Valley Systems B Problem Statement
Valley Systems B Problem Statement is a clear description of an issue or a problem faced by a company or organisation, which must be identified. The primary purpose of identifying an issue and defining itconcisely helps problem solving teams or management to focus and channelize their resources towards resolving those problems.
Moreover, the problem statement comprises of three parts:
- The identification and importance of the issues or problems.
- The vision towards future i.e. what will be the impact on the overall organization strategies when the issue or problem is resolved. And
- Defines the process or method by which the problem can be resolved in the most effective and efficient manner.
The role of 5 W’s is also very crucial in stating the problem statement in the most effective manner, therefore initially these five W’s are considered for developing a clear understanding of an issue. First W i.e. “Who” defines the impact of the problem or the issue on various parts of the organization. Then “What” provide information regarding the impact and scope of the problem i.e. what is affecting the organization and what will be its impact if the issue is not resolved. “When” tells the organization about the timing of the issues and “Where” explains the areas having problems or issues. At last, “Why” is very crucial because it defines the importance of resolving a certain issue due of its potential adverse impact on various stakeholders of the organization which might include employees, customers, suppliers, shareholders etc. Therefore, identifying the problem statement is very crucial for any organization or company.
Valley Systems B Case Analysis
Six (6) steps are involved in conducting an analysis critically to analyse a case or a scenario. These six steps can be defined as understanding the situation, identifying the core business problems, analysing the issues, defining different alternatives to resolve the core business problems, choosing the best solution after qualitative and quantitative analysis and making recommendations.(Business School UNSW Australia, 2015).
First step: Understanding Valley Systems B case situation:
In the first step for case analysis, there is a requirement to understand the entire case situation that the writer has created it in. This can be understood when you have read the whole case scenario. The questions that are required to be addressed during the reading of the case are defined below:
- The identification of a business mission statement.
- Identification of the shareholders of the business.
- Identification of stakeholders of the business that are the outsiders but have the direct concern from the business.
- Understanding organizational decision making process.
- Understanding production process of the company.
- Identifications of direct competitors of the company.
- Effect of the external factors upon the company.
- Major products and services of the company.
The proper understanding of a business will help in identifying the main problems that are being faced by an organization. This understanding will also help in making multiple alternatives for an organization.
Second step: identifying core Valley Systems B business problem:
For identifying a core business problem, there is a need to analyse the situation or a case thoughtfully which would help in reflecting the problems being faced. The nature of these problems are then analysed if they are long term or short term problems.
To find the core business problem, there is a need to identify immediate and long term problems and their impact over the business either immediately or in the future. For this, there is need to identify the major evidences to proof itself that this problem can be the major problem for the organization on immediate basis or in a loner term period.
Third step: Valley Systems B Analysing the issues:
In the third step of case analysis, there is a need to find the factors that have direct impact on the business problems. These factors can be internal or external. To find these factors, there is a need to analyse the SWOT, PESTEL, Porter’s five forces model and other frameworks.
For analysing the issues in the case, there is also a need to identify the risk factors, historical patterns of the organization and other strategic issues that leads toward the core business problem.
Fourth step: Defining different Valley Systems B alternatives:
Different alternatives are developed in this step in order to resolve the core business problem. For developing different alternatives, there is a need to consider individual and organizational factors, long run and short run factors, strength and weaknesses of the company and some other qualitative measurements.
Apart from qualitative analysis, some quantitative measures are also required. Here, there is a need to develop different alternative solutions to make the analysis that which one gives the more financial benefit to the organization. There is also need to consider the risk factors that are belongs to the different alternatives.
Fifth step: Choosing the best Valley Systems B solution:
After the quantitative and qualitative analysis in the fourth step of case analysis, there is a need to choose one best solution for implementation in order to erase the business core problem. The selection of the best alternative must be on the basis of the highest financial benefits and highest qualitative benefits.
Sixth step: Making Valley Systems B recommendations:
After the selection of one best solution, there is a need to make recommendations. At this stage of the case analysis, the recommendations must be in a proper way like precise and concise and must be corresponding with the conclusion of the case. The recommendations must be feasible to implement in order to get the maximum benefits from it for the organization.
