What does Corporate Finance and Strategy have to do with chickens and eggs? It sounds like I am making fun out of such a serious subject. To me, I think it is one way of looking at the issue of Corporate Finance and Strategy, a subject I have been involved with for over 20 years.
The concept of togetherness of Corporate Finance and Strategy in any company I would say is very much like the concept of chickens and eggs on this planet. The reason I say on this planet is because I am not aware of other planets that have chickens and eggs. Even if there are chickens on other planets, eggs might not be the reproduction means of the chicken-like creatures of those planets.
As much as chickens need eggs to continue its future generation, corporations also need good strategies to keep its continuity for several generations. This could raise a few questions. The first question could be which one is more important in the pair of ‘Corporate Finance and Strategy’.
Do we need big financial resources to determine how elaborate our strategy would be or do we actually need a good strategy to determine how full our corporate vaults would become or how successful our organisation would be financially? What comes first: corporate finance or strategy?
Someone would say if we have a good strategy it determines how wealthy we could be. A case in point is Bill Gate before he built Microsoft. He was not as wealthy when he started off Microsoft with a strategy to be a software company supplying operating system for personal computers.
While many would say if you are a mom and pop grocery store, your financial resources would limit what you can craft as a strategy to fight head on with super stores in your home town. That is to say strategies need to be realistic in terms of the funding required to implement them.
A number of factors like how good you are in your business and how fast are changes in your industry also come into play. That is if you have so much money you might be able to afford a few flops than if you have excellent strategies with little money to overcome the hiccups in the execution. It is hard to tell which is more important but I would say they are indispensable from one another in the long run if you are to create a great and long lasting corporation.
The message I want to make here is that they are inseparable in a great company and the facts that they must be aligned cannot be less emphasised. A total alignment of corporate spending and company strategies and directions is very important to long-term well-being of any corporation.
Surprisingly, many companies, not only in Thailand, but the world over, do not fully understand the nature of the industries they are in. They start a business with a drive or passion and a great idea. Without having a well-defined set of strategies or mission they turn themselves into ‘jack of all trades' with an objective to go after anything that makes money when they have cash to spare. Many have done well growing in the beginning but after a while got caught and don't know which way to go.