Ratio analysis can help in measuring business performance and setting objectives/ goals Essay

Ratios are calculated from an organisation’s financial statements and are an effective business tool in measuring its performance. By comparing the ratios to those of the previous year it is possible to determine whether a business is doing better this year than last year. It is also possible to compare ratios of one organisation against those of another in a similar industry. This helps identify areas in which one business is either under performing or indeed is out performing another. Undertaking ratio analysis and making comparisons to market leaders within your industry will help focus on areas which require attention. By carefully selecting the most suitable ratios business owners and managers can use the results to gain a better understanding of how their organisation is performing. The same ratios can also be used to set future targets. Ratios are calculated from an organisation’s financial statements and are an effective business tool in measuring its performance. By comparing the ratios to those of the previous year it is possible to determine whether a business is doing better this year than last year. It is also possible to compare ratios of one organisation against those of another in a similar industry. This helps identify areas in which one business is either under performing or indeed is out performing another. Undertaking ratio analysis and making comparisons to market leaders within your industry will help focus on areas which require attention. By carefully selecting the most suitable ratios business owners and managers can use the results to gain a better understanding of how their organisation is performing. The same ratios can also be used to set future targets. Ratios are calculated from an organisation’s financial statements and are an effective business tool in measuring its performance. By comparing the ratios to those of the previous year it is possible to determine whether a business is doing better this year than last year. It is also possible to compare ratios of one organisation against those of another in a similar industry. This helps identify areas in which one business is either under performing or indeed is out performing another. Undertaking ratio analysis and making comparisons to market leaders within your industry will help focus on areas which require attention. By carefully selecting the most suitable ratios business owners and managers can use the results to gain a better understanding of how their organisation is performing. The same ratios can also be used to set future targets.