SWOT Valley Systems B Analysis
The full form of SWOT i.e. Strengths, Weaknesses, Opportunities and Threats is the tool used by the organizations to analyse and understand the internal and external factors that can affect their organization in the future. The first two of four i.e. Strengths and Weaknesses are considered as internal factors of the organization, as they inform about the internal strengths and weaknesses of an organization. Whereas the last two are the ones that are considered as external factors because they alert the management of the company about the potential opportunities they can be used to benefit the organization in the future. This analysis tool helps the organizations to set realistic targets for the future based on their own core strengths and weaknesses, moreover SWOT analysis also helps in exploiting the opportunities while being aware of the potential threats for the organization. One very vital benefit of SWOT analysis helps the companies and organizations in making necessary measures to take proactive plans and strategies. And enable companies to match the strengths with the opportunities to decrease the adverse impacts of Weaknesses and Threats for the organization. In order to better understand and take maximum benefit, these four factors are required to be discussed in detail.
Valley Systems B Strengths
These are mostly the positive traits and organizations have full control over them. The strengths of an organization includes vital resources of an organization in the form of updated capital or skilled workforce. Moreover, they might also be the location and nature of the business or operations of the organization given the industry in which it is operating. These are usually something on which organization can be proud and which are providing it a competitive edge in the industry and geography where it is operating. In addition, strengths are always the ones on which the company counts and consider them as the pride of an organisation. That’s why there is always a need for the organization to update or upgrade their strengths and that is only possible when the organization knowsproperly and precisely about the core strengths that is providing it leverage over its competitors and is also essential for the future growth of the organization. This makes the process and criteria for identifying the core strengths very important as not all those things, where the organization is performing can’t be considered as its core strengths. To be the core strengths it’s necessary that that certain strengths must have a future impact and are providing material benefit or edge to the organization in comparison to its rivals. Moreover, once the strengths are identified, organization must take further actions to continuously improve and update its strengths with the changing trend to remain competitive and stable in the long-run.
Valley Systems B Weaknesses
These are the factors or resources which might be under the control of a business but they are also the reason behind the decrease in efficiency of an organization. These include imperfect expertise, which causes the company to underperform as compared to its competitors because of not having or attaining the required skills and resources to take maximum benefit out of that expertise. The weaknesses might also arise from lack of certain resources which the competitors already had. When this situation occurs organizations are forced to depend on the prevailing resources and taking more output from limited resources creates various issues and intensifies the problems. Moreover, when organizations have an absence or have limited access to certain skills or innovations that also becomes the weakness of the organization. These various types of weaknesses mostly become the reason for the dissatisfaction of work force and force company to do compromises in quality of the product or service, which at the end refrains organizations from achieving their vision and missions. Therefore it’s always necessary for the organizations to focus more finding the core weaknesses of the organizations that lie in the form of insufficient resources or technology and skills, rather than focusing on appraisal and less important issues.
Valley Systems B Opportunities
This section analyses the external factors of an industry and identifies various incentives and opportunities for the organizations that have potential to make the organization sustainable and increase its scope in the future if the organization take necessary measures to implement those opportunities. These opportunities provide positive prospects for the organization that can help organizations to grow and overcome their weaknesses at the same time. These opportunities might be in the form of adoption of new technology, introduction of new product or service, emergence of new market etc. which might provide the organization an edge over other competitor in the market. In addition, the very important factor while taking decision regarding availing an opportunity is the timing, because when proper timing is not followed while adopting an opportunity especially that is related to technology can ruin the whole organization. Therefore great care is required while evaluating the potential opportunities for the future of business, whether certain opportunity is stable in the long-run or not, as now a days due to technological advancements, life of most opportunities had been decrease, therefore proper evaluation of the opportunity must be done before adoption. This decreases the risk of the organizations from any potential loss in future due to the decisions taken in hurry.
Valley Systems B Threats
These are the external factors which are not under the control of an organization and have the potential to affect the outcomes of an organization in the future. Threats case solution have the potential to put the future of whole organization at stake if not taken in account by the organization and in other words ignored. They might put the whole organizations future at risk, therefore plays very vital role in setting the course of the organizations. There are various forms of threats, like potential increase in cost of goods or services, changes in government regulation, financial downturns, rivalry or the introduction of any break-through innovative product or service that might turn the prevailing service or product of the organization into an outdated one. These all types of threats had the potential to affect the organization’s future, as any change in technology might outdate and make the product or service un attractive to the customers, any change in government regulation might increase the costs and limit or decrease the revenues of the organization and any unpredictable marketing strategy from the rivals might adversely affect the organization. Due these reasons threats can’t be ignored by any organization and organizations might prepare themselves for countering any potential threats but for that the organizations must know precisely about the nature, timing and intensity of the threats. This increases the importance of threats to the organizations.
