Monday, 1 December 2014

Advantages and Disadvantages of long term investment Planning

THE LONG-TERM THINKING INVESTOR
CAPITALISM DEBATE:

Still are managers and companies under great pressure to quickly achieve return on investment. We see only one way to reverse this trend: the large institutional investors need to eradicate the scourge of the partial thought.


Away from the quarter of capitalism and toward a long-term orientation! This call for the United States and other industrialized nations tobecome increasingly louder since the financial and economic crisis. Each time the members of the OECD, the World Economic Forum, the G30 countries and other international bodies to come together, the issue is on the agenda.There are already a variety of solutions - from the shared value concept to "sustainable capitalism" - that explain in detail what social benefits would have a different style of management and investment business leaders. But despite all these clever approaches is not only continued the short-term thinking, it even increases. As a result, companies are less capable of long-term investments and build values ​​- which overall economic growth hurts and reduces the yield of savers.


The main cause of the problem is our opinion that the financial markets set listed companies remain under pressure to maximize short-term success.While there is some top managers have managed to ignore these demands, but without the support of investors, this will probably remain the exception. The breakthrough will only succeed if the institutional investors - those who hold the large participation packages - join the fight. That would be the many savers and investors who entrust this great actors put their money in interest. We present in this paper some practical approaches before, which can bring about a change and implement some of the big investors are already successful. OF SHORT-TERM RESULTS PRESSURE CONTINUES One of the authors of this paper, Dominic Barton, wrote a 2011 Harvard Business Manager that the tyranny of short-term thinking must come to an end (see article "Time to Act" service box on page 49). In recent years, our two companies have been following the ongoing debate on the subject. Early 2013 asked McKinsey and the Canada Pension Plan Investment Board (CPPIB) as part of a McKinsey Quarterly survey more than 1,000 board members and top managers worldwide where they see themselves and their companies on their way to a long-term corporate control. The results were clear:  63 percent said the short-term pressure on earnings have increased over the previous five years. 79 percent felt particularly under pressure over a period of two years or less boast a good financial performance.

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