MBA NOTES: EFFICIENCY RATIOS

EFFICIENCY RATIOS

Cash Turnover
Measures how effective a company is utilizing its cash.

Formula         Net Sales
                       Cash

Sales to Working Capital (Net Working Capital Turnover)

Indicates the turnover in working capital per year. A low ratio indicates inefficiency, while a high level implies that the company's working capital is working too hard.

Formula          Net Sales
                       Average Working Capital

Total Asset Turnover

Measures the activity of the assets and the ability of the business to generate sales through the use of the assets.

Formula          Net Sales
                        Average Total Assets

Fixed Assets Turnover
Measures the capacity utilization and the quality of fixed assets.

Formula           Net Sales
                         Net Fixed Assets

Day's Sales in Receivables

Indicates the average time in days, those receivables are outstanding (DSO). It helps determine if a change in receivables is due to a change in sales, or to another factor such as a change in selling terms. An analyst might compare the days sales in receivables with the company's credit terms as an indication of how efficiently the company manages its receivables.

Formula       Gross Receivables 
                     Annual Net Sales/365

Accounts Receivable Turnover
Indicates the liquidity of the company's receivables.

Formula       Net Sales
                     Average Gross Receivables

Accounts Receivable Turnover in Days
Indicates the liquidity of the company's receivable in days.

Formula         Average Gross Receivables
                       Annual Net Sales/365

Inventory Turnover
Indicates the liquidity of the inventory.

Formula             Cost of Goods Sold
                           Average Inventory

Inventory Turnover in Days
Indicates the liquidity of the inventory in days.

Formula            Average Inventory
                          Cost of Goods Sold / 365

Operating Cycle

Indicates the time between the acquisition of inventory and the realization of cash from sales of  inventory. For most companies the operating cycle is less than one year, but in some industries it is longer.

Formula          Accounts Receivable turnover in Days + Inventory Turnover in Day

Days Payables Outstanding
Indicates how the firm handles obligations of its suppliers.

Formula          Ending Accounts Payable
                        Purchases / 365


Payables Turnover
Indicates the liquidity of the firm's payables.

Formula      Purchases
                   Average Accounts

Payables Turnover in Days
Indicates the liquidity of the firm's Payables in days.

Formula     Average Accounts Payable
                   Purchases / 365

SYNOPSIS OF FINANCIAL ANALYSIS
FINANCIAL STATEMENTS / FINANCIAL REPORTS
USERS OF FINANCIAL STATEMENTS
TYPES OF FINANCIAL ANALYSIS
TOOLS OF FINANCIAL ANALYSIS (METHODS)
RATIO ANALYSIS
CLASSIFICATION OF RATIOS
LIQUIDITY RATIOS
PROFITABILITY RATIOS
LEVERAGE RATIO
EFFICIENCY RATIO


MBA NOTES

MBA NOTES: FINANCIAL LEVERAGE RATIO

FINANCIAL LEVERAGE RATIO

Total Debts to Assets:

Provides information about the company's ability to absorb asset reductions arising from losses without jeopardizing the interest of creditors.

Formula                     Total Liabilities
                                   Total Assets

Capitalization Ratio:
Indicates long-term debt usage.

Formula                 Long-Term Debit
                               Long-Term + Owners Equity

Debt to Equity:
Indicates how well creditors are protected in case of the company's insolvency.

Formula                 Total Debt
                               Total Equity

Interest Coverage Ratio (Times Interest Earned):
Indicates a compaany's capacity to meet interest payments. Uses EBIT (Earnings before interest and taxes)

Formula                  EBIT
                                Interest Expense

Long-term Debt to Net Working Capital:
Provides insight into the ability to pay long term debt from current assets after paying current liabilities.

Formula                  Long-term Debt
                                Current Assets - Current Liabilities

SYNOPSIS OF FINANCIAL ANALYSIS
FINANCIAL STATEMENTS / FINANCIAL REPORTS
USERS OF FINANCIAL STATEMENTS
TYPES OF FINANCIAL ANALYSIS
TOOLS OF FINANCIAL ANALYSIS (METHODS)
RATIO ANALYSIS
CLASSIFICATION OF RATIOS
LIQUIDITY RATIOS
PROFITABILITY RATIOS
LEVERAGE RATIO
EFFICIENCY RATIO




MBA NOTES

MBA NOTES: PROFITABILITY RATIOS

PROFITABILITY RATIOS: MBA NOTES

Net Profit Margin (Return on Sales):
A measure of net income dollars generated by each dollar of sales.

Formula:       Net Income
                      Net Sales

Refinements to the net income figure can make it more accurate than this ratio computation. They could include removal of equity earnings from investments  Other income and other expense items as well as minority share of earnings and non-recurring items.

