internal factors of strategic positioning ( - balance sheets) Flashcards
UNIT 7A
mission statements vs vision statements
purpose of the business
what it wants to be in the future
influences on a businesses mission
values of founders
values of employees
industry apart of
societal views
ownership of the business
define corporate objectives
medium - long term goals to coordinate the business
define strategic decisions
made by senior management for long term involving major commitment
internal influences on corporate objectives and strategic decisions
poor performance
new leader/ownership
pressures for short-termism
business culture
external influences on corporate objectives and strategic decisions
state of the economy
global prices
technological changes
migration
strategy vs tactics
long term
short term
SWOT analysis
strengths weaknesses opportunities threats
name a strategic analysis
SWOT
benefits of SWOT
low cost
structured
recognise risk
combined well with PESTLE-C
can be used within functions
limitations of SWOT
unable to factor in multi-sided factors
does not provide a solution
can be subjective
only as good as the data based upon
capital employed =
working capital + NCA
working capital =
CA - CL
what does the amount of working capital depend on
the volume of sales
the trade credit offered
growth
length of operating cycle
rate of inflation
what is depreciation
the reduction in value of an asset over a period of time
why do firms depreciate assets
to show its re-sale value
Types of profit on an income statement
Gross profit
Net profit (before and after tax)
operating profit
structure of an income statement
gross profit (rev - cogs)
operating profit (gross - overheads)
profit before tax (operating +financing costs)
profit after tax (profit before tax - tax)
exceptional items vs extraordinary items
large one-off transactions
large transactions outside usual trading
what is window dressing
when PLC’s present their financial performance in the most favourable way possible
how can a PLC windowdress?
borrow short term to increase cash
sale and leaseback to improve liquidity
capitalising expenditure
bring forward sales from the next financial year
4 classifications of ratios
profitability
liquidity
gearing
efficiency
what is the profitability ratio
ROCE
calculate the profitability ratio
operating profit
___________________ x100
capital employed
calculate ROCE
operating profit
___________________ x100
capital employed
what are the liquidity ratios
current ratio and gearing
calculate the liquidity ratios
current assets
_________________
current liabilities
and
NCL
_____________________ x 100
total equity + NCL
calculate the current ratio
current assets
_________________
current liabilities
calculate the gearing of a business
NCL
_____________________ x 100
total equity + NCL
what are the efficiency ratios
inventory turnover
payables
recievables
calculate inventory turnover
inventories
______________ x 100
cost of sales(unit costs)
calculate payable days
payables
_____________ x 365
cost of sales
calculate receivable days
receivables
_______________ x 365
revenue
benefits of ratio analysis
can easily view trends in data
can benchmark easily
limitations of ratio analysis
does not take into account:
market within
position within market
quality of workforce and management
economic environment
non-financial data to assess strengths and weaknesses of a business
OPS - productivity
quality
capacity utilisation
HR - absenteeism
turnover
retention
productivity
health & safety data
labour cost per unit
MARKETING - forecasts of future sales
results of market research
progress on product dev.
ENVIRONMENTAL - air emissions
water emissions
land emissions
use of non-renewables
what are core competancies
unique abilities that a business possesses that provide it with competitive advantage
who developed the idea of core competencies
Prahalad and Hamal
benefits of core competencies
take advantage of opportunities
added value
can reduce gaps in the markets
drawbacks of core copentencies
too much of the business becomes outsourced
out of date
What theories assesses business performance
Kaplan and Norton’s balanced scorecard
Elkington’s triple bottom line
what do Kaplan and Norton suggest managers consider when looking at performance (as well as financial measures)
customers perspective
company’s internal perspective
innovation and improvement
What does Kaplan and Norton’s balanced scorecard model suggest
that financial methods of measuring performance are inadequate on their own, and to look at a structured non-financial methods to get a more ‘balanced’ view
What was Elkington’s triple bottom line focused on
Profit
Planet
People
Why is Elkington’s triple bottom line important
to look at social responsibility as another way of a businesses performance
drawbacks of Elkington’s triple bottom line
the three sections are not comparable