Valley Systems B Porters Five Forces
In an industry, each company competes with each other to gain a greater market share. A market leader among them is the one with a stronger competitive advantage hence to analyse competition between each firm Michael Porter designed a framework named as Porter five forces analysis. For an industry to become attractive, it has to generate healthier profits which can only be possible when these five forces work together and lift overall profitability of the industry. Perfect competition within an industry doesn’t allow firm’s to churn out maximum profits which becomes one of the causes of industry unattractiveness.
Porter five forces focuses on micro environment of an entity which deals with the internal environment of a company. An organization with an ability to master their micro environmental factors gives them a chance for competing well in the industry. An investment expert carefully analyses the five forces before proceeding with the investment in a particular industry. An industry with lower than normal profits doesn’t mean that the companies within it will also have lower profits.Porter five forces can be divided into two subgroups. Firstly, forces from Horizontal competition which includes; threat from rivals, threat of new entrants and threat of substitute product. Secondly, forces from vertical competition that are; customers’ bargaining power and supplier’s bargaining power. Following is a detailed discussion on porter’s five forces
Threat of new Valley Systems B case study analysis entrants
Markets with high returns invites larger investments and more firms find ways to get an entry into it. With increased number of new entrants into the market results in more profit distribution between the firms. The industry with a larger firms makes it hard for other firms to find their way into the case help market. The factor that drives a single firm to push out other firms out is the cost advantage that it possess over other firms. The economies of scale gives an added benefit to a larger scale firm to cut down its cost and reduce its prices therefore giving a tough competition to the other firms. Hence, a large scale firm has lower threat of new entrants as compared to a small scale firm. Talking about a company’s perspective, an industry with higher barriers to entry and lower exit barriers makes it attractive for an established firm as its profits won’t be shared by another firm. As an example, a monopolistic firm isn’t threatened by a new entrant and has the ability to skim the profits from the industry. On the Contrary, an organization with higher chances of facing a tough competition faces this threat and its overall profitability gets severely affected.
Threat of substitute Valley Systems B case solution products
In a perfect competition, the firms offer a homogenous product which is produced by each competitor. Presence of a homogenous goods becomes a reason for price war. As soon as, a company increases its price, the consumers will prefer other product with same qualities but at lower prices. For a case study company to get greater competitive advantage over other firms, it has to maintain its focus in developing a higher quality product. Producing a good with no close alternative ensures minimal threat of substitute. In this case, an organization has to put aside a larger part of its earning into research and development so that it bring new innovative product with better technology. A product with better and innovative features has the potential to disrupt market as consumers will prefer that product over others. As an example,it can be considered that Pepsi and Coca-Cola has are intensely battling to gain larger share of the market. Both are close substitutes of each other and to position one step ahead of each other each of them sets aside a larger some of earnings into their advertisement and bringing new changes to their products. To conclude this, in a monopoly condition the threat of substitute is negligible but in a perfect competition the product substitution is high.
Bargaining Valley Systems B case analysis power of customers (buyers)
Customer satisfaction has become one of the targets for the companies. Provision of enhanced quality products with cheaper prices increments the satisfaction levels of the customers. In an attempt to make customers happy has actually made the consumers more powerful. Considering a perfect market condition, with more products to choose from buyers have an upper hand and firms have to come up with the decision accordingly. It can be said that with higher threat of substitution, the bargaining power of buyers does get higher. They can influence prices and a can demand price reduction when they have an alternate product to choose from. Bargaining power depends upon the number of consumers. A harvard case study help product that caters only to a few buyers will feel higher bargaining power from the consumers as they can demand lower prices on the product. Other than the price reduction, buyers can demand quality enhancements in the product. Comparing that with a monopolistic condition, the firm does regards the taste of the buyers as there aren’t much products to choose from and this results in lower bargaining power of the customers. An organization would want a lower bargaining power as it would mean more profitability for the firm. For an industry to be more attractive, the bargaining power of the consumers have to be low so that more new firms can enter into it.