Business Strategy Essay

For better understanding, this assignment has been organised in four sub- headings, they are as follows: the general overview of Porter’s Five Forces model; the importance or usefulness of Five Forces model; the criticisms and evaluation of Porter’s model; the recommendation and finally the conclusion. Overview of Porter’s model Johnson et al (2011) described Porter Five Forces as a strategic tool that helps identify the attractiveness of an industry in terms of five competitive forces: the threat of new entry, the threat of substitutes, the power of buyers, the power of suppliers and the extent of rivalry between competitors. Porter (1980) argues that this model is based on the insight that a good business strategy should meet the opportunities and threats in the organizations external environment. Particularly, competitive strategy should be based on an understanding of industry structures and the way they change. From the above explanation we can see that Porter’s Five Forces is a simple tool that supports strategic management in decision making through understanding where strength and weaknesses lie. Importance of Porter’s Five Forces The Porter’s Five Forces is a simple but powerful tool that supports strategic understanding where power lies in a business situation. It also helps to understand both the strength of the firm’s current competitive position, and strength of a position a company is looking to move to. †¢This model also emphasizes extended competition for value rather than just competition among existing rivals, and the simplicity of its application inspired numerous companies as well as business schools to adopt its uses as suggested by Wheelen and Hunger (1998). With clear understanding of where power lies, it will enable a company to take fair advantage of its strengths and improve on its weaknesses and off cause avoid taking wrong steps. Therefore to apply this planning tool efficiently, it is important to understand the situation and look at each of the forces individually. Criticisms and Evaluation of Five Forces Porters Five Forces is no doubt a powerful framework in determining the competitive nature of an industry. However it has been criticised by various commentators regarding its usefulness in today’s dynamic business environment. Although, Wheelen & Hunger (2002) recognised the five force they both thought that Stakeholders influence should have been included as the sixth force. This is because interest groups like the government, local communities, creditors, trade associations, special interest groups, unions and shareholders all have big influence on how the organisation operate. For instance, financial policies such as interest rates are being regulated by the government and may have a negative or positive effect on the organisation. Also as part of the stakeholders if creditors refuse to provide credit facilities for some firms could force them into liquidation. Porter’s model assumed that all businesses are competing against each other while in the actual sense some complement each to provide a better product, which are known as complementors. Complementors in this sense are businesses that provide complementary services to each other. These companies form strategic alliance to enhance the services that they provide either for the purpose of efficiency or cutting of cost. Example of this situation can be seen on iPods and headphones. Apple produced the iPod while Sony produces the headphone which Apple uses and same time Apple is competing with Sony on its brand of MP3 music player, in other words, each of these firm benefits from each other’s presence. Downes (1997) in his article â€Å"Beyond Porter† in the Context Magazine, suggested three new forces which he called; Digitalisation, Globalisation and Deregulation. Digitalization: He claims that organisations are now highly influenced by technological advancement, especially in information technology as well as retail organisations. Most firms no longer depend on high street sales rather online to boost their revenue. Some high street store also trying to play catch up with organisations like eBay and Amazon who have dominated the online. The introduction of credit cards by credit card organisations, loyalty cards by retail stores, all these new digital technologies allows companies to chase competitive advantage on a different level thereby creating new strategy to outweigh its competitors. Globalization: According to Downes (1997) days are gone when firms were only competing with their local rivals. Most organisations are now competing on international level by way of improved distribution channels, businesses can now buy and sell and on a global level. Customers, through the internet have the chance to shop around and compare prices globally. Even most medium size companies find themselves in an international market, even if they do not have branches overseas. Based on these facts it is not enough anymore for any business to position itself as a price-leader. Instead competitive advantages emerge now from the ability to develop long-term relationships to more mobile costumers and to manage extensive networks of customers and associates for mutual benefit. Deregulation: Industries like Communication, Railways, Airlines, now have different ways of competing against each other since firms are now in the hands of entrepreneurs’ unlike in the 1970 when most firms were in the hands of government. Deregulation creates more intense atmosphere for competition because every player in the industry wants to dominate the market. When compared to Porter’s Five Forces model, digitalization, globalization and deregulation have become more powerful forces in the last few decades, which Porter barely takes into consideration in his work. Today’s companies are highly influenced by technological progress, especially in information technology. Therefore, it is not advisable for any business to develop a strategy solely on the basis of Porters model. Shapiro and Varian (1998) claimed that economic laws do not change while technology do then went further to argue that Porter’s models are economic laws and rules that has been around for ages before his study but technology and information has moved and still moving and will continue to be a major force in competitive strategy. Presently, the level of information made available to businesses has intensified competition. For instance, firms can now gather so much information about their customers and how much they are willing to pay for the product. With customer’s shopping available to them they may choose to â€Å"lock them in† which would not have been possible many years ago when five forces was propounded. Despite the huge success of five forces in strategic management, this model did not give exact percentage of these forces to signal when the company is at risk, therefore the model on its own lacks enough information to actually guide decision makers. Although, still applicable in today’s dynamic business environment, it was advocated many years back when the business environment were not that competitive, for instant, when it was proposed it could be that a firm has only one supplier for its material which eliminated the possibility of strong competition among suppliers. This model from all indication assumed identifiable competitors, business partners, and customers who engage in more or less predictable ways. Kippenberger (1998), Haberberg & Rieple (2001) all suggested that it is not advisable to develop a strategy based on Five Forces model alone, it should be used in addition to other frameworks, thus SWOT and PESTEL analysis. This does not mean that Five Forces is invalid, but it is good to adopt a model knowing its merits and demerits. Rather than jump into a framework thinking it has solution to every situation. Recommendations Managers and decision makers in conducting analysis on Porter’s Five Forces should brainstorm on all relevant factors for the firm’s market situations and then check against the factors presented for each force. It will also be relevant to use positive sign to indicate forces that are in favour of the organisation and negative sign for forces strongly against the organisation in question. After identifying the favourable and unfavourable forces of the company’s performance and industry’s attractiveness, the manager should analyse the situation and examine the impact of these forces. Conclusion This assay has given a thorough account of Porter’s Five Forces by drawing attention to some of the criticisms of this model, which includes neglecting the all-powerful forces of Stakeholders, the emergent effects of digitalisation, globalisation and deregulation. Complementors and Collaborators as well as easy access to information were all overlooked by this framework. Through evaluation of this model, we also found that most organisations have managed to avoid the bargaining powers from either the supplier or distributors by way of backward or forward integration. This assignment acknowledged the usefulness of Porter’s model in strategic analyses even in today’s dynamic business environment but must not be used in isolation without considering other forces mentioned above. And finally organisations and decision makers should not assume that all their competitors and business partners are identifiable as suggested by this model.