Formula:      Net income
                     (beginning + Ending Total Assets)/2

Operating Income Margin:
A measure of the operating income generated by each dollar of sales

Formula:      Operating Income
                     Net Sales


Return on Investment:
Measures the income earned on the invested capital.

Formula:     Net Income
                    Long-term Liabilities + Equity

Return on Equity:
Measures the income earned on the shareholder's investment in the business.

Formula:     Net Income
                    Equity

Du Point Return on Assets:
A combination of financial ratios in a series to evaluate investment return. The benefit of the method id that it provides an understanding of how the company generates its return.

Formula:    Net Income    x   Sales     x    Assets
                   Sales                   Assets          Equity


Gross Profit Margin:
Indicates the relationship between net sales revenue and the cost of goods sold. This ratio should be compared with industry data as it may indicate insufficient volume and excessive purchasing or labour costs.

Formula:     Gross Profit
                    Net Sales


SYNOPSIS OF FINANCIAL ANALYSIS
FINANCIAL STATEMENTS / FINANCIAL REPORTS
USERS OF FINANCIAL STATEMENTS
TYPES OF FINANCIAL ANALYSIS
TOOLS OF FINANCIAL ANALYSIS (METHODS)
RATIO ANALYSIS
CLASSIFICATION OF RATIOS
LIQUIDITY RATIOS
PROFITABILITY RATIOS
LEVERAGE RATIO
EFFICIENCY RATIO


MBA NOTES

LIQUIDITY RATIOS : MBA NOTES

LIQUIDITY RATIOS

WORKING CAPITAL:

Working capital compares current assets to current liabilities and serves as the liquid reserve available to satisfy contingencies and uncertainties, A high working capital balance is mandated if the entity is unable to borrow on short notice. The ratio indicates the short-term solvency of a business and in determining if a firm can pay its current liabilities when due.

Formula:     Current assets - Current liabilities

ACID TEST OR QUICK RATIO:

A measurement of the liquidity position of the business. The quick ratio compares the cash plus cash equivalents and accounts receivable to the current liabilities. the primary difference between the current ratio and the quick ratio is the quick ratio does not include inventory and prepaid expenses in the calculation. Consequently, a business's quick ratio will be lower than its current ratio. It is a stringent test of liquidity.

Formula:      Cash+Marketable securities+Account Receivable
                                                    Current Liabilities

CURRENT RATIO:

Provides an indication of the liquidity of the business by comparing the amount of current assets to current liabilities. A business's current assets generally consist of cash, marketable securities, accounts receivable and inventories  Current liabilities include accounts payable current maturities of long-term debt, accrued income taxes and other accrued expenses that are due within one year, In general businesses prefer to have at least one dollar of current assets for every dollar of current liabilities. However, the normal current ratio fluctuates from industry to industry. A current ratio significantly higher than the industry average could indicate the existence of redundant assets  Conversely a current ratio significantly lowers than the industry average could indicate a lack of liquidity.

Formula:           Current Assets
                         Current Liabilities

CASH RATIO:

Indicates a conservative view of liquidity such as when a company has pledged its receivables and its inventory, or the analyst suspect's severe liquidity problems with inventory and receivables.

Formula:           Cash Equivalents + Marketable Securities
                                              Current Liabilities

SYNOPSIS OF FINANCIAL ANALYSIS
FINANCIAL STATEMENTS / FINANCIAL REPORTS
USERS OF FINANCIAL STATEMENTS
TYPES OF FINANCIAL ANALYSIS
TOOLS OF FINANCIAL ANALYSIS (METHODS)
RATIO ANALYSIS
CLASSIFICATION OF RATIOS
LIQUIDITY RATIOS
PROFITABILITY RATIOS
LEVERAGE RATIO
EFFICIENCY RATIO


MBA NOTES

MBA NOTES:RATIO:CLASSIFICATION OF RATIO ANALYSIS

CLASSIFICATION OF RATIO ANALYSIS

"Ratios" can be grouped into various classes according to "financial" activity or function to be evaluated. In view of the requirements of the various users of "ratios", we can classify then into the following categories.

• Liquidity "Ratios"
• Profitability "Ratios"
• Solvency "Ratios"

"Financial" statement "analysis" is a judgemental process. One of the primary objectives is identification of major changes in trends and relationships and the investigation of the reasons underlying those changes, The judgement process can be improved by experience and the use of analytical tools. Probably the most widely used "financial" "analysis: technique is "ratio" "analysis" the "analysis" of relationships between two or more line items on the "financial" statement. "Financial" "ratios" are usually expressed in percentage or times. Generally, "financial" "ratios" are calculated for the purpose of evaluating aspects of company's operations and fall into the following categories:

• Liquidity ratios: measure a firm's ability to meet its current obligations.
• Profitability ratios: measure management's ability to control expenses and to earn a return on the resources committed to the business.
• Leverage ratios: measure the degree of protection of suppliers of long-term funds and can also aid in judging a firm's ability to raise additional debt and its capacity to pay its  liabilities on time.
• efficiency, activity or turnover ratios: provide information about management's ability to control expenses and to earn a return on the resources committed to the business.

