Answer Plans M4-M6 Flashcards
Analyse whether online booking system is disruptive for Trimayr
Yes is disruptive:
.Impacts customer interaction with Business
.impacts how salons manage operations
Not disruptive:
.Provides customer flexibility/Convenience
.If competitors adopt it before us we appear outdated
.Easier operational perspective/oversight
Evaluate if Trimayr’s 40 salons should be converted into franchised operations
+Improves financial efficiency
+Encourages improved performance
+Consistent with Trimayr’s current business Model
-Own salons offer direct control over service standards
-Offers predictable & controllable revenue stream for group
-Serve as centres of innovation, training
Evaluate potential concerns franchisees may have about online booking systems
.Operational Autonomy (limited flexibility and independence for franchisees)
.Cost Implications (investment and ongoing expenses)
.Technical Issues
.Contractual implications (negotiation issues, hard to implement)
.Search Visibility (higher performing franchises appearing higher up in search results)
Evaluate suitablity of ‘Fixed Rate Bond’ to fund investment
*Fixed Rate Bond
+amount borrowed has to be repaid over x amount of years (time to generate profits and revenue and repay it)
+Only specific (coupon) interest is payable each year
-Take on a debt (gearing increases and financial risk)
-Amount borrowed Unknown? (Most funds borrowed external and depdent on gearing)
Evaluate suitability of Rights Issue to fund investment
+Effective means of raising equity in the business (new shares offered to existing shareholders)
+Shareholders can buy shares/sell rights
+Gearing reduces (reduces financial risk)
-Shareholders expect convincing business proposal
-procedural requirements (legal complexities)
Explain how app development costs should be accounted for in Trimayr’s financial statements
-App Dev costs (IAS 38) - Intangible assets
Development expenditures MUST meet 6 conditions to be satisfied
1)Intention to complete
2)Adequate resources
3)Technical Feasibility
4)Costs reliably measured
5)Can be sold
6)Possible future econ benefits
5&6 only if final testing of app development has been done
*If all 6 criterias met BEFORE end of financial year it can be capitalised as asset and amortised over UEL
*If 6 criterias met AFTER financial yr end - expensed to P&L (cannot be reinstated as asset after)
Explain how proposed share option scheme affects calculation and interpretation of Trimayr EPS
‘EPS’ -Earnings Per share (IAS 33- shows how much profit earned for each ordinary share and max that can be paid)
.employee option scheme doesnt affect EPS as it requires ‘DEPS’
.Diluted Earnings Per Share (DEPS) - indicates how much current EPS may reduce in future and estimates future of dilution
*If DEPS is less than EPS (shareholders view this negatively) - reduces EPS
HOW can we DECIDE if a managers leadership style is creatinf conflict between him and subordinates
-conduct investigation into issues (both counterparts involved)
-(Manager) - their style, decisions and actions, previous work experience/conflicts, lack of skill&expertise
-(Subordinates) - review backgrounds of them, assess if they lack more skill than manager in technology, misalignment between the two
How can we make management and subordinates understand importance of working as an effective team?
1) Establish goals & objectives
2)Set KPI’s to measure performance
3)Encourage Transparency
4)Team Building Activities
Evaluate usefulness of Internal benchmarking as a tool to improve performance across Trimayr’s franchised salons
(Internal Benchmarking) - comparing performance across different business units inside of a company
+Creates easy structured basis for performance comparison
+Feedback and Feedback forward on successful salons
+Decision making will have evidence
-Results may not reflect contextual differences (external facts- location, popularity, size of salon)
-Demotivation/Resistance from franchisees (creates presssure)
