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OBU RAP Topic 15 – Analyse and evaluate the impact on the financial and business performance of the strategy adopted by an organisation in one of the functional areas

 

Overview

Adopting new and different strategies is the growth factor of any company. Companies that evolve with time and review their functions and operations while implementing new fully developed plans are always ahead of the game. A strategy can identify trends and opportunities in the future. It can assess the broader changes in the market such as political, social or technological changes, as well as consumer changes, and can develop tactics so your business can modify and develop to suit these future changes.

The main functional areas can include

  • Marketing
  • Human resource management
  • Operations
  • Inventory/supply chain management
  • Environmental/sustainability

Now we talk about how strategies can be adopted in different functional areas. Therefore, all business planners should concentrate on researching and thoroughly understanding these areas as they relate to the individual business. In big organisations, different people are responsible for the implementation of strategies on a functional level. Usually, they are the senior experts such as a financial manager or engineering manager

Some examples of common functional strategies are production strategy, debt financing, organizational strategies, marketing strategies, financial strategies, etc. Business strategies can either fail or pass, depending on several factors. A well-developed strategy has more of a chance of working out in the end. The execution of strategy also matters a lot. Strategies however fail because of the following reasons:

  1. Unclear communication
  2. No or insufficient communication
  3. Lack of commitment
  4. Insufficient or inadequate resources
  5. Isolated and fragmented actions
  6. Ambiguous or conflicting goals
  7. No or unclear strategy
  8. No clear priorities
  9. Ambiguous responsibilities

In this topic, the implementation of any functional strategy is to be researched in an organization and its impact on the business and financial performance.

Key features/requirements for topic 15 (performance of the strategy)

The following key requirements should be taken into consideration while writing your RAP 

  • Selecting a suitable organisation
  • Studying the functional strategy adopted by the company
  • Identifying the functional area in which the strategy is implemented
  • Analysing the impact of this strategy on the business and financial performance of the company
  • Using suitable business models to study the impact of the strategy

Key success factors for topic 15 (performance of the strategy)

Following are the main points that need to be considered for a successful RAP submission

  • Selecting a suitable company with different functional areas
  • Identification of the functional areas of the company
  • Identification of the strategy implemented in any of the functional areas
  • Assessing the impact of this strategy on the business of the company
  • Creating a link between strategy and the performance of the company
  • Assessing the financial and business performance of the company critically
  • Access to the internally generated information
  • Permission from the management to use the internally generated information
  • In-depth knowledge of all the functional areas and functional strategies
  • Gaining an understanding of all different types of business strategies
  • In-depth knowledge of all the possible impacts these strategies can have on the success of the company
  • Demonstrating a clear understanding of the industry and its competitive peers
  • Adequate application of the selected goals and objectives that were set at the beginning of the RAP in the proper sections of RAP
  • The implementation of the correct research methodology to get good results on all the selected goals and objectives that were put in place at the beginning of the RAP
  • Keeping the discussion logical by keeping all the objectives in mind
  • Using reliable and appropriate sources for data gathering
  • Properly referencing the information gathered according to the Harvard referencing style as told by the OBU.
  • Usage of suitable business models to study the implementation and impacts of the strategies
  • A comparison to another organisation or the industry if secondary information is being used

Accounting and business models for topic 15 (performance of the strategy)

 The strategic analysis can be done by using a SWOT or value chain model to access the reasons for adopting the strategy SS models for topic 7:

SWOT: SWOT model can be used to study the before and after changes in the company’s performance. It is a situational analysis or assessment that helps us to study the strengths, weaknesses, opportunities and threats that are related to the company under consideration. To assess what effects this strategy had on the business and financial performance of the company, SWOT can prove to be a beneficial analysis.

PESTEL: A PESTEL is a model used to study the macro (external) forces facing an organisation. The letters stand for Political, Economic, Social, Technological, Environmental and Legal. It is a very popular model used by management for strategic planning and also for risk management

Value chain: A value chain is a guide that helps us to transform our ideas and dreams into reality by providing us with 5 steps of a business model, Value chains aid to increase a company’s efficiency so the business can deliver the most value for the least possible cost. Five steps to developing a value chain analysis

  • Step 1: recognize all value chain activities.
  • Step 2: Assess each value chain activity’s cost.
  • Step 3: judge what your customers value the most
  • Step 4: assess the value chain of your most competitive peer.
  • Step 5: finalize your competitive advantage.

