Business Alignment Flashcards
What are core business drivers?
Business drivers are the key inputs and activities that drive operational and financial results of a business.
Common examples of business drivers are the number of sites / stores, website traffic, number and price of products sold, units of production etc.
In order to make internal choices about business strategy or build a financial model to value a company, its critical to gain a thorough understanding of the main drivers of a business.
What is corporate alignment?
Corporate alignment is a process businesses can use to ensure that their systems and elements work together to support their long-term goals and objectives. It may also involve eliminating parts of a business that do not support an organisations long-term goals, which can help streamline the business and make its processes more efficient. Corporate alignment can lead to increased productivity and improved business outcomes.
Examples of Corporate Alignment:
1. Business-IT = IT departments coordinate with business leadership to team to align strategies.
- Alignment of management systems = management systems automate tasks and record data; aligning this can set standard operating procedures setting clear directions and proving efficiency.
- Aligning resources = Ensures money and other resources are not wasted, supporting business objectives.
- Alignment of communication = Involves developing standard definitions and language for a company and products.
Training Centre Relocation example:
What was the business’s primary function / objective? What did they do and how did you help them achieve their goal?
My client is in the power tools and machinery industry and their primary objective is to develop exceptional products and services that make life easier, empower people to do better, safer, and more significant work. Across their businesses, they invest in breakthrough innovation and digital excellence, and strive for outperformance and increasing focus on social responsibility.
Their training centre plays an integral part of their business, as that is where they test products, and train employees to use and sell them. Additionally, it is used for general corporate training, marketing, event, and is used as an IT hub / server.
My business alignment guidance assisted with streamlining their processes so their could become more efficient and productive. The relocation to be in proximity to their headquarters aligns their IT and management systems, better allocates resources, and improves connectivity and communication, Ultimately, I helped and enabled my client to achieve their objectives by removing barriers and challenges.
Training Centre Relocation example:
Are there any other departments that you had to align?
Yes, the training centre was also used to test products and display them for marketing purposes. Therefore, I supported my client align their production and marketing departments to be in closer proximity to the headquarters, streamlining processes, and creating a stronger link with the head office.
Training Centre Relocation example:
Was staff satisfaction or cost reduction more important to your client and why?
In this example, the relocation of their office to Maidenhead was driven by their objectives of re-engaging with their employees and improving employee wellness by relocating to an area with more local amenities, in order to entice staff back to the office, and attract and retain the best talent.
Therefore, cost reduction was less important, as my client could have relocated to cheaper offices, however, staff satisfaction was prioritised ahead of financial savings.
This relocation dictated the relocation of their training centre for largely the same reasons, but was also to align their corporate functions.
What is a SWOT analysis?
SWOT stands for Strengths, Weaknesses, Opportunities, and Threats. It provides a framework to help assess and understand the internal and external forces that may create opportunities or risks for a business.
Retail Project example:
What are your clients ESG-led organisational objectives?
My client has three main ESG objectives:
- To support the transition to a low carbon economy by delivering their net zero ambition by 2050.
- Promote inclusive growth by supporting productive inclusion across their main stakeholders (employees, customer, and communities).
- Strong governance and culture across the organisation by incorporating ESG in behaviour, policies, process and governance throughout the Group.
Retail Project example:
What were you looking for when seeking businesses?
I sought local and independent businesses that would attract footfall to the building and provide a service offering.
Due to it not being a retail destination, I sought operators who didn’t rely solely on footfall, but would be destination led. I researched the businesses to establish if they had ESG initiatives, such as supporting local charities, employing homeless people, providing apprenticeships to disadvantaged kids, or using locally sourced or eco-friendly materials / resources.
Retail Project example:
Tell me about your clients KPIs.
KPIs are the quantifiable measurements used to gauge a company’s overall long-term performance.
To provide an overview of some of my clients publicly available strategic and operational KPIs:
1. FY’23 Attributable Profit up +15% to EUR 11.1bn
2. FY’23 Revenue up +11% to EUR 58bn
3. Return on Tangible Equity (RoTE) was up +15.1% (measures the efficiency with which a company operates and utilise its tangible assets to generate long-term profits.
What are Decentralised and Centralised business structures and what are their advantages / disadvantages?
Centralised Management Structure:
- Decision-making powers are retained at the top (Head Office)
- Communication flows in a top-down manner from the central authority to other locations / branches.
- All branches operate similarly, following standard procedures
- Operations / decisions are closely managed from the top.
- Reporting lines are well-defined.
- Pros: Consistency, clear direction, controlled operations.
- Cons: May demotivate employees, standardised approach may not work universally, potential impact on productivity.
- Examples = family-owned businesses, franchise organisations have a mixed centralised / decentralised model.
Decentralised Management Structure:
- Decision-making authority is distributed throughout the company.
- Managers / subordinates further down the chain have more decision-making responsibilities.
- Teams / departments make decisions independently.
- Decisions suit the local area and customers.
- Employees have more autonomy.
- Pros: Improved employee motivation, quick response to changes, local adaption.
- Cons: Lack of consistency across the business, ineffective decisions by lower-level managers may impact overall performance.
- Examples = blockchain networks, community-driven platforms, start-ups / agile teams.
How do global economic and market conditions impact business strategies?
- Interest rates / exchange rates - fluctuations can influence the general trading climate. i.e., higher interest rates affect borrowing costs and investment decisions.
- Competitors - existing competitors and the emergence of new ones significantly affect strategies.
- Technological innovations - new technology can disrupt markets, and businesses must adapt to remain competitive, e.g., e-commerce.
- Economic Factors - Recessions, economic downturns, or booms impact consumer spending, demand etc.
- Trade Policies and Alliances - Global trade agreements, tariffs, and economic alliances shape marketing strategies.
- Market Shifts - Adapting to market changes is essential for survival and growth.
How can businesses strategically use real estate?
Aligning real estate with business strategy requires thoughtful analysis, data-driven decisions, and a shift from viewing it as a mere cost centre, to recognising it as a source of competitive advantage.
- Property investment, leveraging debt (using mortgage loans to acquire property), diversification of portfolios.
- Income generation from rental properties
- Strategic use of space - optimise layouts, consider flexible workspaces
What is the current Bank of England Base Rate?
Currently, the base rate is 5.25%
What is the current rate of inflation?
Current rate of inflation was 3.2% in March 2024.
Training Centre Relocation example:
What are your clients wider organisational objectives?
My client’s objective is to accelerate organic growth (i.e., from increased sales, business expansion using existing resources)
- Reduce Complexity - optimise corporate structure, simplify operating model, and transform the supply chain.
- Invest in core growth - innovation, electrification, market leadership, more responsive supply chain.
- Enhancing shareholder Return - organic revenue growth, powerful innovation, customer fill rate improvement.
