Capital expenditures are required to maintain asset reliability, thereby, at a minimum, sustaining profitability levels from prior periods. Capex is also required for capacity expansion, to organically grow the business within the same site or at alternate site with same or new customers.
Capital is critical to the survival and growth of any business. Discipline in the capital planning, use & deployment processes can yield significant margin improvements over the life of the asset, higher return on investment (ROI) in the planning period and lower Total Installed Cost (TIC).
Project execution training & support at all levels in the organization is critical in avoiding scope creep, schedule delays and budget overruns.
Transformational capital is the third dimension of capital investment. One that is focused on empowering the company to deliver greater than competitively expected returns by transforming the way it does business, as compared to other market players.
Renewal
A successful company grows rapidly, expanding its technological and asset base, adding customers, suppliers and employees of various experiences and talents. It becomes challenging to grow without sacrificing some decisions related to some dimensions of business performance. After years of success, taking time to evaluate where the business is and what future success will look like and what it will take to deliver it, is invaluable. It becomes an imperative.
Companies that understand that agility and adaptability are key determinants of their greater performance success will outperform its competitors who do not invest in achieving those competencies. This adaptability could be in the form of a focused R&D program that develops next generation products & technologies, that will enhance future revenue and margin mix.
Renewal can also be had through inorganic sources; namely Mergers, Acquisitions and also Divestitures, with the goal of providing a planned strategic and capital efficacious basis for sustaining and growing future business performance results.
As importantly as M&A programs, renewal in the form of a well- designed transformational program for a company to deploy, to reinvent its assets and services to exceed customer expectations or unmet market needs is critically important in the process of developing a “moat” around the businesses from competitive market forces and also increasing the company market penetration.