BCG Matrix: This tool is used by the internal management to access the value of a company’s product line or other different units of the company. it can help us to make important strategic decisions of buying and selling.

RATIO ANALYSIS: It is a quantitative method of gaining insight into a company’s operational efficiency, profitability, solvency, or liquidity by studying its financial statements such as the balance sheet and income statement. The types of ratio analysis include profitability ratios, liquidity ratios, solvency ratios, turnover ratios, and earning ratios. Any of the ratios can be used. This tells us about the financial performance of the company.

Apart from financial analysis, function-specific models can also be used

7 Ps of marketing: This is a strategic notion that can be applied to any marketing mix, and it consists of 7 elements. It’s called the seven Ps of marketing and includes product, price, promotion, place, people, process, and physical evidence

Many other models can be adopted, and this is not an exhausted list. For more guidance regarding the use of models, you must be registered with a mentor.

Major benefits of choosing topic 15 (performance of the strategy)

Students can benefit from researching this topic as their overall knowledge will be improved and they can grow professionally and academically as well. 

  • Students will get to know about the functional strategies that are used to improve the performance of the company
  • Students will learn about the relevant companies and the industry of the selected company
  • The insight will be gained regarding all the business models used to study strategies and their functionality
  • Students will learn about the impact of these strategies on the selected companies
  • A detailed study regarding the company’s operational and financial performance of the employees will equip the students for their professional careers
  • Students can apply their theoretical knowledge to real-world situations.
  • A critical analysis of the company’s business and financial performance will help to sharpen the required skills needed by an accountant

Possible limitations faced by the students while researching topic 15 (performance of the strategy)

The main aim of conducting research is to set up new facts or confirm the outcomes of the previous research. It enables us to gain new knowledge regarding the subject. However, while preparing for OBU thesis research students face many problems. Some of the key limitations are as follows

General Limitations

  • Research method: Students need to have a clear understanding of the research methods. Mainly the research methods are not relevant or reliable as students are not trained in different methodologies. Simply replicating the knowledge available online or from different sources is not wise. There is a lack of basic knowledge regarding the correct methods of research.·
  • Overlapping information: overlapping information is often obtained as a result of excessive research through different sources. Each source has its own story to tell. Students often get confused regarding the facts and statements
  • Students may not be able to get authorization to talk to the higher management and also some information may not be provided due to confidentiality issues.
  • Interaction between the subject company and student: Mainly there isn’t any proper interaction between the subject company and the student. This means that a substantial amount of data going into the thesis goes untapped. The key issues of the company can only be highlighted with the help of internal company management
  • Time constraints: it is without a doubt that students need to complete their RAP before the deadline hits. Sometimes, the time limit can affect the quality of RAP very negatively. Students need to acknowledge this from the very start and set a schedule to be consistent with their research.
  • Data collection process: The different ways of collecting data presents a strong limitation. If a student conducts an interview person to person or if he does it over the phone, both can have different effects on the interview. Hence, this data limitation must be reflected upon

Specific Limitations

  • No permission letter: This topic can only be carried out well with the help of internal information. It is possible that students will not be allowed to conduct research on the internal matters of the company and permission letter will not be granted.
  • No access to management: It is difficult o access the internal management of the company if the students are not an employee of the organization.

Suitable organization for topic 15

The most suitable organisation is the one in which primary data collection is possible and the company has adopted many strategies for its functional areas. It is not possible to write on this topic without reliable secondary and primary information. Selecting a company which is established enough so that its performance and financial position to be studied over some time is necessary. To make a high-quality RAP, it is essential that students choose a company whose operations are easily understood by the student and he can make connections between various topics.