Bargaining power of Valley Systems B HBR case study suppliers
A firm requires merchandise and other raw materials as an input for its products. To fulfil its raw material needs an organization has to maintain a sound relationship with its raw material suppliers. Few number of suppliers will make sure that they are supplying the product on their terms and at their fixed price. In this case, it is hard for a firm to negotiate with the suppliers as it doesn’t have much options to choose from. Higher supplier power increases the cost of goods and hence put downward pressure on the company’s bottom line. Taking an example of a firm that requires scars raw material might have a few suppliers or even only one. In that case, it doesn’t have much choice as to buy the case help raw material from which supplier. Any scarce mineral as a raw material will give a high power to supplier and they won’t want to sell the mineral at their own price. OPEC is an oil cartel that have a few countries that supplies oil to the entire globe. Being the sole oil supplying organization, it gives them an immense power to decide about oil prices and its supplying quantity. Now all the firms that needs oil for their production are hugely depended upon OPEC decision regarding the oil prices. A firm facing a higher bargaining power from its supplier will face a decline in its profits as compared to a firm with low supplier power.
Threats from Valley Systems B case help rivalry
The last of the porter’s five forces is considered to have the greatest effects on a company’s profitably. An industry with fierce rivals will see lower overall profitability. Though it might work well for the consumers but certainly not for the seller. Rise of more entrants can create a strong rivalry. Firms within an industry formulates different strategies and plans to overcome their rival. A company can move ahead of its rivals by reducing its product’s prices which can attract the consumers. Also, by the provision of better quality product a firm can gain a greater market share as its product will be preferred more over the other rivals’ product. A larger number of rivals in an industry causes lower profits for each firm as the overall revenues gets distributed among the rivals. Therefore, an organization would want to face lesser rivals within their industry.
PESTEL Valley Systems B Case Analysis
This analysis helps the company to develop its goals by incorporating the influences of external factors that helps the company in accomplishing its goals. These external factors are beyond an entity’s control, so there is a need to analyse them carefully in order to maintain the path of a company. PESTEL Case is an acronym for Ethical or Environmental and Legal analyses of a company to identify the impact of external factors upon a company or organization by changes in any of the above mentioned factors.
Above mentioned factors can influence the company’s marketing strategies which have been developed to maintain its relationship with its customers. How these factors influences, will discuss in detail in below described paragraphs.
Reasons to use the PESTEL Valley Systems B Analysis
There are four main reasons to conduct PESTEL analysis for a company or an organization (PEST Analysis, 2018).
- PESTEL analysis helps the managers to identify business opportunities and threats which are particularly related with the business. Through which managers can alter the goals of a company by identifying good opportunities which will provide future benefits to the company by removing the significance of the identified threats for the business.
- PESTEL analysis helps the company to identify its directions according to the changes in external environment which are beyond the control of the entity. This analysis helps the company to shape its things according to the external change rather to stick on the same path.
- PESTEL analysis helps the company to identify the starting projects feasibility in subsequent years by incorporating the factors that are beyond the entity’s control.
- PESTEL analysis helps the company when it is going to enter into new market. By analysing the PESTEL environment of the new region, helps the company set its objectives according to the external environment.
Understanding PESTEL Valley Systems B Analysis
The external factors that affects the outcomes of a business are discussed as follows:
HBS Case Study Solution Political:
The first factor in PESTEL case solution is political factor. Political factors generally discusses the effects of government policies on a business or an organization with respect to achieving their goals. Political factors are very important because all entities have an obligation to follow the rules and regulations that are made by the government for conducting different business activities by a company. These activities involves the risk factors that will ultimately lead to affect the stated objectives of a company.
Political factors need to be analysed by seeking the changes in the corporate tax policies because this have the direct impact upon the business and it is beyond the control of the business. In this situations mangers need to stay updated and must incorporate these changes while making and developing the goals and objectives for the company (Contributor, 2015).
Other than the analyses of changes in the corporate tax rates, interest rates is also a main factor which needs to be considered while making the future planning of the business. Interest rate is a rate who have a directly effect upon the required rate of returns of the company’s stakeholders.
Although the political environment factors are the least predictable factors because it is vary from one government to another. After every few years government follows re-elections which is the cause of major changes in political environment.
There is also a need to analyse the changes in powers between one group to another and their influences upon the business. These political changes are impacting on the overall economy of the country or a region.