Wind power for water desalination including a comparison with solar Dissertation

Wind power for water desalination including a comparison with solar power desalination - Dissertation Example Sew water desalination through the renewable energy resources can solve the problem. Wind energy has the most potential in the coastal regions of the world due to high availability of wind. Wind desalination utilized the RO, MVC and ED techniques to desalinate the sea water. RO method of desalination is considered the most efficient method of desalination. Wind desalination has many advantages over solar desalination, particularly at coastal regions. The advanced wind turbines have more efficiencies than that of the previous designs. On the other hand the desalination methods involving coupling of solar and wind energy are much efficient. TVC desalination method can couple solar and wind energy. Greece is facing the water scarcity and desalination is the most effective and efficient method to provide fresh water for the economic and social growth of the country. Some Greece islands are facing droughts and desalination is the economic solution. Greece islands have major coastal region s, which can be considered suitable to harness the wind energy for the desalination. However, solar and wind energy both can be coupled to enhance the gain and efficiency of the desalination plants. RO desalination technique is considered best to be coupled with the wind energy. Some disadvantages of the wind desalination are the noise, disposal of concentrated brine and disposal of chemicals. However, the advantages are more than disadvantages and thus wind desalination has a promising future. Wind power for water desalination including a comparison with solar power desalination Chapter 1- Literature Review Among the many problems, the human race is facing, the two major problems are the worst of all. The two problems are the environmental pollution and climate change and the second is the water scarcity. As the population is increasing the problems of fresh water scarcity and climate change is increasing are becoming more severe. In fact, the fresh water resources in the world rem ained lesser than what is demanded by the population, thus billions of people will have to suffer and have to drink contaminated or low quality water (Sen, 2008). There is a need to establish such systems that equally encounter the climate change as well as water scarcity. The system, thus, have to utilize the alternate resources of energy like the solar energy, wind energy, geothermal energy, hydropower, etc (Kalogirou, 2005). Earth has plenty of saline water; in fact, the major portion of the earth is covered with saline water in form of oceans and seas. In order to encounter the water scarcity, there is a need to treat the saline water to make it in the purely drinkable. On the major process is the water distillation that converts the dirty or saline water into steam by utilizing the heat from different sources and the then converting it back into the liquid state. All the impurities remain at the bottom of the container in which the water is heated. The other methods are the uti lizing the different layers of filters to file the impurities and adding chemical additives. The major process that has the potential of providing the necessary amount of water without worrying about heating the water is the RO process, in which dirty water or saline water is forcefully passed through different layers of filters. The layers provides a passage for the only water molecules, as the width of the pores in the filter is about in the range of nanometres allowing only the water molecules to pass through the filter. In nature such type of layers can in found in eggs and layer of ash. However, the process of RO consumes much energy having a purification plant of a grand scale, thus a large amount of energy is required

Globalization Consequancess on Jordan Case Study

Globalization Consequancess on Jordan - Case Study Example By 1994, participants to the Uruguay Round of the treaty have totalled 123 countries. By 1995, the World Trade Organization (WTO) was incepted, becoming the successor of the GATT. Currently with 153 countries as members of the WTO, the organisation embodies the implementations of the liberalisation of trade among nations, encouraging economies of its member nations to open up to global markets. Smaller and emerging economies of the 3rd world and developing countries have very often expressed dissent over issues on matters where the sheer size and volume of trade from the direction of the more developed economies have disadvantaged the former than worked fairly in everyone's favour. Jordan signed up with the WTO in April, 2000. "Small scale industries sector was a major contributor to the industrial economy of Jordan. It accounts for 50% of the total manufacturing sector, has 20% share in exports and provides 80% of employment in industrial sectors"(Lozi, p.98) On account of this economic reality in Jordan, the small scale industry (SSI) sector is a significant indicator of the effects of globalization of trade. Since the early 1990's, the SSI sector of Jordan has already found itself in the competitive situations induced by international trade's open market environments. In a study by Basem Mohammed Lozi of the Amman College for Administrative and Financial Sciences, Al Balga Applied University in Jordan, the effects of such pressures from international competition has actually favoured the SSI sector. He writes, "Liberalization have forced all industries to constantly upgrade their quality while cutting down the costs if they want to remain and retain their place and share in the global market. Small scale industries world over including Jordan were facing the on slight of the adverse effects of globalization in the stringent requirements of quality costs, tight delivery schedules and productivity."(Lozi, p.98) Apparently, like most, if not all small scale industry sectors the world over, globalisation has become challenge to shape up in the face of international competition and demand of stricter parameters of business and trade. Unlike many in the developing economies that merely suffered on account of their inability to cope, Jordan, however, rose to the challenge. Lozi concludes, "This has resulted in more growth in its contribution to national income and exports in the 1990s."(Lozi, p 102) Nevertheless, Lozi recommends strategic directions for Jordan: "Concerted efforts are needed both from the government and more importantly, from small scale industries themselves to imbibe technological dynamism into Jordanian small scale industries. Technological up gradation and in-house technological innovations and promotion of inter-firm linkages need to be encouraged consciously and consistently." (Lozi, p 102) Globalisation and the Jordanian Society Globalisation is not only the organised and structured pressures to open local trade and economic circumstances to international markets and

The Idea of Realism Essay Example | Topics and Well Written Essays - 1000 words

The Idea of Realism - Essay Example The essay "The Idea of Realism" will examine the idea of realism in the context of modern art. Realism is an artistic movement that was popular in France. In attempting to ‘accurately’ reflect life in all its objective detail, artists taking a Realist approach often worked to find the most ‘common’ people of the fields and villages and depicted them in their most humble and menial tasks. The ideas behind realism can be better understood by comparing the writing of two influential artists of the period, Gustave Courbet and Ferdnand Leger. Gustave Courbet held that â€Å"painting is an essentially concrete art and can only consist in the representation of real and existing things†. The chief technical concern of Courbet seemed to be an abandonment, to some extent, of the ‘rules’ of art in favor of a more natural flow of line and form. By retaining these rough elements of the painting, Courbet felt he was more accurately representing the mom ent and the emotion of the moment during which the piece was created or the scene was witnessed. As he continued to attempt to portray the ‘real’ of life by focusing upon the humble peasantry, he began to identify himself more and more from their perspective. By 1850, his ideas regarding what was real were becoming more defined as he wrote to a friend, â€Å"†¦ in our so very civilized society it is necessary for me to live the life of a savage. I must be free even of governments. The people have my sympathies, I must address myself to them directly†.

