1. Ch 4 -1 Chapter 4 (Part-II) The Internal Assessment Strategic Management: Concepts & Cases Dr. Ayham Jaaron

2. Ch 4 -2 Finance/Accounting  Determining financial strengths & weaknesses key to strategy formation

3. Ch 4 -3 Finance/Accounting Finance/Accounting Functions 1. Investment decision (Capital budgeting) 2. Financing decision 3. Dividend decision (interest paid on shares)

4. Ch 4 -4 Firm’s ability to meet its short-term obligations Ratios Current ratio Quick (or acid test) ratio Basic Financial Ratios Liquidity Ratios

5. Ch 4 -5 Extent of debt financing Ratios Debt-to-total assets Debt-to-equity Long-term debt-to-equity Times-interest earned Basic Financial Ratios Leverage Ratios

6. Ch 4 -6 Effective use of firm’s resources Ratios Inventory-turnover Fixed assets turnover Total assets turnover Accounts receivable turnover Average collection period Basic Financial Ratios Activity Ratios

7. Ch 4 -7 Effectiveness shown by returns on sales & investment Ratios Gross profit margin Operating profit margin Net profit margin Return on total assets (ROA) Basic Financial Ratios Profitability Ratios

8. Ch 4 -8 Effectiveness shown by returns on sales & investment Ratios Return on stockholders equity (ROE) Earnings per share Price-earnings ratio Basic Financial Ratios Profitability Ratios (cont’d)

9. Ch 4 -9 Firm’s ability to maintain economic position Ratios Sales Net income Earnings per share Dividends per share Basic Financial Ratios Growth Ratios

10. Ch 4 -10 Finance/Accounting Audit Where is the firm strong/weak as indicated by financial ratio analysis? Can the firm raise short-term capital as needed? Can the firm raise long-term capital as needed through debt and/or equity? Where is the firm strong/weak as indicated by financial ratio analysis? Can the firm raise short-term capital as needed? Can the firm raise long-term capital as needed through debt and/or equity?

11. Ch 4 -11 Finance/Accounting Audit Does the firm have sufficient working capital? Are capital budgeting procedures effective? Are dividend payout policies reasonable? Are the firm’s financial managers experienced & well trained? Does the firm have sufficient working capital? Are capital budgeting procedures effective? Are dividend payout policies reasonable? Are the firm’s financial managers experienced & well trained?

12. Ch 4 -12 Finance/Accounting Audit Effective Financial Analysis Requires: 1.Analysis of how the ratios have changed over time 2.How the ratios compare to industry norms 3.How the ratios compare with key competitors Effective Financial Analysis Requires: 1.Analysis of how the ratios have changed over time 2.How the ratios compare to industry norms 3.How the ratios compare with key competitors

13. Ch 4 -13 Production/Operations Production/Operations Functions  Process  Capacity  Inventory  Workforce  Quality

14. Ch 4 -14 Facility design Technology selection Facility layout Process flow analysis Facility location Line balancing Process control Production/Operations Process

15. Ch 4 -15 Forecasting Facilities planning Aggregate planning Scheduling Capacity planning Queuing analysis Production/Operations Capacity

16. Ch 4 -16 Raw materials Work in process Finished goods Materials handling Production/Operations Inventory

17. Ch 4 -17 Job design Work measurement Job enrichment Work standards Motivation techniques Production/Operations Workforce

18. Ch 4 -18 Quality control Sampling Testing Quality assurance Cost Control Production/Operations Quality

19. Ch 4 -19 Production/Operations Audit Are suppliers of materials, parts, etc. reliable and reasonable? Are facilities, equipment & machinery in good condition? Are inventory-control policies and procedures effective? Are suppliers of materials, parts, etc. reliable and reasonable? Are facilities, equipment & machinery in good condition? Are inventory-control policies and procedures effective?

20. Ch 4 -20 Production/Operations Audit Are quality-control policies & procedures effective? Are facilities, resources, and markets strategically located? Does the firm have technological competencies? Are quality-control policies & procedures effective? Are facilities, resources, and markets strategically located? Does the firm have technological competencies?

21. Ch 4 -21 Research & Development Research & Development Functions  Development of new products before competitors  Improving product quality  Improving manufacturing processes to reduce costs

22. Ch 4 -22 Financing as many projects as possible Use percent-of-sales method Budgeting relative to competitors How many successful new products are needed Research & Development R&D Budgets

23. Ch 4 -23 Research & Development Audit Are the R&D facilities adequate? If R&D is outsourced, is it cost effective? Are the R&D personnel well qualified? Are R&D resources allocated effectively? Are the R&D facilities adequate? If R&D is outsourced, is it cost effective? Are the R&D personnel well qualified? Are R&D resources allocated effectively?

24. Ch 4 -24 Research & Development Audit Are MIS and computer systems adequate? Is communication between R&D & other organizational units effective? Are present products technologically competitive? Are MIS and computer systems adequate? Is communication between R&D & other organizational units effective? Are present products technologically competitive?

25. Ch 4 -25 Management Information Systems Purpose  Improve performance of an enterprise by improving the quality of managerial decisions.

26. Ch 4 -26 Management Information Systems Information Systems CIO/CTO Security User-friendly E-commerce

27. Ch 4 -27 Management Information Systems Audit Do managers use the information system to make decisions? Is there a CIO or Director of Information Systems position in the firm? Is data updated regularly? Do managers use the information system to make decisions? Is there a CIO or Director of Information Systems position in the firm? Is data updated regularly?

28. Ch 4 -28 Management Information Systems Audit Do managers from all functional areas contribute input to the information system? Are there effective passwords for entry into the firm’s information system? Are strategists of the firm familiar with the information systems of rival firms? Do managers from all functional areas contribute input to the information system? Are there effective passwords for entry into the firm’s information system? Are strategists of the firm familiar with the information systems of rival firms?

29. Ch 4 -29 Management Information Systems Audit Is the information system user-friendly? Do all users understand the competitive advantages that information can provide? Are computer training workshops provided for users? Is the firm’s system being improved? Is the information system user-friendly? Do all users understand the competitive advantages that information can provide? Are computer training workshops provided for users? Is the firm’s system being improved?

30. Ch 4 -30

31. Ch 4 -31