The performance or corporate performance refers to the company’s ability to use its resources in the best way possible to manage its business activities. In comparison, financial performance measures the company’s ability to generate profits.
The main points that should be considered are
- The poor performance should not depend on COVID-19 only
- The poor performance of the company must have become obvious within the last three years
- The company’s performance should be evaluated based on several factors and COVID-19 can be one of them
The main objective of this topic is to identify and analyse an organization that has shown abnormally mediocre performance in both the business and financial sectors while also discussing the main hurdles or problems that the company had to face for three years in a detailed manner. Justifying the choice of the company is important as to why you think the performance of the company was exceptionally poor. In recent years, many companies failed to produce profitable results due to the coronavirus. It is the most obvious reason hence alongside COVID, finding other reasons for the company’s questionable performance is also the main objective. Mentioning only the Covid-19 will not be enough to secure a passing grade.
To pass the RAP, the requirements set forth by OBU for topic 4 must be fully met. The main requirements that should be kept in mind are as follows
- Identification of a company with a record of poor performance over three years
- Identification of the business and financial aspects of the company
- Evaluating how the business performance was impacted over three years
- Evaluating how financial performance was impacted over three years
- Critically analysing the factors that led to the declining performance
- Creating a link between the factors and the performance of the company
- The poor performance should not be entirely based on COVID-19
- Reasons other than COVID-19 must be researched
- Justification of the reasons for why the company’s performance was considered poor
Key success factors
Several factors contribute to the successful completion of the thesis on this topic. After fully understanding the requirements, students should focus on the key points that can lead to success
- Selecting a suitable company that has performed poorly over three years
- Justifying the choice of organization and justifying why you consider the performance exceptionally poor
- Providing academic justification for the selection of the company performing poorly
- Identifying the negative changes in the business performance of the selected company
- Identifying the negative changes in the financial performance of the selected company
- Detailed knowledge of the performance of other companies operating in the same industry
- In-depth knowledge of the hardships and problems faced by the selected company in the past three years
- In-depth knowledge of the reasons why the company had to face these hardships
- A critical assessment of the reasons for these hardships
- Studying the problems of the relevant companies in the same industry and if they were also impacted by them
- Demonstrating a clear understanding of the industry sector and its competitive pressures
- 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 satisfactory 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 various aspects of performance and its reasons
- A comparison to another organization or the industry sector average to better evaluate the performance
Accounting and Business models for topic 4
For the strategic analysis of the external environment, the following models can be used:
- PESTEL: A PESTEL analysis is a tool used to identify the macro (external) forces affecting an organization. PESTEL is an acronym 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
- Porter’s five forces model: This model identifies five major factors that are responsible for any weaknesses that the company is facing. It tells us about the five competitive forces that affect a range of business sectors.
For the strategic analysis of the organization’s position, the following models can be used:
- SWOT: SWOT model can be used to study the before and after 3 years 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.
- 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.
- Business Canvas: This model is a strategic management model that helps to design and create new models and helps in the maintenance of already existing models. This model can be studied to highlight all the key strategic factors involved in the performance of the company. It is a complete review of the company’s workings, profits, revenue streams, customer experience, and much more. This model can give you a complete overview of the activities of the organization.
- Financial Analysis (Ratio Analysis): A complete financial analysis of the organization with the help of ratio analysis is important. Ratio analysis is a quantitative measure of a company’s position regarding its profitability, liquidity, gearing, and efficiency. It helps the investors to make informed decisions regarding their investments. Many financial ratios can be used such as as GP margin, NP margin, current ratio, quick ratio, gearing ratio, interest cover ratio, EPS, DPS, P/E ratio, etc.
- KPIs: Key performance indicators can be used to detect the performance of the company through different measures. These are the critical indicators of a company’s progress toward its objectives. Many relevant KPIs such as revenue, profit, customer satisfaction, and employee satisfaction can be used to judge the performance of the company over the three years.
So which model can be used for the best evaluation of the topic? Well, it depends on the company you chose and the business that the company is involved in. use only the most relevant to topic 4. Using all these models at once will not be extremely useful. A mentor can better guide the selection of a model.
Major benefits of choosing topic 4
Topic 4 allows the students to fully understand and research the overall performance of the company, which is greatly beneficial for the revision of financial and business concepts. There are several other benefits that must be considered.
- Students will get to know about the companies performing poorly
- Students will learn about the relevant companies and the industry of the selected company
- Insight will be gained regarding all the hardships and problems a business must face
- A detailed study regarding the company’s operational and financial performance 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
- Studying the reasons for failure and hardships can increase a student’s business acumen
- This research can serve as a foundation for the students while serving their clients in financial matters by studying their financial statements and providing suggestions for improvement
Possible limitations faced by the students while researching topic 4
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.
The limitations that can be found regardless of your choice of the topic are as follows:
- Research method: Students need to have a clear understanding of the research methods. The research methods are not relevant or reliable as students are not trained in different methodologies. Simply replicating the knowledge available online or from various sources is not wise. There is a lack of basic knowledge regarding the correct methods of research.