A "ratio" can be computed from any pair of numbers. Given the large quantity of variables included in "financial" statements, a very long list of meaningful ratios can be derived. A standard list of "ratios" or standard computation of them does not exist, The following ratio presentation includes "ratios" that are most often used when evaluating the credit worthiness of customer. "Ratio" "analysis" becomes a very personal or company driven procedure. Analysts are drawn to and use the ones they are comfortable with and understand.

SYNOPSIS OF FINANCIAL ANALYSIS
FINANCIAL STATEMENTS / FINANCIAL REPORTS
USERS OF FINANCIAL STATEMENTS
TYPES OF FINANCIAL ANALYSIS
TOOLS OF FINANCIAL ANALYSIS (METHODS)
RATIO ANALYSIS
CLASSIFICATION OF RATIOS
LIQUIDITY RATIOS
PROFITABILITY RATIOS
LEVERAGE RATIO
EFFICIENCY RATIO

MBA NOTES
"MBA" "NOTES"

MBA NOTES:RATIO ANALYSIS

RATIO ANALYSIS

A company's financial information is contained in 3 basic financial statements the balance sheet, the trading and profit and loss account and profit and loss appropriation account. These statements are very useful to different parties concerned such as management, creditors, investors and so on. These statements may be more fruitfully used if they are analysed an interpreted to have an insight into the strengths and weakness of the firm.

Analysis of statements means such a treatment of the information contained in the two statements as to afford a diagnosis of the profitability and financial position of the firm concerned. In the analysis of financial statements, the analyst has variety of tools available from which he can choose those best suited to his specific purpose.

The most important tools used now days are ratio analysis, fund flow analysis and comparative and common size statements.

Ratio Analysis

Ratios are well known and most widely used tools of financial analysis, A ratio gives the mathematical relationship between one variable and another, Accounting ratios are relationships, expressed in quantitative terms between figures which have a cause and effect relationship or which are connected with each other in some manner or the other. The analysis of a ratio can disclose the relationships as well as bass of comparison that reveals conditions and trends that cant be detected by going through the individual components of the ratio.

The usefulness of ratios is ultimately dependent on their intelligent and skilful interpretation.

SYNOPSIS OF FINANCIAL ANALYSIS
FINANCIAL STATEMENTS / FINANCIAL REPORTS
USERS OF FINANCIAL STATEMENTS
TYPES OF FINANCIAL ANALYSIS
TOOLS OF FINANCIAL ANALYSIS (METHODS)
RATIO ANALYSIS
CLASSIFICATION OF RATIOS
LIQUIDITY RATIOS
PROFITABILITY RATIOS
LEVERAGE RATIO
EFFICIENCY RATIO

MBA NOTES
MBA

MBA NOTES:TOOLS OF FINANCIAL ANALYSIS (METHODS)

TOOLS OF FINANCIAL ANALYSIS (METHODS)

The analysis of financial statements consists of a study of relationship and trends to determine whether or not the financial position of the concern and its operating efficiency have been satisfactory. In the process of this analysis various tools or methods are used by financial analyst.

theses tools are:

1. comparative statements
2. common size statements
3. Trend analysis
4. Average analysis 
5. Statement of changes in working capital
6. Fund flow analysis
7. Cash flow analysis
8. Ratio analysis

SYNOPSIS OF FINANCIAL ANALYSIS
FINANCIAL STATEMENTS / FINANCIAL REPORTS
USERS OF FINANCIAL STATEMENTS
TYPES OF FINANCIAL ANALYSIS
TOOLS OF FINANCIAL ANALYSIS (METHODS)
RATIO ANALYSIS
CLASSIFICATION OF RATIOS
LIQUIDITY RATIOS
PROFITABILITY RATIOS
LEVERAGE RATIO
EFFICIENCY RATIO



MBA NOTES
MBA

MBA NOTES:TYPES OF FINANCIAL ANALYSIS

TYPES OF FINANCIAL ANALYSIS

Following are the various types of financial analysis.

A. On the basis of material used.

1. External Analysis
Analysis of financial statements may be carried out on the basis of published information. i.e.., information made available in the annual report of the enterprise. such analysis are usually carried out by those who do not have access to the detailed accounting records of the Co. i.e., Banks, Creditors etc.

