After doing the Financial Ratio Analysis , gather the
following information :
1.History of your Organization
2. Core Values, Mission, Vision of your Organization
3.Business Ethics and Diversity
4.Financial Position:
i. Income Statement:
Income
Statement
Revenues
COGS
Gross
Profit
Operating
Expenses
EBIT
Interest
Expense
EBT
Tax
Nonrecurring
events
Net Income
Year 1
Year 2
Year 3
Year 4
Year 5
%
change
↓ or ↑
Year 2
Year 3
Year 4
Year 5
%
change
↓ or ↑
ii. Balance Sheet :
Balance
Year 1
Sheet
ASSETS
Cash and
Short term
Investments
Accounts
receivable
Inventory
Other
current
Assets
Total
Current
Assets
Property
Plan &
Equipment
Goodwill
Intangibles
Other Long
term assets
TOTAL
ASSETS
LIABILITIES
Accounts
Payable
Other
current
Liabilities
Total
Current
Liabilities
Long term
debt
Other Long
term
Liabilities
Total
Liabilities
Equity
Common
Stock
Retained
Earnings
Treasury
Stock
Paid in
capital and
Other
Total Equity
Total
Liabilities
and Equity
Operating Segments
iii. Your project organization financial data across key variables
Variable
Year 1
Year 2
Year 3
Year 4
Year 5
%
change
↓ or ↑
Advertising
expenditure
Selling and
Distribution
expenses
Treasury
Stock
Purchased
Number of
shares
repurchased
Average
price per
share of
stock
Dividends
paid
Long term
debt
iv. Your project organization Revenue (Domestic and Overseas)
Year 1
Year 2
Year 3
Year 4
Year 5
%
change
↓ or ↑
Year 5
%
change
↓ or ↑
Domestic
Ops
Global
Operations
v. Your project organization Revenue by Segments
Year 1
Domestic Ops
East
West
North
South
Central
Global
Europe
Middle east
Africa
Year 2
Year 3
Year 4
Latin
America
North
America
Asia Pacific
Institution
business
Government
Business
vi. Total Operating Income by segments
Year 1
Year 2
Year 3
Year 4
Year 5
%
change
↓ or ↑
Domestic Ops
East
West
North
South
Central
Global
Europe
Middle east
Africa
Latin
America
North
America
Asia Pacific
Institution
business
Government
Business
Mission Statement matrix
(Write Included or Not Included in each cell of your matrix to indicate whether you
feel each particular mission statement includes the respective mission statement
component written from a customer perspective. Justify your opinion.)
Component
Your
own
firm
Competitor Competitor Competitor Competitor Competitor
1
2
3
4
5
Customers
Product/Services
Markets
Technology
Concern for
survival, growth,
and profitability
Philosophy
Distinctive
Competence
Concern for
Public Image
Concern for
Employees
Types of Strategies
Strategy
Definition
Integration Strategies
Does your project
organization
follow this
strategy?
Forward Integration
Gaining ownership or increased control over
distributors or retailers
Seeking ownership or increased control over
suppliers
Seeking ownership or increased control over
competitors
Backward Integration
Horizontal Integration
Intensive Strategies
Market Penetration
Seeking increased market share for present
products in present markets through greater
marketing
Market Development
Introducing present products into new
geographic area
Product Development
Seeking increased sales by improving
present products or developing new ones
Diversification Strategies
Related Diversification
Adding new but related products
Unrelated Diversification Adding new, unrelated products
Defensive Strategies
Retrenchment
Regrouping through cost and asset reduction
to reverse declining sales and profit
Divestiture
Selling a division or part of an organization
Liquidation
Selling all of a company’s assets, in parts, for
their tangible worth
FOUR Types of Generic Strategies
Generic Strategies
Market Segments
Broad
Narrow
Cost Leadership
Differentiation
Type 1
Type 2
Type 3
Type 4
Means for Achieving the Strategies
1.BUILD from Within to grow (growing organically)
2.BORROW from others to grow (e. g JV or Strategic Alliances)
3.BUY others to grow ( M&A)
The Strategy-Formulation Analytical Framework
Stage 1 : The Input Stage
External Factor Evaluation
(EFE)Matrix
Competitive Profile
Matrix (CPM)
(based on CSF)
StrengthsWeaknessOpportunities Threat Matrix
Internal Factor
Evaluation (IFE)
Matrix
Stage 2 : The Matching Stage
Strategic
Boston
Internal- Grand Strategy
Position
Consulting External Matrix
and
Group
(IE)
Action
(BCG)
Matrix
Evaluation
Matrix
Matrix
Stage 3 : The Decision Stage
Quantitative
Strategic
Planning Matrix
Exercises based on the Financial Analysis of your Project
Organization
Exercise 1A: Gather Strategy Information for your Project
Organization.
Purpose
The primary purpose of this exercise is to show you how to obtain vital information
for doing case analysis or preparing a strategic plan for any public/private held firm.
The secondary purpose is to familiarize you with
(1) strategy terms introduced in the course
(2) key sources of information for doing strategic planning.
Generally in a strategic-management course, teams of students prepare a strategic
plan (case analysis) for some assigned company, so this exercise can assist in
learning
how to get started in such a project.
