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CFO Insights — Balancing act: Managing stakeholder groups in capital-allocation decisions

Published on: Jul 11, 2019

In the midst of the capital-allocation process, it’s often a struggle for CFOs to find common ground between all of the projects competing for funding and the stakeholders with their conflicting objectives.

As part of their decision-making, CFOs typically look for a balance between directing funds into strategic and longer-term investments and making shorter-term bets to generate cash flow. Similarly, they also need to navigate their way through stakeholders’ differing aims and goals. The route, however, is often dotted with trade-offs and compromises, as groups of stakeholders concentrate on strategy or mission or return.

Still, in the end, these factions are expected to converge on an agreed-upon formula. Of course, it’s crucial that any plan, once filtered through several levels of stakeholders, does not emerge too diluted to serve its intended purposes: maximizing returns, while also fortifying company strategy and resiliency.

This issue discusses how finance executives can leverage the views of different stakeholders to help sharpen their approach to allocating capital — and emerge from the exercise with not only a stronger balance sheet, but also a much-improved capital allocation process.

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