Valley Systems B Economic:
The second factor in PESTEL is economic factor. The economic factor especially incorporates the financial changes in the rules and regulations of the country for the business or an industry. These economic factors that needs to be analysed are changes in interest rates, changes in exchange rates and exchange rate risks. Recession analysis, inflation analysis, changes in corporate taxes and changes in services, withholding and sales taxes along with the estimation of demand and supply of the region for the organization.
By taking the deep analysis of the above mentioned factors, organization will able to minimize the suddenly effect of these changes upon the business in order to avoid any possible losses for the organization (Bush, 2016).
Organization can analyse these factors by seeing the historical information and ups and downs of these rates and its impacts upon the different businesses in different situations.If the organization is multinational and carries high debt ratio then the interest rates and exchange rates are the main concern for this organization which need to effectively analyse and needs to be hedge by making the future and forward contracts from their suppliers or even bulk quantity purchaser customers.
There are some questions that need to be answered for effective analysis. These questions are about the stability of the economy, growth of the economy, stability of exchange rates and interest rates. There is also need to find the skilled labour rate plus unskilled labour rate along with the globalization effect upon the economic environment and much more which the organization think that this will need to be considered.
Ivey Case Analysis Social:
The third factor in PESTEL Ivey Cases is social factor. In social factors the organization needs to analyse the shared believes and attitudes of the population by analysing the factors like population growths, age category and gender distribution, wealth and education of the population, careers and jobs etc.
The above mentioned factors have the direct impact upon the products and marketing techniques of the organization that is why these factors needs to be analysed carefully in order to understand the behaviour of the customers in different situations with different needs and wants.
There are some questions that needs to be answered to analyse the socio cultural factors for the organization. These questions are related to the population’s growth rate and their age factors and age distribution, generational shift, religious beliefs and norms, life styles, education, jobs and much more.Analysis of these factors will help the organization in order to determine the market positioning of its products in the consumers’ minds.
Case Study Technological:
The fourth factor in PESTEL case solution is technological factor. In technological factors, organizations need to analysenew ways for producing goods which will be cost effective and efficient which then leads to the more organizational profits as well as increase in bonuses for the employees.
There is nolimit for case analysing new ways of production but organizations can also analyse new ways of marketing, distributing and communicating from the end users about its newly manufactured products.
The questions that need to be answered while Valley Systems B analysing the macro environment for the organization are related to the searching for new technologies and its implementations before the access of organization’s competitor for this new technology in order to get the competitive edge over its competitors. There is also need to analyse the effective work patterns, effective infrastructure changes like from centralization to decentralization or vice versa.
Ethical or Environmental:
The fifth factor in PESTEL is ethical or environmental factor. In ethical or environmental factor, organizations need to analyse the scarcity of raw materials for manufacturing and considering pollution targets by producing environmental friendly (green environmental) products. The organizations also need to analyse and ensure the fair and ethical competition in the industry within the country and outside the country.
There are some questions that need to be answered by analysing the environmental factor of the company. These questions are related to the analysis of changes in the weather, seasons and climate of the region, also the analysis of the geographical location of eth organization along with the trends and expected future developments in the environmental region (SWOT AND PESTEL, 2017).
Valley Systems B Legal:
The last factor in PESTEL is legal factor. In legal factor, organizations need to analyse the legal issues in order to avoid any type of legal and regulatory charges in future. Legal factors which need to be analysed are the health and safety laws, equal employment opportunity law, fair competition laws, consumer’s rights and laws and laws related to the product labelling and its safety.
VRIO Valley Systems B Case Analysis
Business analyst use VRIO Valley Systems B framework to study about the internal and external resources of a company. The framework highlights four factors that guide us through the firm’s resources which further develops the idea about the firm’s competitive advantage over other firms. The discussion on the four factors is given below:
The initial point to ponder is if the resource used by the firms provides any value to the firm. A valuable resource enable a firm to fight against the threats and to exploit the opportunities thrown to at it. A firm that utilizes its resources with pure efficiency makes sure to provide greater perceived customer value.
An organization using scarce resources or that are unique can be considered as rare. Usually rare resources are hard to accumulate but they provide great value to the firm. In addition to this, a scarce or rare resources ensures a competitive edge for the firm. For instance, a firm using a unique technology for making its product more innovative will provide a competitive advantage against other firm. Whereas, if most of the companies in the industry are using the same technology or resources then it will be referred to as competitive parity.