2. Internal Analysis
Analysis may also be based on detailed information available within the Co. which is not available to the outsiders. such analysis is called internal analysis. this type of analysis id of a detailed one and is carried out on behalf of the management for the purpose of providing necessary information for decision making, such analysis emphasizes on the performance appraisal and assessing the profitability of different activities.

B. According to objectives of analysis

1. Short Term Analysis
Short term analysis is mainly concerned with the working capital analysis.in the short run, a Co. must have ample funds readily available to meet its current needs and sufficient borrowing capacity to meet the contingencies. in short term analysis the current assets and current liabilities are analysed and liquidity is determined.

2. Long Term Analysis
In the long term a Co. must earn a minimum amount sufficient to maintain a reasonable rate of return on the investment to provide for the necessary growth and development of the Co., and to meet the cost of capital.
financial planning is also desirable for the continued success of a Co. Thus in the long term analysis the stability and the earning potentiality of the C. is analysed  i.e., fixed assets, long term debt structure and the ownership interest is analysed.

C. According to the Modus Operandi of analysis

1. Horizontal Analysis
Analysis of financial statements involves making comparisons and establishing relationship among related items. such comparison or establishing of relationship may be based on financial statements of a Co.for a number of years and the financial statements of different Co's for the same year. such analysis is called horizontal analysis. it may take the following two forms.
a. comparative financial statement analysis
b. trend analysis.

2. vertical Analysis.
Analysis of financial data based on relationship among items in a single period of financial statement is called vertical analysis. from a single balance sheet or P&L A/C relationships of various items may be established.
e.g. various assets can be expressed as percentage of total assets. statements containing such analysis are also called as common size statements. The common size P&L A/C is more useful in analysing the operating results and costs during the year. It shows each element of cost as a percentage of sales. Similarly common size balance sheet show fixed assets as a percentage to total assets.

SYNOPSIS OF FINANCIAL ANALYSIS
FINANCIAL STATEMENTS / FINANCIAL REPORTS
USERS OF FINANCIAL STATEMENTS
TYPES OF FINANCIAL ANALYSIS
TOOLS OF FINANCIAL ANALYSIS (METHODS)
RATIO ANALYSIS
CLASSIFICATION OF RATIOS
LIQUIDITY RATIOS
PROFITABILITY RATIOS
LEVERAGE RATIO
EFFICIENCY RATIO




MBA NOTES

MBA NOTES:USER OF FINANCIAL STATEMENTS

USER OF FINANCIAL STATEMENTS

Analysis of financial statements is linked with the objective and interest of the individual agency involved. some of the agencies interested include management, investors, creditors, bankers, workers, government and public at large.

MANAGEMENT

Management is interested in the financial performance and financial condition of the enterprise. it would like to know about its viability as an on going concern, management of cash, debtors, inventory and fixed asset and adequacy of capital structure. Management would also be interested in the overall financial position and profitability of the enterprise as a whole and its various departments and divisions.

INVESTORS

An investor is interested in the profitability and safety of his investment and would like to know whether the business is profitable, has growth potential and is progressing on sound lines. The present investors want to decide whether they should hold the securities of the company or sell them. potential investors, on the other hand, want to know whether they should invest in the shares of the company or not. investors (Shareholders or owners) and potential investors, thus, make use of the financial statements to judge the present and future earning capacity of the business, to judge the operational efficiency of the business and to know the safety of investment and growth prospects.

BANKERS AND LENDERS

Bankers and lenders are interested in serving of their loans by the enterprise, i.e. regular payment of interest and repayment of principal amount on schedule dates. They also like to know the safety of their investment and reliability of returns.

SUPPLIERS / CREDITORS

Creditors dealing with the enterprise are interested in receiving their payments as and when fall due and would like to know its ability to honor its  short-term commitments.

EMPLOYEES

Employees interested in better emoluments, bonus and continuance of the business, would like to know its financial performance and profitability.

GOVERNMENT

Government and regulatory authorities would like to ensure that the financial statements prepared areas per the specified laws and rules and are to safe guard the interest of various concerned agencies. e.g.: Taxation authorities would be interested in ensuring proper assessment of tax liability of the enterprise as per the laws.

STOCK EXCHANGE

Stock exchange uses the financial statements to analyse and thereafter, inform its members about the performance, financial health  etc, of the company, to see whether financial statements prepared are in conformity with the specified laws and rules and to see whether they safeguard the interest of various concerned agencies.

Other regulatory authorities  (such as, company law board, SEBI, stock exchanges, tax authorities etc) would like that the financial statements prepared are in conformity with the specified laws and rules and are to safeguard the interest of various concerned agencies, For example, taxation authorities would be interested in ensuring proper assessment of tax liability of the enterprise as per the laws in force from time to time.