The following factors should be kept in mind while choosing a company for RAP:

  • The general interest of the student in the company
  • The amount of information available for the company
  • Access to the internal management of the company
  • Access to reliable secondary sources of information
  • Familiarity with the industry sector associated with the company

Suggested approach for topic 15

It is essential that prior to research, the OBU information pack must be read thoroughly. The requirements of OBU must be kept in mind from the beginning. ‘Harvard Citation’ must be understood. The word limit for RAP is between 7001-7500 words. You should plan your research first according to the requirements.

In Part 1- (Research objectives and overall research approach), Students need to make a table of contents and a title page mentioning the ACCA reg number and the selected topic. Part 1 mostly contains the introduction and the objectives of the RAP. The objectives of topic 15 include the recognition of strategies adopted by the organisation in any of its functional areas. Your personal aims and goals are not required to be a part of this section. The reasons for selecting the topic must be jotted down. The organisation which is suitable for topic 15 and why that organisation was deemed appropriate for the topic. You should make a connection between the topic, approach, and your research questions. Research questions must also be answered in detail.

Part 2- (Information gathering/accounting and business techniques) is essential as all your understanding of the business and accountancy models is analysed here. A quality explanation of the used models or any other frameworks and analysis of all their possible limitations must be performed. The most structured way of representing section 2 is by first mentioning the sources of information that were used to acquire the data for research on topic 15. Topic 15 relates to financial and business performance related to the strategy change so publicly available information can be used such as the annual reports, articles by famous newspapers, journals etc. primary data collection is also encouraged. The internally generated information helps in the better evaluation of this topic. Briefly describe all the sources such as the annual reports, the interviews of employees etc used and why they were considered good sources. There are many websites, books and newspapers that can be used. A discussion of the limitations of your information gathering must be included. Students should find references to mention limitations instead of writing from their own opinion. Any ethical issues that arose during information gathering and your solutions regarding the issues. Every part should be backed up by good references. Next, you would list down all the business and accountancy models and their possible limitations. SWOT and PESTEL are the most appropriate for this topic. To find out more about the selection of respective models for topic 5, kindly refer to section ‘Accounting and business models for topic 15’ above.  Word count is to be prioritized which is 1800-2000 words.

In part 3, there is a further evaluation, analysis and conclusion. It should contain a description of the results obtained and all the limitations. Further research with examples and comparisons between the two companies is done.

Evaluation and analysis of topic 15 mean you need to explain the financial performance with the help of ratios and compare those ratios over the three years. How the strategy change adopted in functional areas impacted the different KPIs? Trends of financial ratios over three years can better reveal the impacts of a new strategy. The negative ratios can help you understand why the strategic change was necessary. Recommendations to the selected company may be made but it is not very necessary. It is of utmost importance that word count must be kept in mind. If you exceed it in any way, then the examiner will mark the conclusions as failing.  4500 words must be written to ensure a detailed analysis.

Suggested approach for SLS

The meetings with the mentor must be planned at the start of the RAP and a track of those meetings must be kept in a diary as it will help later on to write the SLS. The time required to conduct effective research needs to be calculated at the start and a timetable should be kept in place. Religiously following the requirements and keeping track of the time is necessary to pass the RAP. All the information gathered should be recorded systemically and needs to be shared with your project mentor so that complete guidance can be given to you. Consultation with the project mentor ensures that a student passes with the highest possible grade. If any issue arises it can be solved by discussing it with your project guide.

Sources of information

There are mainly two types of sources that can be used, primary and secondary.

Primary sources are the data that you collect on your own and it is considered first-hand. This can be done by conducting interviews, surveys or having participants fill in questionnaires. In this topic, students are required to gather information directly from the management which will qualify as a primary source of information. It will be helpful for students as it will better evaluate the results.

Secondary information on the other hand refers to already available and published information. Using it to your own advantage by checking the authenticity of the sources can be very beneficial for the RAP.  All other sources of information such as online websites, journals, and articles are considered secondary sources of information. For using a secondary source, the reliability must be checked and then the information should be put in the RAP. This topic can be carried out well only with the help of secondary information. Information in the RAP must be through a relevant source and its content should also be relevant to the topic. The sources of information play a crucial role in producing a good RAP that is based on facts and figures. If reliable sources are not found, then a student must consider choosing a different topic for which information is more easily available.

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