A resource or capabilities with distinct features makes it unique and hard to imitate. For a resource to be successful it has to have a high degree of originality. Many firms try to imitate the resources used by the other firm which might be costly for them. On the other hand, a firm that uses resources that are hard to imitate gives it greater advantage over others. Temporary competitive advantage arises when a cost to imitate a resource isn’t high. The consumers prefers your products over other products because they have the originality and hard to find in the market.
Direct duplications and substitution are the two main ways of tackling with the inability of the resources. Firms copy the exact features of the resource and offer it to their customers. Otherwise, if the cost of imitation is high it offers a product or service with similar features which can be called as the substitute of the original product.
In a service industry, if a firm hires highly skilled workers that provides unique and unmatchable services, consumers would want to avail its services rather than opting for any other firm.
Exploitation of resources can be done in an efficient way when the firm is organized in a better way. An organization with a firm management system combined with its organizational structure and policies can be referred to as a well-organized firm. Adding up all these will result in a better competitive advantage for the company.
Financial Case Analysis
Financial case analysis is one of the key factors to analyse the financial performance of the firm and to determine how strong or weak the company is according to the financials reported by the company in their financial statements. Financial analysis can also be performed on the projects undertaken by the company such as expansion project or purchasing a new equipment to increase the production efficiency by the company. The other type of financial analyst, known as external financial analyst, used to analyse the performance of the companies on behalf of their clients or their company in order to analyse the financials of the company which help the reader of the analysis to conduct investment decision i.e. wither to invest in the company or not according to the financial performance reported by the company in their financial statement. Hence, financial analysis is considered an important part in analysing the company. However, there are several steps and procedures which are used in performing financial analysis of the company. These steps and procedures are discussed below.
One of the important elements of financial analysis is capital budgeting, which is used to determine the project’s cash flows and efficiency in recovering investments. Capital budgeting analysis is also conducted to determine that whether the funds and investment available within the company is either suitable for the projects which are available to the company. The main concept of performing capital budgeting is to do the comparison between the different projects which are available to the company. The purpose of comparing different projects available to the company is to select the most suitable projects available to the company which could provide benefit to the company and its shareholder by undertaking the most suitable projects available with the company. Hence, there are different types of capital budgeting method which are discussed below.
Profitability Valley Systems B Index:
Profitability Valley Systems B index method is considered as the most suitable method in evaluating the projects which are available to the company. Moreover, a value of less than one indicates that discounted future cash flows of a project will not be able to recover the initial investment of the project and hence projects with discounted cash flow which do not covers the initial investment of the project should not be undertaken by the company because these projects appears to create a negative value for the company. Moreover, the profitability index is considered the most suitable method of evaluating and identifying the most suitable project for the company.
Net Present Valley Systems B Value:
NPV is derived through the deduction of invested amount from the present value of all future cash flows of a project. A positive NPV shows that the project will generate favourable outcomes for the shareholders.
Financial Statement Valley Systems B Analysis:
The analysis of financial statement is used by many companies and analyst in order to analyse the performance of the company be considering the components reported by the company in their financial statements. There are various steps and procedures which are used in conducting financial analysis of the company by reviewing the financials of the company which helps the reader of the financial statements of the company to take better financial and economic decision. These steps and procedures are discussed in detail below.
Income Statement Analysis:
Hence the major components which are analysed in the income statement includes revenues, operating expense and earnings of the company to identify and determine the financial performance of the company.
Ratios analysis which analysed the income statement can be conducted in two forms either by vertical analysis and horizontal analysis. The vertical analysis will provide us with many ratios which includes gross profit margins, operating margins and net income margins of the companies. Hence, if the margins of the companies are increasing with the reported revenue of the company each year than the company is performing well and is on the verge of performing better each year where as if the margins of the company are remaining stable with the revenues generate by the company than the company financial performance is stable. Often companies with stable financial performance are considered to be mature companies which are at the maturity stage of the business cycle. If the margins of the companies are declining it provides an indication that the company is not performing well because its earning are declining. Moreover, it can also be said that the company is not managing their operations and expenses efficiently which therefore the profit margins of the company is declining instead in inclining. The greater the time interest earned ratio the greater the company is capable of paying interest on their loans.
