Value creation focuses on enhancing your business’s efficiency and fostering innovation. Byron Smith of our Strategy team explains the concept below.
By identifying inefficiencies and implementing best practices, you can significantly boost your business’s performance. This might involve streamlining processes, adopting new technologies, or optimising supply chains. The result is often a leaner, more agile organisation capable of delivering higher margins and better returns.
Business leaders and executives in Ireland utilise value creation strategies to enhance market positioning and profitability.
Irish entrepreneurs and private enterprise management use value creation to differentiate their products and services, to both attract investment and enhance existing market growth.
Investors and shareholders assess value creation metrics to gauge potential and performance.
Employees benefit from value creation through improved job security and career growth, while customers enjoy superior products and services tailored to their needs.
Value creation adopts a holistic, integrated approach. Unlike traditional methods that focus on short-term financial gains and that have often been imposed on management, value creation emphasises long-term sustainability and stakeholder engagement. It involves innovative thinking, continuous improvement, and a deep understanding of market dynamics.
Traditional methods often prioritise immediate returns through carve-outs, cost-cutting and financial engineering. Value creation expands on that approach, seeking to build enduring increased value through innovation, customer satisfaction, and operational efficiency – with management buy-in emphasised throughout the process.
Implementing a value creation strategy can yield significant results across various business scenarios. In deal scenarios, KPMG's value creation approach has enhanced deal values by up to 30% by identifying key value drivers and mitigating drags on value.
In growth scenarios, KPMG's strategic insights and market intelligence enable Irish businesses to capitalise on emerging opportunities and navigate market complexities. By leveraging benchmarking and best practices, companies can achieve sustainable growth and improved market positioning, with potential revenue increases up to 25%.
For joint ventures, KPMG's expertise in designing and managing complex partnerships helps businesses share costs and risks effectively while achieving strategic goals. Successful joint ventures, guided by KPMG's principles, have demonstrated increased operational efficiency and market reach, providing a flexible and lower-risk path to growth, with efficiency gains of up to 15%.
A successful value creation strategy is built on a clear purpose and vision, engaging all stakeholders to meet their needs. It uses market insights for informed decision-making and prioritises continuous innovation and differentiation.
Key elements include operational efficiency, a customer-centric approach, and performance metrics to track progress. Emphasising sustainability and social responsibility enhances reputation, while agility and adaptability enable quick responses to market changes.
Strong leadership and governance are crucial for successful implementation, fostering a culture of value creation that drives long-term success and benefits all stakeholders.
How KPMG helps businesses to create value
KPMG uses evidence-based, quantified benchmarking, market insights and intelligence, and best practices from thousands of similar projects.
We pull in our wider skills across strategic planning, operational improvement, and financial restructuring, all aimed at enhancing business value. By focusing on both short-term performance and long-term growth, KPMG helps businesses create sustainable value that benefits all stakeholders.
Get in touch
If you have any queries about building value in your business, please contact Byron Smith of our Strategy team. We'd be delighted to hear from you.
