Strategic decisions always involve some level of uncertainty. While we cannot eliminate this uncertainty, we can facilitate better strategic decision-making under uncertainty.

Capacent’s approach to supporting strategic planning and decision-making is based on insights into corporate strategy and financial modeling, but also on the ability to create common understanding and commitment in an executive team. Strategic priorities and targets, as well as capital structure strategies, are key inputs to the process, but may also be challenged.

Thorough financial modeling either in regular spreadsheets or through the use of efficient programs, such as Hyperion Strategic Finance (HSF), enables us to provide on-the-spot simulation of any relevant financial measure or ratio, under a combination of market scenarios and alternative actions. This gives a powerful fact base to facilitate the decision-making process.

For clients who use HSF, we can also help build the models and skills to efficiently use this as a tool in the ongoing decision-making and strategic planning process. However, financial modeling is merely a tool for supporting the process of defining and analyzing alternative actions, in order to support the strategic planning and decision-making process. Working in close dialogue with clients is just as critical, to identify:

• Objectives and priorities, e.g., maximizing ROCE or ROE, given existing constraints, such as liquidity needs, ensuring loan covenants are not broken, enabling investment plans with maintained financial ratios and ratings, etc.
• Relevant variables, risks and market scenarios that should be considered
• Possible actions and the most attractive actions to analyze further for achieving the objectives and reducing risks