Answer Plans (M1-M3) Flashcards
(23 cards)
How can Trimayr use Business Intelligence System (BIS) to make informed management decisions?
-BIS (is a tech driven process to collect, process and analyse internal and external data)
Point 1- Customer Feedback Analysis
Point 2 - Product/Service portfolio decisions
Point 3- Identify emerging trends
Point 4- Franchisees performance management
Point 5 - Expansion Decisions
Point 6 - Optimising Marketing Spend
How Adopting Integrated Reporting may help give stakeholders a perception beyond financial value?
I.R is reporting that covers financial and non financial information to (provide a view of performance and how companies create value over time)
Point 1- Allows stakeholders to look at Environmental, social and governance (ESG) factors
Point 2- Allows stakeholders to look at resources/capital used by organisation
Point 3 - Reliance on capital (HFMSIN)
Key stages how a project should be managed by a project manager?
5 stage approach for project management:
1) Initiation
2)Planning
3)Implementation
4)Control
5)Completion
How do you handle staff issues at Trimayr?
-Nature of staff issue: disciplinary matter
-Handling of issue(s) : should comply with company policies and procedures
1st) Inappropriate for any manager/supervisor to call out employee infront of peers
2nd) Disciplinary issues has steps to follow (warnings, informal chat, reasonable time and support)
3rd) Breakdown of reporting lines and communication (wrong people informed)
-HR department should step in to resolve the issues
What is the accounting treatment for Costs in schedules and its challenges?
1) Different elements of expenditure - need to be broken down and accounted separately
- Hardware (Tangible, non-current asset) - IAS 16
-Software Licenxe (Intangible Asset) - IAS 38
-Consultancy Fees (IAS 38)
-Software Upgrades (IAS 38)
-Work undertaken by IT staff (IAS 38)
-Training and maintenance costs - these count as operational costs (written off as expense)
Risks associated with a system reconfiguration project?
- Implementation Delays
-Data migration Risks
-Cost overruns
-Cybersecurity issues
-Vendor dependence
How a Project Manager can gain the necessary co- operation and commitment from staff?
- Communicate importance and benefits of project
-Provide training and ongoing support to staff
-Encourage participation
-Recognise and reward staff for contribution
Evaluation of argument between franchise management and recruitment giving rise to suboptimal behaviour?
Suboptimal behaviour (it is when teams prioritise own department goals over Trimayr’s)
-Blame shifting
-Over time (leads to failure, impacts performance and reputation)
How Trimayr can realign incentives and responsibilities between Franchise management and recruitment to support long term franchisee success?
-Review and revise current incentive and responsibilities where necessary
-Introduce joint KPI’s that hold both teams accountable
How an acquisition can impact Trimayr’s value Chain?
1) Procurement
2)Inbound Logistics
3)Operations
4)Sales &Marketing
What are challenges associated with determining ‘Goodwill’ upon acquisition and how these can be overcome?
‘GOODWILL’ represents the consideration paid in excess of the fair value of net assets of company
1)Determining Fair Value of
purchase consideration (it can be in different forms e.g cash payment, deferred consideration)
2)Determining fair value of net assets acquired (e.g PPE, systems acquired)
Should an acquisition of Trimayr be allowed to manufacture and supply products to other salon operators post acquisition?
+ Retains an existing revenue stream for Trimayr (better for shareholders)
+Maximises utilisation of product facility (using up space-achieving econ of scale)
-Complication of operational priorities (schedule conflicts between internal & external demand)
-Conflicts with Trimayr’s goal of being unique and authentic (lack of exclusivity)
Evaluate suitability of using full cost plus and market based transfer pricing methods for recording internal transfers
-‘Full Cost Plus’ (full cost plus the mark up)
-‘Market Price’ is (the current market price)
Full cost:
+recover all costs (fixed and variable) as well gain a profit margin
+cost visibility and predictability
-Lacks consideration for external market conditions (may cheaper alternatives elsewhere and opportunity to sell higher elsewhere)
-Unsure whether to use actuals or budgeted figures (brings unreliability and issues of control)
Market Cost:
+Unbiased (prices based on market rates)
+Encourages competitive pricing (benchmarks itself against competitors)
-Hard to determine market price (products/prices vary) - creates ambiguity and unfairness
Challenges with balanced scorecard approach to measure performance of new subsidiary?