CUSTOMER

Customer are interested to ascertain continuance of an enterprise. for example, an enterprise may be supplier of a particular type of consumer goods and in case it appears that the enterprise may not continue for a long time, the customer has to find an alternate source.

PUBLIC

Enterprises affect members of the public in a variety of ways. for example, enterprises may make a substantial contribution to the local economy in many ways including the number of people, they employ and their patronage of local suppliers, Financial statements may assist the public by providing information about trends and recent developments in the prosperity of the enterprise and the range of its activities.

Different agencies thus look at the enterprise from their respective viewpoint and are interested in knowing about its profitability and financial condition. In short a detailed cause and effect study of profitability and financial condition is the over all objective of financial statement analysis.

SYNOPSIS OF FINANCIAL ANALYSIS
FINANCIAL STATEMENTS / FINANCIAL REPORTS
USERS OF FINANCIAL STATEMENTS
TYPES OF FINANCIAL ANALYSIS
TOOLS OF FINANCIAL ANALYSIS (METHODS)
RATIO ANALYSIS
CLASSIFICATION OF RATIOS
LIQUIDITY RATIOS
PROFITABILITY RATIOS
LEVERAGE RATIO
EFFICIENCY RATIO



MBA NOTES
MBA

MBA NOTES:FINANCIAL STATEMENTS / FINANCIAL REPORTS

FINANCIAL STATEMENTS / FINANCIAL REPORTS

Financial statements (financial reports) are formal records of a business financial activities. these statements provide an overview of a business profitability and financial condition in both short and long term. There are five basic financial statements:

Balance Sheet

Balance sheet also referred to as statement of financial position or condition, reports on a company assets, liabilities and net equity as of a given point in time.

Income Statement

Income statement also referred to as profit or loss statement. reports on a company results of operations over a period of time.

Cash Flow Statement

Statement of cash flows reports on a company cash flow activities, particularly its operating, investing and financing activities.

Statement of Changes in Equity

Statement of retained earnings explains the changes in a company retained earnings over the reporting period.

Notes to the Financial Statements

Notes to the financial statements explains the necessary details and calculations about the key figures nominated at the face of balance sheet and income statement. commonly this section is called footnotes but its a comprehensive part of financial statements that describe the accounting procedures and policies.

SYNOPSIS OF FINANCIAL ANALYSIS
FINANCIAL STATEMENTS / FINANCIAL REPORTS
USERS OF FINANCIAL STATEMENTS
TYPES OF FINANCIAL ANALYSIS
TOOLS OF FINANCIAL ANALYSIS (METHODS)
RATIO ANALYSIS
CLASSIFICATION OF RATIOS
LIQUIDITY RATIOS
PROFITABILITY RATIOS
LEVERAGE RATIO
EFFICIENCY RATIO

MBA NOTES

MBA NOTES

MBA NOTES:SYNOPSIS OF FINANCIAL ANALYSIS

FINANCIAL ANALYSIS

A RIGHT WAY FOR FINANCIAL DECISION

Analysis means to put the meaning of a statement in to simple terms for the benefit of a person. analysis comprises resolving the statements by breaking them in to simpler statements by a process of rearranging, regrouping and collection of information broadly the term is applied to almost any kind of detailed enquiry in to financial data. A financial manager has to evaluate the past performance, present financial position, liquidity situation, enquire in to profitability of the firm and to plan for future operations. for all this, they have to study the relationship among various financial variables in a business as disclosed in various financial statements.

written by Dr. Malik Mohummed K. Shahzad Awan 

SYNOPSIS OF FINANCIAL ANALYSIS
FINANCIAL STATEMENTS / FINANCIAL REPORTS
USERS OF FINANCIAL STATEMENTS
TYPES OF FINANCIAL ANALYSIS
TOOLS OF FINANCIAL ANALYSIS (METHODS)
RATIO ANALYSIS
CLASSIFICATION OF RATIOS
LIQUIDITY RATIOS
PROFITABILITY RATIOS
LEVERAGE RATIO
EFFICIENCY RATIO