Based on the base year the future components of the financial analysis are analysed which provides the picture of the company to the analyst that how these components of income statement are changed from the past. Therefore vertical and horizontal analysis plays an important role in identifying the firm’s financial performance.
Valley Systems B of Balance Sheet:
The components of balance sheet which includes current and no current assets and liabilities and stockholder’s equity. The components of balance sheet in line with the components of income statement also provides us with several ratio which helps the investors to analyse that how efficiently the company is using their assets and capital in recognizing profit. These ratios include total assets turnover, return on assets, return on equity and return on capital employed.
The debt ratios gives idea to the reader of the financial statement that how much debt is begin taken by the company against the assets possessed by the company. Moreover, the debt ratios enable the reader of the financial statement to analyse the credit situation of the company and helps in conducting the credit analysis of the company. Therefore, the components of balance sheets plays an important role in analysing the assets, liabilities and credits undertaken by the company to understand the financial position of the company.
Valley Systems B Statement of Cash flows:
Cash flow statements show how much cash company has generated and the sources where it has been utilized. Hence, obtaining loan will increase the operating cost of the company. Therefore, operating cash flows provides the information that how efficiently the company is managing their cash.
Cash flow from investing activities will provide the information to the analyst and the reader of the financial statement about where the company is investing i.e. either company is investing in plants and equipment of the company is selling their fixed assets to accumulate cash. Hence, information about fixed assets is analysed in the cash flow from investing activities.
Cash flow from financing activities provides the information about the how the company is financing its capital i.e. either through debt, equity or with the combination of debt and equity. Dividends are also disclosed in the cash flow from financing activities. Hence, from the information available in the cash flow from financing activities enable the analyst or reader of the financial statement about the companies financing activities and changes in capital.
Valley Systems B Alternatives
Once all the above information was collected, alternatives provides the various options to the company for resolving the issue based on the internal resources and financial condition. These include more than one options, because each option has its own limitations regarding providing benefits to the organization.
Evaluation of Valley Systems B Alternatives
case study Alternatives provide various benefits but at the same time, each has its own drawbacks. Therefore its necessary that each alternative must be evaluated based on their various features.
- As the cost of each alternative is different and the company also has to keep in view its financial condition and how much it can spend and borrow on the alternative to retain stability of its financial conditions.
- Next very important factor in evaluating the alternatives is the reliability of the each alternative over the required period of time. This step helps the organizations in avoiding any bias in selecting the alternatives based the cost effectiveness of each option.
- After reliability stability is again very important and that filters the alternatives to check the stability of the each options over the long-run or at least till the required time period.
- The other very important criteria for evaluation of alternatives is the flexibility of the options to resolve various issues, because in large organization various problems occur at one time and it’s difficult to devise a separate alternative for every problem. This defines the scope of the problem solving nature of each option.
- Riskiness of the alternative is another factor that companies consider while evaluating the alternatives because some alternatives might be attractive to the management from one aspect but can inflict even more losses in instances of failure are not the good options.
- After that the simplicity and compatibility of the alternatives in resolving the problems with least complexities and high efficiency.
- Moreover, the reversibility of each alternative is also very important deciding about the attractiveness of the each option, as there is also certain risk associated with each option and this step helps the organizations in taking premeasures for any worst case scenario. As, in case of failure, there must be the chance of returning to its initial state to decrease any losses due to disruption in process.
- In the end the last but the least criterion is to check robustness of the each option under various states, because it is least likely that the current situation will remain same in the future also, therefore chosen alternative must have the ability to work in varying situations.
When most of the criterion are met by the alternative that is chosen for resolving the issue that has been identified in the problem statement.
Valley Systems B Case study help Recommendation
In a case analysis when all the requirements are met than recommendations are being provided in order to suggest some different ways to analyse the case or to take any other remedial actions to address the situation at hand. These recommendations are generally provided as a personal opinion by the writer of the report to address the problem or situation differently than what has been concluded. The writer may include the best option that he feels will work for the company. For instance if there are a few alternatives given in the case summary then in the recommendation part the writer can give his opinion about one of those alternatives and can guide which alternative will work best for the firm. Writer can also highlight the core problems of the firm in the recommendation section. Specifying the core problems of the firm makes it easier for the reader to have a clear view about causes of company’s weak performance.