The objectives of communicating with shareholders are to increase awareness of the company within the investment community, ensure that key messages are delivered consistently, and ultimately, facilitate the availability of capital at a lower cost. Effective stockholder communication plans allow companies to exercise greater control over the capital formation process. When investors believe that the return on their investment is greater than the perceived risk, capital is available at the lowest possible cost. That is why it is essential for companies to communicate their business strategies clearly and consistently.
This benchmarking tool focuses on leading practices and key performance indicators for effectively communicating with shareholders. It looks at the fundamentals of effective shareholder communication plans and allows companies to understand the effect they have on the cost of capital. Key questions to consider include:
- What is the competitive position and market outlook for each of the company's business segments?
- Where does the company's specific competitive advantage lie?
- What opportunities are available through new products, new lines and acquisitions?
- What are the company's true core competencies?
- What are the company's weaknesses and how are they being addressed by management?
- What are management's goals and strategies for achieving them?
- How adaptable is management to changes in business markets?
- How quickly can the company adapt once necessary changes are recognized?
- What will be the effect of normal growth, abnormal growth, technological trends, changing consumer taste, changing demographic patterns, and pending legislation?