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Purpose, business model and strategy
Clear presentation of a company’s purpose, business model and strategy is becoming ever more significant for engagement and can provide a more compelling business case to investors and help the workforce understand the value, and values, of the company. Clear expression of a company’s business model can also help management develop methods for ensuring intellectual and relationship value is measured, preserved or grown and that this can be made visible externally.
Purpose
While description of corporate purpose is not required by legislation it is increasingly expected of larger companies - quoted, unquoted and unlisted - and having an explicit corporate purpose, over and above simply making a profit, is becoming increasingly important to companies for engagement with their workforce, customers and community.
Business model and strategy
Quoted companies are required to describe their business model and strategy in their annual reports. Many public interest entities will also face similar requirements and AIM listed companies (though not within scope of the same legislation) in practice need to describe strategy to present their business case.
Describing or illustrating the company’s business model also helps investors and lenders to understand the business. The business model should encompass the key resources and relationships which allow the company to pursue its purpose and enable its competitive advantage, and should include both the physical resources on the balance sheet as well as assets that are not recognised, such as workforce skill and key relationships with suppliers. Strategy should then describe how the assets and relationships described in the business model result in competitive advantages and how the company will use those advantages to grow, make profits and pursue its purpose.
How we can support you
We can guide you through the challenges and complexities of the requirements and practical obligations to help you express your purpose, business model and strategy effectively, comply with regulations and deliver a compelling investment case for investors.
This can include:
- Advice on the scope of the new, or existing, requirements or guidance applicable to your company or group;
- Holding workshops to consider key assets and relationships in the business model and how to describe them;
- Considering how the company can demonstrate the value of its key relationships or assets where these are not by traditional accounting systems; and
- Drafting or assistance with drafting sections of the annual report.
Contact us
If you would like to contact us, please use the link below and a member of the Accounting Technical Services team will be in contact.
Related page
Narrative reporting
Pressure for greater transparency from shareholders, not only in the financial statements, but in explaining performance in detail and in more forward-looking areas like strategy and plans for the future is not new.