to do. This strategy answers key questions such as who an investment will benefit (personas), how it will benefit those personas, and what are the goals for the investment all through its lifecycle.
Our investment management experts suggest three key elements for the investment strategy:
- Organisational decision-making
- Financial decision-making
- Investment decision-making
A large part of the Investment Strategy is organisational decision-making. Our Investment Strategy is a core element for the Foundation and it ultimately forms the support of the organisational structure. Securing and managing investments are vital to our success.
Part of the Investment Strategy is organisational decision-making which details how we apply investments. Organisational decision-making is a general guide. For example, knowing when to secure investments that has a large return is vital. Any investments made through the organisation, particularly large investments, should have detailed guidelines. Effective organisational decision-making encourages taking advantage of the terms of suppliers. In addition, it specifies if approval is required by a manager or board for large investments.
While some specifics, such as approval authorities can be detailed, it is advisable to account for every possible investment scenario that arises in the organisation. However, the Investment Strategy is enough of a guideline to direct the basic personnel of the firm in conducting the investment aspects of the firm.
In general, advice should be given to management in circumstances such as when approval is needed to make changes to current investments or to liquidate investments to cover the organisation’s necessities.
Capital investment is the springboard for wealth creation. Since management is ultimately responsible, the objective of our financial management is to implement investment and financial decisions which satisfies the organisation by placing it in an optimum financial position. The decisions are basically with regard to the identification of the possible strategies capable of maximising our industry value. They involve the allocation of capital resources among profitable opportunities.
They also encompass the implementation and monitoring of the chosen strategy so as to achieve agreed objectives. This is the portfolio constituent of the Investment Strategy that embraces the optimum investment and financing decisions required to attain the overall specified objectives. In this connection, it is necessary to distinguish between strategic, tactical, and operational investment planning. While strategy is a long-term course of action, tactics are intermediate plans, while operational are on-going functions.
Irrespective of the time horizon, the investment and financial decisions functions involve the following responsibilities:
- Continual search for best investment opportunities.
- Selection of the best profitable opportunities.
- Determination of optimal mix of funds for the opportunities.
- Establishment of systems for internal managements.
- Analysis of results for future decision-making.
- Key financial decisions in our organisation alters the total value of the Foundation by alteration in its capital structure which would cause an optimal financial mix to exist resulting in a maximised industry value for the organisation.
- Key investment decisions in our organisation typically involves the profitable application of funds especially in long-term projects. A comprehension of cost of capital, capital structure, and portfolio theory is a prerequisite here.
- Dividend decision determines the division of earnings between investment profits and reinvestment in the organisation. Retained earnings are one of the most significant sources of funds for financing our growth, dividends constitute the flow of profits that accrue to the organisation.
- Portfolio decisions or analysis is a method of evaluating investments based on their contribution to the aggregate performance of the entire organisation rather than on the individual characteristics of the investment themselves. When performing portfolio analysis, information is gathered with regard to the individual investments available, and then chooses the projects that assist to attain all our goals in all the years that are of concern. Strategic Portfolio Management takes the insights gained from portfolio analysis and integrates them into the decision-making process of the organisation.
An organisation is intimately linked with money. This fact has to be appreciated so that the interface of strategic management and Investment Strategy will be clearly comprehended.
Strategic investment decision-making involves the process of identifying, evaluating, and selecting among projects that are likely to have significant effect on the organisation’s free enterprise advantage. More specifically, the decision influences what the firm does, where it does it, and how it does it.
There is a vital need to get these decisions right. The organisation reaps major strategic and operational advantages, if the decision proves successful. Our investment leaders carry an enormous responsibility to guide the Foundation to the right decision. The following principal guidelines will assist in going an extra mile in investment decision situations and significantly mitigate the risk of incorrect decisions for the Foundation.
- Alignment of investment decision with Corporate Strategy is of utmost importance.
- There should be only one standard way to evaluate all projects.
- Apply intelligent estimates and simpler investment analysis.
- Correctness and consistency in setting the baseline is vital to determine the increments of the project.
- Give respect to investment benefit or revenue forecast given by corporate partners. At the same time, give significant importance to the views or inputs of the ultimate beneficiary of the investment decision.
- Effectiveness is vital.
- Early engagement with the organisation is extremely important.
- For big and complex situations, provide a range of results, rather than a single point estimate.
- No matter how big and complex is the situation, always present in the most simple and relevant way to the decision makers.
- Post investment monitoring of the final situation with the actual performance of the investment is essential for learning purpose. Openly share the learnings and apply them for future investment situations.
This investment strategy serves three main valuable organisationa purposes.
- It provides clarity for the firm. Our team is in a better position to deliver their best effort to the firm as a result of the properly drafted and well communicated clear Investment Strategy.
- It assists with prioritising our investment roadmap. With our Investment Strategy, we have a clearer picture of what we hope to accomplish with our investment(s), translating into a more strategically sound investment roadmap.
- It improves our team’s tactical decisions.