MBA NOTES

MBA NOTES:types of strategies

Types of strategies

Growth Strategies
THERE ARE THREE MAIN TYPES OF GROWTH STRATEGIES

• forward integration
• backward integration
• horizontal integration

forward integration|forward strategies|vertical strategies
GAINING OWNERSHIP OR CONTROL OVER DISTRIBUTOR, WHOLE SELLER

backward integration
TO SEEK OVER OWNERSHIP OR CONTROL OVER FIRM SUPPLIER

horizontal integration
TO SEEK OWNERSHIP OR CONTROL OVER THE FIRM COMPETITOR

intensive strategies
THERE ARE THREE MAIN TYPES OF INTENSIVE STRATEGIES

• market penetration
• market development
• product development

market penetration
SEEK TO INCREASE MARKET SHARE OF PRESENT PRODUCT OR SERVICES IN THE PRESENT MARKET THROUGH GREATER MARKETING EFFORTS

market development
INTRODUCING PRESENT PRODUCT OR SERVICES IN NEW GEOGRAPHICAL AREA

product development
INCREASE THE SALES BY IMPROVING OR MODIFYING PRESENT PRODUCT OR SERVICES

diversification strategies
THERE ARE TWO MAIN TYPES OF DIVERSIFICATION STRATEGIES

• related diversification strategies
• unrelated diversification strategies

related diversification strategies
ADD NEW PRODUCTS OR SERVICES RELATED TO CURRENT BUSINESS

unrelated diversification strategies
ADD NEW PRODUCTS OR SERVICES UNRELATED TO CURRENT BUSINESS

defensive strategies
THERE ARE THREE MAIN TYPES OF DEFENSIVE STRATEGIES

• retrenchment strategies
• diversification strategies
• liquidation strategy

retrenchment strategies
IT OCCUR WHEN AN ORGANIZATION REGROUPS THROUGH COST OR ASSET DEDUCTION TO INCREASE THE REVENUE AFTER DECREASE CURRENT SALES OF PRODUCT OR SERVICES

diversification strategies
A PART OF THE ORGANIZATION SOLD OUT TO RAISE THE CAPITAL

liquidation strategy
IN THE LIQUIDATION ASSETS ARE SALE OUT OF THE BUSINESS FOR RAISING CAPITAL

WHAT IS VISION STATEMENT
WHAT IS MISSION STATEMENT
WHAT IS OBJECTIVE
KEY TERM OF STRATEGIC MANAGEMENT
WHAT IS FACTOR IN STRATEGIC MANAGEMENT
PITFALL,DRAW BACK IN STRATEGIC MANAGEMENT
TYPES OF STRATEGIES






MBA NOTES
strategic management

MBA NOTES:PITFALL,DRAW BACK, DISADVANTAGES OF STRATEGIC MANAGEMENT PLANING

PITFALL OF STRATEGIC MANAGEMENT PLANNING (SMP)

1. LESS CONTROL OVER DECISION AND RESOURCES
2. STRATEGIC PLANING ONLY SATISFY THE REGULATORY REQUIREMENT
3. SMP TOO HASTILY MOVING FORM MISSION DEVELOPMENT TO STRATEGY FORMULATION
4. SMP FAILING TO COMMUNICATE THE PLAN TO EMPLOYEES
5. TOP MANAGERS NOT ACTIVELY SUPPORTING THE SMP
6. FAILING TO USE PLANS AS A STANDERS FOR MEASURE PERFORMANCE
7. FAILING TO INVOLVE KEY EMPLOYEES IN ALL PHASES OF PLANNING
8. ONLY STRATEGIST ARE HIGHLIGHTED
9. FAILING TO CREATE A COLLABORATIVE CLIMATE FOR CHANGE

WHAT IS VISION STATEMENT
WHAT IS MISSION STATEMENT
WHAT IS OBJECTIVE
KEY TERM OF STRATEGIC MANAGEMENT
WHAT IS FACTOR IN STRATEGIC MANAGEMENT
PITFALL,DRAW BACK IN STRATEGIC MANAGEMENT
TYPES OF STRATEGIES

MBA NOTES

PITFALL OF STRATEGIC MANAGEMENT PLANNING (SMP)

MBA NOTES:WHAT IS FACTOR IN STRATEGIC MANAGEMENT

WHAT IS FACTOR IN STRATEGIC MANAGEMENT

WHAT IS BUSINESS FACTORS
DEFINITION:
ANY REASONS DUE TO THIS YOUR BUSINESS INCREASE OR DECREASE IS CALLED THE BUSINESS FACTOR

EXAMPLE:
SUPPOSE YOU ARE A MILK SUPPLIER AND YOU ARE ONLY ONE SUPPLIER IN THE MARKET BUT A NEW SUPPLIER COME IN THE MARKET

THE NEW COMPETITOR IS A FACTOR FOR YOUR BUSINESS

BECAUSE WHEN ONLY ONE YOU ARE IN MARKET AND ALL CUSTOMER COMES TO YOU BUT AFTER THE NEW SUPPLIER COMING THE CUSTOMER ARE DIVIDED AND SOME COMES TO THAT SUPPLIER  AND SOME COME TO YOU AND YOUR BUSINESS IS DECREASE

