Ok7 investor relations

INVESTOR RELATIONS AS THE NEW FOCUS IN CREATING LONG TERM CORPORATE VALUE Case Study, Concepts, and Debatable Ideas

Importance of Investor Relations Why focus on Investor Relations in the first place?

Is Investor Relations important?
Funds
Brand
Intelligence
Customer-shareholders

Importance: Funds
This is the most obvious.
The objective is to keep the paymasters happy so that they will either maintain or increase their funding.
Crisis Management is one small area that falls into this objective

Importance: Brand
Investor Relations is a key component of corporate Branding due to its direct influence on:
Multiple parties (Investors)
These parties are either our Branding targets or has influence on our branding targets
Brand Architecture

Importance: Intelligence
Two types:
I.R. Investors CRM Intelligence Deal with… I.R. Management Investor Intelligence Deal with…

Intelligence: Why do they Invest?
Return/Profit
Risk Management/ Hedging
Tax-benefits
CSR/Image
Diversify revenue
Counter-cyclical balance
Support ‘Mission’
Exclusive rights
Contractual obligation
National Agenda
Control Supply Chain
R&D portfolio
Control Management
Alternative Cash Flow
M&A

Intelligence: How do Investors get their ‘INFO’? (1/2) Institutional Gov./Politics Customers Suppliers Economics AGM Market Research Internet* Annual Report Media Analysts Fund Managers Due Diligence NGOs Newsletter Spokespersons

Intelligence: How do Investors get their ‘INFO’? (2/2) Retail Gov./ Politics Customers Public Events Economics AGM Ads Internet* Annual Report Media Analysts Fund Managers Relatives Friends Pasar Malam Employees Employee Bloggers Mgmt Actions Newsletter

Investor Intelligence: What?
Examples…
Record feedback and questions
Competitors’ IR communications
Top 10 Analysts’ views on Company
Top 10 Analysts’ views on Industry

Investor Intelligence: Why?
Broad view of market
Less optimistic/review own assumptions
Upgrade IR function to be strategic
Feed Management discussions
Better and more relevant IR communications
Support (buy-in)

Investor Intelligence: Why? Revenue Growth Base Retention Share Gain Positioning Adjacent Market New Business Operational Excellence Product Leadership Customer Intimacy Competencies Information Systems Motivation, empowerment, alignment Financial Learning & Growth Internal Process Customers Investment Strategy Productivity Market Value

Dangers of Intelligence…
Also known as ‘Beware of Benchmarking’:
Big vs. Small company
Selective success stories
Correlation vs. Causal
Survey problems
Actionable vs. For-fun

Intelligence: Survey Problems…
“ In business after business, 60% to 80% of lost customers reported on a survey just prior to defecting that they were satisfied or very satisfied .”
HBR March/April 1996

Is Investor Relations important?
Funds
Brand
Intelligence
Customer-shareholders

Obstacles to Growth of Investor Relations If IR is so important, why is it not growing?

Challenges of Investor Relations
Stake- vs. Share-holder*
Public Opinions
Global operations – difficult to explain
Increasing focus on ecological, social, ethical issues
Diverged expectations for same issue
What to do with Excessive Cash?
Superficial changes vs. Fundamental Changes
Investors depend on ‘hearsay’ vs. ‘facts’
Share Price ≠ Market
R&D/M.S./HR vs. Investor Expectations
Opposing ‘Expert’ views

IR Challenges
“ Good news for stockholders can be bad news for other stakeholders.”
Gregory Miller, Assoc. Prof., Harvard Business School.

Principles of Investor Relations to counter Challenges
Long-term relationship
Consistent and Proactive
Performance vs. Controllability
Aligned with operating/strategy position*
One message, Different Emphasis

Maximizing IR in Communications Communications Internal External Mgmt Distributors Suppliers Proactive Reactive Proactive Reactive COMM Tools COMM Tools Employees Media Government Public Authorities Associations Universities NGOs Investors

“… in the past 18 months, we have heard that profit is more important than revenue, quality is more important that profit, people are more important than profit, customers are more important than our people, big customers are more important than small customers, and that growth is the key to our success. No wonder our performance is inconsistent"
CEO, Anonymous www.myCNI.com.my www.OOBEY.com

Don’t forget…
“ The business of business is Business, not Investor Relations”

Ok7 investor relations

by Mitra Consultant

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