CAPEX Excellence (eBook)

Optimizing Fixed Asset Investments

Hauke Hansen, Wolfgang Huhn, Olivier Legrand, Daniel Steiners, Thomas Vahlenkamp (Autoren)

eBook Download: PDF

2009
John Wiley & Sons (Verlag)
9780470748763 (ISBN)

Infos

Much of current management literature focuses on a limited set of 'classical' value levers, such as cost reduction, sales optimization or mergers & acquisitions, thus neglecting another core value lever: capital investments. That capital investments receive such limited attention is all the more surprising when one considers how vitally important they are to the economy as a whole as well as individual businesses.

There is significant value-creation potential in optimizing capital investments. Investments not only determine the asset structure of a venture. They also enable the introduction of new products structural cost reductions. The book focuses on core questions to be answered in the critical design and realization phase of new investments:

• Right positioning - does the competitive situation allow the investment to be successful
• Right technology - how to optimize timing and risks of technology innovations
• Right timing - how to cope with economic cycles
• Right size - how to identify the optimum size of an asset
• Right location - how to find the best location for an asset
• Right design - how to make investments lean and flexible
• Right financing - how to structure the investment financing

The book features an introductory section that provides an overview of investments across the globe, across industries and across time provides practical advice on how to allocate capital to several projects within a company's investment portfolio.

Optimising Fixed Asset Investment is illustrated with real world examples from a range of industries. This book is essential reading for managers faced with challenges of making individual or portfolio capital investment decisions and who are responsible for managing these capital assets over their entire asset lifecycle. The ideas put forward within the book will help to sharpen the focus of management on the impact capital investments have on the well-being and growth of their companies.

Optimizing Fixed Asset Investments is a strategic manual for everyone involved or interested in large fixed-capital investments.

Hauke Hansen works as a production manager for ASML in Veldhoven (NL). Prior to his current job he was an Associate Principal in McKinsey's Düsseldorf office. He served high-tech, telecom, logistics and telecom companies and supported several multi-billion dollar investment projects. He holds a PhD in physics from the University of Konstanz and was a Fulbright-scholar at the California Institute of Technology.

Wolfgang Huhn is a Director in McKinsey's Frankfurt office. He primarily serves clients in the high tech industry as well as in energy. Wolfgang is a member of the Business Technology Office where he leads the industrial sector in Europe. He also leads the European Product Development Practice. Prior to joining McKinsey, Wolfgang studied electrical engineering and physics in Aachen and UK and obtained his PhD in Physics from the RWTH Aachen. From 1998 to 2000, Wolfgang was the CEO of a VC-backed company.

Olivier Legrand is a Partner in McKinsey's Paris office. He serves clients in the transportation, steel and aluminum industries as well as in consumer goods and energy. Olivier co-leads McKinsey's global capital productivity group. Prior to joining McKinsey, Olivier spent four years with Air France in marketing research, marketing and sales positions. Olivier holds an MBA from Stanford Business School.

Daniel Steiners is an Associate Principal in McKinsey's Düsseldorf office. He serves clients in electric power and chemicals across Europe and North America and is a co-leader of McKinsey's European capital productivity group. Daniel received a diploma in business administration from Muenster University and a PhD in management accounting from the European Business School in Oestrich-Winkel.

Thomas Vahlenkamp is a Director in McKinsey's Düsseldorf office. He serves clients in the coal, oil, gas, power, and chemicals as well as transportation industries. Thomas is the sector leader of the Energy and Materials Practice in Germany and a member of the leadership group of the European Electric Power and Natural Gas Practice. His educational background is in polymer chemistry. He holds a degree from the Technical University of Aachen (RWTH) and a doctorate from the Max Planck Institute for Polymer Research.

Inhalt

Acknowledgements

About the Authors

Part I Why Investments Matter

1 Introduction

1.1 Investments - the forgotten value lever

1.2 A bird's-eye view of the book content

1.3 Why investments matter - the importance and structure of capital investments

Appendix A1 Microeconomics background: the relevance of capital investments

Appendix A2 Wavelet analysis: extracting frequency information from investment timelines

References

Part II Getting Investments Right

2 Right Positioning: Managing an Asset's Exposure to Economic Risk

2.1 Introduction

2.2 The level of asset exposure determines the achievable return

2.3 The level of protection determines the degree of exposure of an investment

2.4 A simple scoring metric to measure asset exposure

2.5 Quantitataive asset exposure analysis shows high correlation with ROIC at all levels

2.6 Strategies for reducing asset exposure



3 Right Technology: How and when to invest in a new technology

3.1 Capital investments in technology innovation



4 Right Timing: How Cyclicality Affects Return on Investments and What Companies Can Do About It

4.1 How cyclicality destroys value

4.2 Industry drivers of cyclicality

4.3 Developing an economic model of cyclicality

4.4 Measure to cope with cyclicality

Appendix 4A A differential equation for economic cyclicality



5 Right Size: Balancing Economies and Diseconomies of Scale

5.1 Introduction: The role of scale in determining profitability

5.2 Assessing economies of scale

5.3 Determining diseconomies of scale

5.4 Risk elements

5.5 An approach for finding the "sweet spot"

5.6 Real-life examples

6 Right Location: Getting the Most from Government Incentives



6.1 Government incentives: an overview

6.2 Creating public-private, win-win situations

6.3 Common types of incentive instruments

6.4 The financial impact of incentives: a modeling approach

6.5 Geographical differences in incentive structures

6.6 Managing government incentives



7 Right Design: How to Make Investments Lean and Flexible

7.1 Lean design as a competitive advantage

7.2 The three dimensions of a lean capital investment system

7.3 Flexibility: just what customers and shareholders need and no more

7.4 How to avoid creatig a front-page disaster: anticipating what can go wrong



8 Right Financing: Shaping the Optimal Finance Portfolio

8.1 Why financing matters

8.2 Three-step financing approach



Part III: Right Allocation: Managing a Company's Investment Portfolio

9 Right Allocation: How to Allocate Money Within the Company

9.1 Key requirements for capital allocation

9.2 Four models of the corporate centre role in shaping the investment portfolio

9.3 Capital allocation approach for operators and strategic controllers

9.4 Capital allocation approach for strategic architects and financial holding structures

Index

Produkt-Details

• Erscheint lt. Verlag: 28.8.2009
• Sprache: englisch
• Themenwelt: Recht / Steuern ► Wirtschaftsrecht
• Themenwelt: Wirtschaft ► Betriebswirtschaft / Management ► Finanzierung
• Schlagworte: Accounting • across • allocate • Classical • Companys • Competitive • Corporate Finance • Cost • Current • focuses • Investment • levers • Limited • Literature • Management • Mergers • optimize • Practical • Projects • Rechnungswesen • reduction • right • Sales • SET • Situation • Successful • Technology • Time • Value
• ISBN-13: 9780470748763 / 9780470748763