BUSINESS FACTORS DIVIDED INTO TWO TYPES
1 INTERNAL FACTORS
2 EXTERNAL FACTORS

INTERNAL FACTOR
THE FACTOR THAT EFFECT INSIDE THE ORGANIZATION

EXAMPLE
MANAGEMENT

EXTERNAL FACTORS
THE FACTORS ALL OUTSIDE THE ORGANIZATION ARE EXTERNAL FACTORS

EXAMPLE
SOCIAL, COMPETITORS, POLITICAL
WHAT IS VISION STATEMENT
WHAT IS MISSION STATEMENT
WHAT IS OBJECTIVE
KEY TERM OF STRATEGIC MANAGEMENT
WHAT IS FACTOR IN STRATEGIC MANAGEMENT
PITFALL,DRAW BACK IN STRATEGIC MANAGEMENT
TYPES OF STRATEGIES


MBA NOTES

MBA NOTES:KEY TERMS OF STRATEGIC MANAGEMENT

KEY TERMS OF STRATEGIC MANAGEMENT

VISION STATEMENT
WHAT YOU WANT TO BECOME IN FUTURE

MISSION STATEMENT
WHAT IS YOUR BUSINESS

OBJECTIVE
THE ACTION LIST YOU HAVE TO DO TO COMPLETE THE MISSION

STRATEGIST
THE PERSON WHO MAKE THE STRATEGIES.

COMPETITIVE ADVANTAGES
ANYTHING IN WHICH YOU ARE BETTER THAN COMPETITORS.

INTERNAL STRENGTH OR WEAKNESS
ANYTHING INSIDE ORGANIZATION YOU CAN HAVE OR YOU CAN DO IT IS YOUR STRENGTH OR ANYTHING YOU CAN NOT DO IT OR YOU DON'T HAVE IS YOU WEAKNESS.

EXTERNAL OPPORTUNITIES OR THREAD
ANYTHING OUTSIDE THE ORGANIZATION YOU CAN GET IT YOU INCREASE YOUR BUSINESS IS OPPORTUNITIES AND THAT THING WILL TRY TO STOP THAT OPPORTUNITIES ARE THREADS.

STRATEGIES
HOW TO ACHIEVE THE OBJECTIVES ARE STRATEGIES IT IS CALLED ACTON PLAN.

POLICIES
SET THE RULES OR REGULATION TO CONTROL THE OPERATION ACTIVITIES.
WHAT IS VISION STATEMENT
WHAT IS MISSION STATEMENT
WHAT IS OBJECTIVE
KEY TERM OF STRATEGIC MANAGEMENT
WHAT IS FACTOR IN STRATEGIC MANAGEMENT
PITFALL,DRAW BACK IN STRATEGIC MANAGEMENT
TYPES OF STRATEGIES

MBA NOTES

KEY TERMS OF STRATEGIC MANAGEMENT

MBA NOTES:WHAT IS OBJECTIVE

WHAT IS OBJECTIVE

DEFINITION:
OBJECTIVE IS WHAT YOU NEEDS TO ACHIEVE TO COMPLETE THE MISSION

OBJECTIVES ARE RELEVANT TO MISSION STATEMENT IF YOU ACHIEVE THE OBJECTIVES THEN YOU WILL COMPLETE THE MISSION

EXPLANATION:
IN SIMPLE WORD IF YOU PLAY THE MISSION TYPE OF VIDEO GAMES. EVERY STAG OF THE GAME HAVE MISSION THAT YOU HAVE TO COMPLETE WHEN YOU WILL COMPLETE THE MISSION THAT GAME TRANSFER YOU NEXT STAGE AND EVERY MISSION HAVE OBJECTIVES THAT ALL MUST BE COMPLETED. WHEN YOU WILL COMPLETE THE ALL OBJECTIVES THEN MISSION WILL BE COMPETED AND YOU WILL GO TO NEXT STAGE.

FOR EXAMPLE GAME
HITMAN

BECAUSE WE USE MILK SUPPLIER IN PREVIOUS NOTES SO I WILL ALSO USE IT TO EXPLAIN THE OBJECTIVE

SUPPOSE

VISION
BECOME A LEADER OF MILK SUPPLIER INDUSTRY

MISSION
SUPPOSE WE WANT TO BECOME A ABC CITY SUPPLIER LEADER FIRST
WHAT ARE THE THINGS WE HAVE TO COMPLETE TO BECOME A ABC CITY TOP MILK SUPPLIER


