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Why be in business?

This is the fundamental question that all stakeholders (that passe term) should ask and is explored in Chapter 2. Stakeholders can be: investors, individuals, pension funds etc; employees; suppliers and customers; governments keen on economic activity; and so on.

This question is not asking 'Why does a business exist?' - that is to be found in history - but rather where is your business heading: what are the objectives for the future? In this book the question is being asked from the perspective of the investor - the committed long-term investor.

We now have 'corporate philosophers' questioning 'why be in business' and the like, but being 'philosophers' they have to be clever and dismiss the notion of making money (or rather 'returns' if they can comprehend the difference) as too simplistic. We are all philosophers and will have done our own critical thinking and hold deep views on many matters, but this book is about finance and strategy; yes, there is more to life than numbers and money, but numbers give a perfectly defined focus for our actions.

We would soon be bogged down in politics with both a large and small 'p' if we looked at finance and accounting from all the other stakeholders' viewpoints - and this is the problem of the 'stakeholder' concept: not all stakeholders are equal, in spite of what the well-intentioned may opine. I believe that it is possible and in fact essential to be apolitical and unemotional about business and to look at strategy from an investor's viewpoint.

The concept of 'free market' economies is under attack today (2014) due to the, let's be polite and call them shenanigans, of a privileged few (the use of the word 'elite' is quite inappropriate!). Truly free markets, but with some tempering or regulation, for we are but human, allow sensible investment to be made.


- The words 'strategy' and 'strategic' must be used with care and in a well-defined context.

- Financial reporting, both internal and external, reveals the effects of physical or practical strategies and supports operating financial strategies.

- There are financial strategies that deliver more by optimizing financial (balance sheet) structure rather than operational performance.

- Do you need a map of your financial strategies? This question is considered further in the summary chapter (Chapter 13).

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