.Balanced scorecard is a framework that evaluates performance in 4 areas (financial, leanring and development, customer, internal business)
1) Determining the right KPI’s
2)Data Collection and Reliability
3)Buy in from Staff
contractual inadequacy risks associated with proposal to engage marketing consultancy for customer feedback?
1) Deliverables (Trimayr may lack expertise and understanding)
2)Pricing (no fixed pricing or structure of model to follow)
3)Timeline (no clear timeline and risk of delays)
Evaluation of financials based on given financial indicators?
. Gross Profit Margin (if lower than average then company is less efficient at converting revenue into profit)
.Return on Capital Employed (ROCE) -measures efficiency in generating profits from capital investments (less efficient if lower)
.Recievables Days (if higher than average then company takes longer to collect payments) -disrupts cash flow
.Gearing (reliant on debt finance- so higher gearing is increased financial risk) -50% usually threshold
.Revenue Growth (higher chance of revenue growth not always accurate especially if new entrant/early yrs)
What are implications of entering full service beuaty salon market on Trimayr’s business model?
Business model is: Create, Define, Deliver, Capture (VALUE)
.DEFINING (expanding value beyond haircare) (ensure new services reflect quality, innovation and style)
.CREATING (employ high quality beauty staff, justify premium pricing and keep up with market trends)
.DELIVER (Keep accessibility and brand consistency, preserve efficient customer experience)
.CAPTURE (franchisee signings and revenue may be limited) (may lack brand recognition in beauty market)
What are business risks associated with entering full service beauty salon market and how to mitigate these?
- Competition (many new entrants- difficult to differentiate and capture market share) -seek expertise and leverage brand rep
-Healthy & Safety Risks (beauty services have higher risks e.g allergic reaction) - have rules in place with legal & compliance set up
-Reputational Risks (not expert in this market, training not speciality of these beauticians) - employ high quality and experienced ppl and make specialist training mandatory
Approach taken to successfully negotiate acquisition of G&G and issues that may arise?
-PREPARATION (find common ground, do due diligence with financial and non financial analysis)
.company may not disclose all info and shareholders may not be so interested
OPENING (express interest and present bid, specify how to settle price ‘cash’ or ‘non-cash consideration’)
.shareholders refuse to sell
.may quote exaggerated price
- BARGAINING (discuss to achieve mutually beneficial agreement)
.shareholders may still persist price that exceeds valuation
.weigh up price offered and market price (see if acquisition is advisable)
-CLOSING (if both parties reach consensus then finalise agreement)
How addition of G&G as a subsidary to Trimayr affects analysis of TRIMAYR’s consolidated financial statements?
- Financial Position
-new funding affects consol of SOFP
-If funded by equity (group equity increases whilst gearing ratio decreases)
-If funded via debt (gearing ratio increases- increased financial risk)
*FINANCIAL PERFORMANCE
-key measure of group profitability - ROCE (funding increases captial employed) - post acquisition profits will be small so reduces ROCE in short term
-Goodwill recognition (increases capital employed)
-Goodwill subject to annual impairment review (reduces operating profit - negative impact on ROCE)
How acquisition can change TRIMAYR’s WACC and implications of this change?
-WACC represents average cost of entity’s total pool of funds.
WACC derived by (estimating cost of each source of finance AND weighting each source according to respective proportion)
Changes in WACC due to acquisition:
-Additional shares will increase WACC
-cost of equity > cost of debt (so increase in equity will increase WACC)
-Lenders can be concerned of doubts about profitability of new subsidiary
*IMPLICATION OF INCREASE IN WACC:
-Pressure on board to provide higher returns to shareholders and lenders
-face drop in share price or demands for early repayments due to big increase in WACC
Appropriate types of responsibility center for G&G:
-there are 4 types of responsibility centres (controllability is a key factor when determing most suitable)
(CRIP)
*COST CENTRE
(Management has responsibility for only controlling costs)
*REVENUE CENTRE
(Management responsibility for generation of revenue)
*PROFIT CENTRE
(Management responsibile for revenue as well as costs)
*INVESTMENT CENTRE
(Management responsible for investment decisions as well as revenues& costs)
-level of automony for management needs to be established before choosing appropriate centre
Approach needed for Trimayr to create effective team that can carry out task?
- Determine Teams goals/objectives (have a plan and assemble good team with right personnel)
*Team composition (senior management skilled experts needed, and good communication skills needed too to bottom)
*Team Management (Designated leader to provide direction and guidance)