Instructions
Step 1
Read your company website and gather information regarding Company’s













Vision
Mission
Values
Business Products/ services
Operating segments
Competitors ( Direct and Indirect )
Organization structure
Financial Statements.
Now ,go through the financial statements and list what you consider to be the
firm’s
strengths,
weaknesses,
opportunities,
and
threats.
Step 2
Go to any college library/ data website(which can provide you the information) and
download to your desktop Standard & Poor’s Industry Surveys PDF file for your
project organization industry.
Use this information to add to your list of the project organization
strengths,
weaknesses,
opportunities,
and
threats.
Step 3
Go to the https://finance.yahoo.com/ website.
Enter the stock symbol (like KO is for Coca Cola, it is just like PAN CARD number,
you can determine your own project organization company from the internet)
Note the wealth of information on your company that may be obtained by clicking
any item along the row below the company name. Use this data to refine your lists of
key external and internal factors.
Each factor listed for this exercise should include a percentage, number, dollar, or
ratio to reveal some quantified fact or trend.
These factors provide the underlying basis for a strategic plan because a firm strives
to take advantage of strengths, improve weaknesses, avoid threats, and capitalize
on opportunities.
Avoid vagueness in strategic planning.
Step 4
Through class discussion, compare your lists of external and internal factors to those
developed by other students (if you have formed the groups) and modify your lists as
needed. Save this information for use in later exercises .
Step 5
Whatever case company you work on this subject, update the information on your
company by following the steps listed above.
Exercise 1B: Enter your project organization Vitals into the
Strategic Planning Template
Purpose
The purpose of this exercise is to give you practice using resources provided during
the discussions , especially the Excel strategic planning template.
Instructions
Step 1
 Review the following resource:
• Excel student template
Step 2
Read carefully instructions given with the template.
Step 3
Using your Exercise 1A results, enter your project organization company





strengths,
weaknesses,
opportunities,
and
threats
into the Excel template.
Step 4
Save this file for use in later exercises.
Additional Exercises
1.Perform an EPS/EBIT Analysis for your Project
Organization
Purpose
An EPS/EBIT analysis is one of the most widely used techniques for determining the extent
that
debt or stock should be used to finance strategies to be implemented.
This exercise can give you practice performing EPS/EBIT analysis.
Instructions
( let’s take a look at the following hypothetical example)
Suppose, Coca-Cola needs: $5,000 million to build four new manufacturing plants outside
the
United States
Interest rate: 5%
Tax rate: 21%
Stock price: $45.54 as of January 2, 2018
Number of shares outstanding: 4,255 million
EBIT: Pessimistic: $7,000 million, Realistic: $9,000 million, Optimistic: $11,000 million
Steps
1. Prepare an EPS/EBIT analysis for Coca-Cola.
Determine whether the company should use
 All debt,
 all stock,
or a
 50-50 combination of debt and stock to finance this market-development strategy.
2. Develop an EPS/EBIT chart after completing the EPS/EBIT table.
3. Next, give a three-sentence recommendation for Coca-Cola’s ( or your project orgn) CFO.
2.Prepare Projected Financial Statements for your own
project organization
Purpose
This exercise is designed to give you experience preparing projected financial statements.
This analysis is a strategic finance and accounting issue because it allows managers to
anticipate and evaluatethe expected results of various strategy-implementation approaches.
Instructions
Step 1
Work with a classmate.
Develop a projected income statement and balance sheet for your project organization
Use the template if possible.
Assume that your project organization needs to raise $1 billion to increase its market share,
and plans to obtain 50 percent financing from a bank and 50 percent financing from a stock
issuance. Make other assumptions as needed, and state them clearly in written form.
Step 2
Bring your projected statements to class and discuss any problems or questions you
encountered.
Step 3
Compare your projected statements to the statements of other students.
What major differences exist between your analysis and the work of other students?
3.Determine the Cash Value of your project organization
Purpose
It is simply good business to continually know the cash value (corporate valuation) of your
company. This exercise gives you practice in determining the total worth of a company using
several methods.
To perform this analysis, use your project organization financial statements as given in the
Cohesion Case.
Instructions
Step 1
Calculate the financial worth of Coca-Cola based on four approaches:
(1) the net worth method,
(2) the net income method,
(3) the price-earnings ratio method,
and
(4) the outstanding shares method.
Step 2
Get an average of the four methods. In a dollar amount, how much is Coca-Cola worth?
Step 3
Compare your analyses and conclusions with those of other students.
4.Prepare Projected Financial Ratios for your project
organization
Purpose
Financial ratios are vastly more than just an exercise for students to perform. If any firm’s
financial ratios get out of line with industry average or decline over time, investors can
withdraw support literally overnight.
Projected financial ratios are an excellent means for anticipating financial results so as to
avoid overnight calamities.
The template will generate projected financial ratios after you convert your firm’s financial
statements to the template format and then develop projected financial statements based on
recommended strategies.
Step 1
Review the results of your EXERCISE 2
Step 2
Compute you project organization
 current ratio,
 debt-to-equity ratio,
and
 return-on-investment ratio.
How do your projected ratios compare to prior year ratios?
Why is it important to make this comparison?