Stategy Key Point
AYN 505 – Sem. 1/2011
BUSINESS STRATEGY ANALYSIS -
SEMINAR QUESTIONS – WEEK 2 - KEY POINTS
A. Discussion Question
1. In financial analysis, explain why each of the four financial analysis steps (strategy, accounting, financial, and prospective analysis) is critical, and explain how they relate to one another. (PHBWBL p10, Q4 adapted)
2. Your brother, who works in a bank, has recommended to you that you purchase shares in an organisation, on the basis of the following information, which he has heard discussed around the office:
• Total assets have increased by 33% • Revenue has increased by 12% • Net profit has decreased by 4%. • The dividend per share is 23c. • The current share price is $8.50; 12 months ago it was $7.50.
Would you invest in this organisation? What information encourages you to do so, and what reasons might you have for hesitating? What additional information would you like before making this decision, and where might you find that information? (PHBWBL p10, Q5 adapted)
3. Rate and compare the leisure & hospitality industry and the mining industry as high, medium, or low on the Porter’s Five-Forces framework for industry structure. Which is likely to earn the highest returns? (PHBWBL p44, Q4 adapted)
4. What are the ways that an organisation can create barriers to entry to deter competition in its business? What factors determine whether these barriers are likely to be enduring? (PHBWBL p44, Q8)
B. Case Study
Inventec Case PHBWBL p48-53
Attempt the following questions (p53)
1. Despite its growth and size why is Inventec not very profitable?
2. What are the drivers of the average profitability of the Original Design and Manufacturing industry?
3. What are the key factors that a company like Inventec needs to manage to earn above-average profits in this industry?
4. Why is the Indian software industry, on average, so much more profitable than the Chinese ODM industry?
5. What
BUSINESS STRATEGY ANALYSIS -
SEMINAR QUESTIONS – WEEK 2 - KEY POINTS
A. Discussion Question
1. In financial analysis, explain why each of the four financial analysis steps (strategy, accounting, financial, and prospective analysis) is critical, and explain how they relate to one another. (PHBWBL p10, Q4 adapted)
2. Your brother, who works in a bank, has recommended to you that you purchase shares in an organisation, on the basis of the following information, which he has heard discussed around the office:
• Total assets have increased by 33% • Revenue has increased by 12% • Net profit has decreased by 4%. • The dividend per share is 23c. • The current share price is $8.50; 12 months ago it was $7.50.
Would you invest in this organisation? What information encourages you to do so, and what reasons might you have for hesitating? What additional information would you like before making this decision, and where might you find that information? (PHBWBL p10, Q5 adapted)
3. Rate and compare the leisure & hospitality industry and the mining industry as high, medium, or low on the Porter’s Five-Forces framework for industry structure. Which is likely to earn the highest returns? (PHBWBL p44, Q4 adapted)
4. What are the ways that an organisation can create barriers to entry to deter competition in its business? What factors determine whether these barriers are likely to be enduring? (PHBWBL p44, Q8)
B. Case Study
Inventec Case PHBWBL p48-53
Attempt the following questions (p53)
1. Despite its growth and size why is Inventec not very profitable?
2. What are the drivers of the average profitability of the Original Design and Manufacturing industry?
3. What are the key factors that a company like Inventec needs to manage to earn above-average profits in this industry?
4. Why is the Indian software industry, on average, so much more profitable than the Chinese ODM industry?
5. What