Question

What are the benefits of a long-term perspective on value creation?For companies? For the economy?

Answer 1

The basic principle of value creation is derived from the combined effort of growth and return on invested capital relative to the involved cost.Creating value is a long-term perspective. Long term perspective for value creation is wider in scope for company and for any economy.

Long term perspective on value creation for company

Having long term perspective in practices and implications, company can generate higher returns. It provides a chance to earn higher return than its cost of capital. This process will increase their revenue, and create their brand image in the market. They are in a better position to generate fund at low rates even in distress situation. These practices utilize the resources, inputs, and manpower optimally, which provide them an edge in the competitive environment.

Benefits to the companies:

• It increases the employee retention rate.

• It increases productivity and efficiency of the company.

Long term perspective on value creation for economy

An economy should make their policy to create value in long term perspective. Good policies create more employment, optimum utilization of resources, easy funding options for the economy. So, the policy maker is benefitted by the long term perspective.

Benefits to the economy:

• It increases the employment rate in the economy.

• It helps in optimal utilization of natural resources.

• It increase the GDP of the economy.

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