Individual Assignment Essay Example | Topics and Well Written Essays - 1250 words

Individual Assignment - Essay Example The company chose to deal with water, a vital commodity over which, because of public interest, they could not raise prices too high without becoming the target of negative sentiments. This means that MIBW4A will be trapped perpetually in narrow profit margins. Underreporting is a real concern, because there is no way for MIBW4A to oversee sales. The revenue sharing agreement, where water vendors receive 20% and MIBW4A 80%, in unrealistic, given that the water which comprises the product is provided by water vendors, the cost they shoulder. MIBW4A will be more justified to charge a flat rate for rental. There is no reason why the vendors could not purchase their own filters and get 100% of their own sales, instead of turning over 80% to MIBW4A. Slow Sand Filtration is inferior to the 10-stage, or other multistage, standard water filtration system. There are more strategic, technological, and operational weaknesses in the business plans for MIBW4A, that there is greater reason to beli eve that it shall be more unfeasible than feasible. 2. What conclusions can you draw from your analysis of the financial statements? The financial statements are not realistic projections of the likely financial performance of the proposed business. On the following pages, the ratios of the pro forma financial statements, and the horizontal and vertical analysis of the balance sheet and income statement, are presented. Since the company shall not rely on short-term or long-term borrowings or liabilities, there are no liquidity or solvency ratios to speak of. All financing will be by equity (Atril & McLaney, 2008). This in itself is financially unsound, because the business does not explore the profit magnifying power of financial leverage. Fixed asset and total asset turnovers appear rosy, but this not being a manufacturing concern, reliance on these ratios is not significant. The firm has no major fixed assets directly related to its production except the filters, its contract, and its vehicles. Of these, only the vehicles are of real, tangible value, because the filters and contract are only as valuable as their perceived usefulness allows. Obsolescence and lack of market interest could drive the value of these assets to almost nothing very quickly. There being no cost of goods sold, there is no gross profit margin. The net profit margin is high at 59% and 61%, while the ROI (which is also the ROE since equity financed all the assets) is high for the second year at 96% but drops by 30 percentage points to 60% for the third year. Again, these ratios could not be relied upon because there appear to be significant elements which were not considered in the forecasting of revenues and costs. (Sources: Paramasivan, et al., 2008; Shim, et al., 2008) The common-size balance sheet (vertical analysis) on the next page shows each account as a ratio of total assets. A huge proportion of the assets are in cash, indicating that the company is under-invested. Keeping huge amounts of cash is unproductive; where these funds are not needed to be invested in the company’s business, it should be put in marketable securities such as safe government bonds or treasury bills. The horizontal analysis points to the

Strategy Implementation Essay Example | Topics and Well Written Essays - 1500 words - 1

Strategy Implementation - Essay Example We need to shift with it and we implement every strategy with result-oriented mindset" (Ambrosini, pp. 123-126). McConnon (pp. 46-51) mentions that Intel recognizes the need for continually analyzing and reviewing its strategies in order to meet the changes and challenges that come from the external environments so as to meet the stakeholders' expectations. Intel strives for business renewal and revitalization as a way of dealing effectively with the impact of the information society on today's dynamic industry. This paper discusses Strategy Implementation in the context of the case study of Intel in a concise and comprehensive way. Intel is an innovation-driven organization that strongly believes that competitive advantage can be achieved by choosing the right option at the right time so as to create value to Intel's key stakeholders: its customers. To achieve this Intel uses the following key drivers: According to Edwards (pp. 46-47) due to Intel's successful early days into the semiconductor industry, Intel established itself as one of the leading brands in the hi-tech sector. Intel managed to create and develop such an established and well recognized brand by being able to launch new products as well as being able to reinvent itself (e.g. moving from semiconductor memories to microprocessors). In other words, management created a dynamic internal environment where people were encouraged to accept 'change' as part of Intel's corporate culture. This was achieved through designing a matrix structure that favored and facilitated the flow of information and knowledge across the organization. Intel managed to create an internal environment that requires employees to deal with challenging corporate goals (i.e. result orientated) and beliefs (i.e. attention to details/quality, professionalism, etc) in a team-based and open-minded workplace. Given the dynamic industry Intel is operating in, innovation can be obtained through investing heavily in Research and Development (R&D). All the above-mentioned strengths may only feature in an organization that has great managerial vision; in other words, Intel's management was able to analyze the changing patterns of the industry, make choices (see the "buying options") and implement them quickly (i.e. strategic flexibility) in order to achieve competitiveness. Finally, another major strength may be identified: Intel believes that listening to its customers and working close with its business partners is a pivotal factor in the search for competitive advantage and, indeed, corporate success (Einhorn, pp. 52-53). Culture was of great importance to Intel. The 2-in-a-box management philosophy enabled top management to form a complementary and well-balanced team by combining philosophical and pragmatic skills. The 2-in-a-box philosophy reflects Intel's culture: it requires both strong personalities (egos) and teamwork (a philosophical dichotomy). Intel's culture is focused on being aggressive and direct, as suggested by Bob Noyce (1988) "people get respected or get ahead because of their abilities, not their position. You can always tell the boss he's wrong". Being a knowledge-based