- Interaction between the subject company and student: usually there isn’t any proper interaction between the company and the researcher. This means that an important amount of data going into the RAP is untapped. The key issues of the company can only be highlighted with the help of internal company management.
- Overlapping information: overlapping information is often obtained because of excessive research through various sources. Each source has its own story to tell. Students often get confused regarding the facts and statements
- Confidentiality matters: Students may not be able to get authorization to talk to the higher management and some information may not be provided due to confidentiality issues.
- 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 diverse ways of collecting data present 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
Limitations specific to topic 4 can also be found such as
- No access to internal management: The reasons for the poor performance can be better known if you have access to internal management. Many secondary sources can portray varied reasons for the bad performance but only an insider can tell you the real story.
- Lack of data understanding: Too much information on the internet can confuse the students regarding the difficulties of the company. The actual reasons for the company’s difficulty might be hidden.
- Figures for ratio analysis: The exact numbers to be used for the calculation of ratio analysis might be difficult for students to find.
Suitable organization for topic 4
The most suitable organization is the one which has shown abnormally poor performance in the last three years. Selecting a company that 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 several topics.
The following factors should be kept in mind when choosing a company for RAP:
- The general interest of the students in the company
- The amount of information available for the company
- Access to reliable secondary sources of information
- Ability to generate primary data through interviews or surveys
- Familiarity with the industry sector associated with the company
Innovation is especially important for companies to grow and adapt to the challenges of change. Any company that has failed to innovate in the rapidly changing environment can be considered for this research. Many companies filed for bankruptcy due to heavy losses over the last three years. More information about these companies can be found here:
Suggested approach for topic 4
Before starting your research, you should understand the assignment. The guidelines mentioned in the information pack should be read. The word count and length should be looked upon. What kind of sources are required by the topic, primary or secondary? The style of citation ‘Harvard referencing’ should be understood by the students. All the other requirements and directions made by the OBU must be complied with. The major requirement is that the students find a suitable company that has shown a record poor performance over three years. After choosing this topic, a proper mind map must be made from the start so the student conducts all the required tasks in a proper and timely manner. The main objective is to analyse the performance of the company very critically. The research approach and questions should be consistent with each other. A research methodology and all reliable websites and authentic sources should be noted down. The style of referencing must be kept in mind while researching this topic to pass the OBU RAP. A comparison organisation might be helpful for topic 4.
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 title of topic 4. Part 1 mostly contains the introduction and the objectives of the RAP. The objectives should be consistent with the research of the project. Any organisation you choose should be mentioned clearly and the reasons for its selection. Your personal aims and goals are not required to be a part of this section. The reasons for selecting the topic must be written down. Your reasons should be clear like this company was selected due to its consistent poor performance and this statement should be backed up by figures and facts.
Part 2- (Information gathering/accounting and business techniques) is a very crucial section as all your understanding of the business and accountancy models is analyzed here. A quality explanation of the used models or any other frameworks and analysis of all their 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 4. Topic 4 relates to financial and business performance so publicly available information can be used such as the annual reports, articles by famous newspapers, journals, etc. The annual reports of the company and all the articles that show mediocre performance and the reasons can be used. Students are advised to select only those resources that they can understand easily. Briefly describe all the sources used and why they were considered reliable sources. All the limitations specific to topic 4, such as access to internal data, 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 all the business and accountancy models and their limitations. Financial analysis is an integral part of topic 4 and must not be ignored. To find out more about the selection of respective models for topic 4, kindly refer to section ‘Accounting and business models above. Word count is to be prioritized which is 1800-2000 words.
In part 3, there is a further evaluation, analysis, and conclusion. All the information must be summed up in a conclusion and your recommendations to the company are also made. The research and objectives give directions to this section of the RAP. For the most effective analysis, you should use a comparator organization from the same industry. You should provide your judgment and expressions related to the models applied and the information gathered. After applying models like PESTEL and 5 forces, your point of view must be truly clear regarding the reasons for the hardships of the company. Present them in clear words and compare them with another organization. All the financial ratios must be compared with the ratios of the comparator and effective judgments should be made. Graphs should be used to represent your financial ratios. Discuss and explain the changes that have become evident in the company over three years. Do not give descriptive statements in this section of the RAP use figures and ratios.
Every student takes his approach regarding the given topic, and this is only an idea of what can be done. Students can take whatever approach they feel is appropriate for them considering that it complies with OBU requirements.
Suggested approach for SLS
The meetings with the mentor must be planned at the start of the RAP and a record of those meetings must be kept in a diary as it will help later 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 tracking 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
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. Primary sources can be questionnaires, surveys, or interviews of the management of the company. There is little chance that companies would want to discuss their declining progress so publicly available information can be used for topic 4.
Secondary information on the other hand refers to already available and published information. Using it to your own advantage by checking the authenticity of these sources can be greatly beneficial for 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. The annual reports of the company can be a good representation of the company’s deficient performance and they can also be used for an extensive analysis.