OBJECTIVES
1. TO DECREASE OUR MILK RATE TO DECREASE THE COST
2. TO INCREASE THE PROFIT


HOW WE CAN DECREASE THE MILK COST

THE ANSWER IS WE WILL USE THE STRATEGIES TO ACHIEVE THE OBJECTIVES

WHAT IS STRATEGY
HOW WE CAN ACHIEVE THE OBJECTIVE IS CALLED STRATEGY IT IS A PLAN OF ACTION

WHAT TYPES OF STRATEGY WE WILL USE TO DECREASE THE MILK COST

STRATEGY
1. USE LATEST MACHINE TECHNOLOGY TO REDUCE THE LABOUR COST

WHEN WE WILL USE THE MACHINE TECHNOLOGY OUR COST WILL BE DECREASE AND TOTAL MILK COST WILL DECREASE AND OUR MILK COST WILL BE REDUCED OR OBJECTIVE WILL BE COMPLETED.
WHAT IS VISION STATEMENT
WHAT IS MISSION STATEMENT
WHAT IS OBJECTIVE
KEY TERM OF STRATEGIC MANAGEMENT
WHAT IS FACTOR IN STRATEGIC MANAGEMENT
PITFALL,DRAW BACK IN STRATEGIC MANAGEMENT
TYPES OF STRATEGIES


MBA NOTES

MBA NOTES:WHAT IS MISSION STATEMENT

WHAT IS MISSION STATEMENT

DEFINITION:

WHAT IS YOUR BUSINESS IS DEFINED IN STATEMENT IS CALLED MISSION STATEMENT.

EXPLANATION: 
SUPPOSE YOU ARE A MILK SUPPLIER SO

PROVIDE THE MILK TO OTHER IS YOUR BUSINESS

IMPORTANT MISSION STATEMENT COMPONENTS 

IN MISSION STATEMENT SOME POINTS MUST BE DESCRIBED

CUSTOMER:
WHO IS YOUR CUSTOMER

PRODUCT:
WHAT ARE YOUR PRODUCTS THAT OFFER YOU CUSTOMER

MARKET:
WHAT ARE THE MARKET THAT YOU ARE TARGET.

TECHNOLOGY:
WHAT TYPES OF TECHNOLOGY YOU ARE USED ADVANCED, OLDER.
OR
CONCERN ABOUT EMPLOYEES OR INVESTORS PROFITS
WHAT IS VISION STATEMENT
WHAT IS MISSION STATEMENT
WHAT IS OBJECTIVE
KEY TERM OF STRATEGIC MANAGEMENT
WHAT IS FACTOR IN STRATEGIC MANAGEMENT
PITFALL,DRAW BACK IN STRATEGIC MANAGEMENT
TYPES OF STRATEGIES


MBA NOTES

MBA NOTES:WHAT IS VISION STATEMENT

WHAT IS VISION STATEMENT

DEFINITION:
 WHAT YOU WANT TO BECOME IN FUTURE IS A VISION

EXPLANATION:
SUPPOSE YOU ARE THE OWNER OF MILK SUPPLIER COMPANY AND YOU WANT TO BECOME A LEADER OF THE SUPPLIER INDUSTRY
SO WHAT YOU WANT TO BECOME IN FUTURE
VISION IS "BECOME A LEADER OF MILK SUPPLIER INDUSTRY"

THE COMPANY THAT HAVE A CLEAR VISION STATEMENT THAT COMPANY GET MORE GROWTH THAN OTHER THAT DON'T HAVE VISION STATEMENT.
BECAUSE THE VISION STATEMENT GIVES THE PATH OF ORGANIZATION WHERE YOU GO IN FUTURE.

MOSTLY VISION STATEMENT IS WRITTEN FOR 5 YEAR

IN VISION STATEMENT THE ORGANIZATION SET THE GOALS FOR FUTURE.

MBA NOTES
WHAT IS VISION STATEMENT
WHAT IS MISSION STATEMENT
WHAT IS OBJECTIVE
KEY TERM OF STRATEGIC MANAGEMENT
WHAT IS FACTOR IN STRATEGIC MANAGEMENT
PITFALL,DRAW BACK IN STRATEGIC MANAGEMENT
TYPES OF STRATEGIES

WHAT IS VISION STATEMENT

MBA NOTES:MBA NOTES STRATEGIC MANAGEMENT 1

Strategic management notes

Topics

Vision statement

Mission statement

Key terms of strategic management

Analysis the factors that effects the business

Formulation the strategies

Implement the strategies

Evaluation the strategies

WHAT IS VISION STATEMENT
WHAT IS MISSION STATEMENT
WHAT IS OBJECTIVE
KEY TERM OF STRATEGIC MANAGEMENT
WHAT IS FACTOR IN STRATEGIC MANAGEMENT
PITFALL,DRAW BACK IN STRATEGIC MANAGEMENT
TYPES OF STRATEGIES