Be able to make financial decisions based on financial information Assignment

Be able to make financial decisions based on financial information - Assignment Example Competitors may have offered new products having more superior quality that attract more number of customers. Another reason may be that the company might have changed the product price that may, in turn, result in a variance in the unit sales volume. The direct material price variance (Â £7,500) is the variation between actual material cost (Â £22,500) and budgeted material cost (Â £ 15,000). Here, the material price variance shows an unfavorable trend, as the actual cost is higher than the material. The other reason for the price variance may be due to the non accessibility of cash discounts that are actually expected at the time of deciding the price standards and also may be due to changes in transportation costs, careless purchasing and changes in the material standard. The total direct labor variance is found by evaluating actual cost of direct labor to the budgeted direct labor cost. If the actual cost is in excess of the budgeted cost, the resultant variances become unfavorable. This may be due to the usage of more labor hours as there is shortage of adequate experienced labors in the concerned cutlery manufacturing. The other reasons are the higher payment of labor rate per hour. The sum of unfavorable direct labor variance (1,875) is the combination of adverse direct labor efficiency variance of (5,625) + adverse direct labor rate variance of 3,750. The adverse variance in the material usage amounting (Â £ 3,000) are due to the imperfect material, unnecessary waste of material, and stricter quality control. The labor rate variance has shown an adverse trend. This unfavorable variance is due to the increase in the wage rate of laborers. The labor efficiency rate is also showing an unfavorable trend of (Â £ 5,625). This is mainly due to the usage of poor quality material. The company lacks the supply of steel material of adequate quality. The other reason may be the lost of time over and above

Grand Met case, on horizontal integration Essay

Grand Met case, on horizontal integration - Essay Example So it is becoming more important for the business managers to redefine the strategies based on the situations in the market and direct the company to attain great success. GrandMet integrated horizontally and also diversified their business by merging with several companies that are either related or not related to the business. That was done in order to acquire the strategic resources that were important for the smooth operation of GrandMet. In this study the strategic choices of Max Joseph and his team would be analysed from the inception of GrandMet, so that the approaches applied for making the strategic decisions can be understood. Apart from this the reasons for choosing the strategies would also be evaluated and scrutinised so that the feasibility of the strategies can be discussed and decisions can be taken regarding the capabilities of Max Joseph and his decision making abilities. External Environment and Internal Strategic Capabilities In order to make strategic choices in the increasingly competitive environment, the firms have analysed the threats and opportunities according to the strategic management process. An analysis of the economic environment which includes the direction and the characteristics of the economy in which the firm is operating or competing has to be analysed. As far as the macro environmental aspects are concerned, GrandMet engaged themselves into the business of fast moving consumer durables (FMCG), which customers required everyday and the rate of repurchase in such cases are also high. So it can be said the choosing the FMCG market was due to the huge potential in this sector (Hitt, Ireland, and Hoskisson, 2012, p. 13-15). However, the fact remains that the FMCG market is dominated by few major players, who are considered to the best brands and they have also got well established distribution channels or supply chain, corporate system, are financially stable and have a sustainable position both economically and strategically. These features of the major players, such as Pepsi Co., or Bread Inc., in the FMCG industry were a major threat for GrandMet. Moreover, the FMCG market is extremely competitive and the customers have various choices, substitute products, and complementary products, which also gives the customers high bargaining power. This also leads to the increase in competitiveness and reduction of the profit margin of the companies or marketers. Customers are also afraid or reluctant to change or try out new products, which are an aspect of psychology or consumer behaviour, so it is also difficult to make the customers switch to a different brand. Only when the company can make sure, as to how the preferences or the taste of the customers’ changes and how it can be changed, the objective of offering new products or services would be successful (Bamford, and West, 2010, p. XVI). The market share of GrandMet was high and the sales figures of the company were higher among the global operati ons in the industry. In the year 1991, the sales of the company were around $14.771 billion, while the asset value was $17.648 billion. There were around 13.8 million employees in the company. On the basis of the sales report of 1991, GrandMet was in the 5th position among the British companies and 78th among the large corporations in the world. Apart from this, the CEO of the company Max Joseph