1 Comprehensive Exam

TABLE OF CONTENT

BACKGROUND................................................3

I. CURRENT SITUATION.....................................3
 CURRENT PERFORMANCE.....................................3
 STRATEGIC POSTURE......................................3
1. Mission.........................................3
2. Objectives......................................3
3. Strategies......................................3
Strategic Audit - ___________

4. Policies........................................3
II. CORPORATE GOVERNANCE..................................3
 BOARD OF DIRECTORS.....................................3
 TOP MANAGEMENT.........................................4
 SHAREHOLDERS...........................................4
III.EXTERNAL ENVIRONMENT: OPPORTUNITIES AND THREATS (SWOT) 4
 SOCIETAL ENVIRONMENT (P.E.S.T FACTORS)...................4
1. Political - Legal Factors.......................4
2. Economic Factors................................4
3. Socio-cultural Factors..........................4
4. Technological Factors...........................4
 TASK ENVIRONMENT (INDUSTRY)..............................4
Porter’s Approach......................................4
1. Threat of New Entrants.........................5
2. Rivalry among Existing Firms...................5
3. Threat of Substitute Products or Services......5
4. Bargaining Power of Buyers.....................6
5. Bargaining Power of Suppliers..................6
6. Relative Power of Other Stakeholders...........6
EXTERNAL FACTOR ANALYSIS SUMMARY EFAS (AS ATTACHED)............6
IV. INTERNAL ENVIRONMENT: STRENGTH AND WEAKNESSES (SWOT). .6
 CORPORATE STRUCTURE.....................................6
 CORPORATE CULTURE......................................6
 CORPORATE RESOURCES.....................................6
1. Marketing.......................................6
2. Finance.........................................7
3. Research and Development........................8
4. Operations and Logistics........................8
5. Human Resources.................................8
6. Information Systems.............................8
INTERNAL FACTOR ANALYSIS SUMMARY IFAS (AS ATTACHED)............8
V. ANALYSIS OF STRATEGIC FACTORS (SWOT)..................8
 SITUATION ANALYSIS......................................8

Student Name: Fadia Fadel

 2 Comprehensive Exam

 REVIEW OF MISSION AND OBJECTIVES..........................8

VI. STRATEGIC ALTERNATIVE AND RECOMMENDED STRATEGY........8
 STRATEGIC ALTERNATIVE...................................8
 RECOMMENDED STRATEGY....................................9
VII.IMPLEMENTATION........................................9
1. MANAGEMENT COMMITMENT..................................9
2. EMPLOYEE EMPOWERMENT...................................9
3. REWARD SYSTEM........................................9
4. INTEGRATING TRAINING...................................9
5. PROCESS IMPROVEMENT....................................9
6. QUALITY AT SOURCE.....................................9
Strategic Audit - ___________

VIII.EVALUATION AND CONTROL...............................9

IX. ATTACHMENTS...........................................9
 EFAS................................................10
 IFAS................................................10
 SFAS................................................10
 TOWS MATRIX..........................................10
 FINANCIAL RATIO ANALYSIS...............................10

Student Name: Fadia Fadel

 3 Comprehensive Exam

Background

A. Current Situation

ㄱ Current Performance
ㄱ Use the case given information to comment on the firm’s current
performance.

ㄴ Strategic Posture
Strategic Audit - ___________

1. Mission
ㄴ to be stated and comment whether it is generic or limited and
is it implied from performance (this comment can be done
later in “Review of Mission and Objectives”
2. Objectives
ㄷ comment whether it is realistic or not

3. Strategies
ㄹ Concentric diversification or Conglumary (Refer to Ch.6).

4. Policies
ㅁ State whether the firm has clear and written policies and
fitting to its mission and objectives.

B. Corporate Governance

ㄷ Board of Directors
ㅂ Who are they, are they internal or external, do they own
shares, do they have different voting rights and for how long
they are serving on the board?
ㅅ Do they contribute knowledge, skills and connections to the
firm? And if the firm has international operations do they
have international experience?
ㅇ What is there level of involvement in strategic management?
(refer to board continuum

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ㄹ Top Management
ㅈ Who are the top managers and what are their characteristics
in terms of knowledge, skills, background and style? And if
the firm has international operations do they have
international experience?
ㅊ Are they responsible for the performance of the firm and how
well they interact with the lower level and the BOD?
ㅋ What is there level of involvement in the strategic
management process?
Strategic Audit - ___________

ㅁ Shareholders

C. External Environment: Opportunities and Threats (SWOT)

ㅂ Societal Environment (P.E.S.T Factors)

P 53
1. Political - Legal Factors

2. Economic Factors

3. Socio-cultural Factors

4. Technological Factors

ㅅ Task Environment (Industry)

 Is represented in the forces drive industry competition and whether

they are the same globally or vary from country to another.

Porter’s Approach
Michael Porter contends that a corporation is most
concerned with the intensity of competition within its
industry. The level of this intensity is determined by

Student Name: Fadia Fadel

 5 Comprehensive Exam

basic competitive forces. “The collective strength of these

forces,” he contends, “determines the ultimate profit
potential in the industry, where profit potential is
measured in terms of long-run return on invested capital.”
In carefully scanning its industry, the corporation must
assess the importance to its success of each of the 6
forces: threat of new entrants, rivalry among existing
firms, threat of substitute products or services,
bargaining power of buyers, bargaining power of suppliers,
and relative power of other stakeholders.

Potential
Potential
Entrants
Strategic Audit - ___________

Entrants
Relative power of Threat of New
Unions, Governments Entrance

Other
Other Industry
Shareholders Industry Buyers
Shareholders Competitors Buyers
Competitors
Rivalry among
Rivalry among
Suppliers Existing firms Bargaining power
Suppliers Existing firms
of Buyers

Bargaining power
of Suppliers Substitutes
Substitutes

Threat of substitute
product or service

1. Threat of New Entrants

 This is considered as low Threat to Wal-Mart as there is economic

uncertainty for retailers.

2. Rivalry among Existing Firms

3. Threat of Substitute Products or Services

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4. Bargaining Power of Buyers

5. Bargaining Power of Suppliers

6. Relative Power of Other Stakeholders

Strategic Audit - ___________

External Factor Analysis Summary EFAS (As Attached)

D. Internal Environment: Strength and Weaknesses (SWOT)

ㅇ Corporate Structure

 Mechanistic vs. Organic, Centralized vs. Decentralized

 Is it clearly understood to each one in the firm?
 Does it contain objectives, strategies, policies and programs?
 Compare to similar corporations if possible?

ㅈ Corporate Culture

 Are shared beliefs, expectations and values well defined? And do

the firm has diversity of cultures?
 How the corporate culture perceive quality and adaptability to
change in conditions.

ㅊ Corporate Resources

1. Marketing

 What are their objectives is the clearly stated, consistent with

mission, objectives, strategies, and policies with external and
internal environment? Are marketing managers using accepted
techniques? And does marketing provide competitive advantage?

Student Name: Fadia Fadel

 7 Comprehensive Exam

2. Finance

The interpretation of the ratios:

Liquidity Ratio:

The ratio indicates that the company is able to meet all

its current and immediate obligations to the creditors, as
it has the capability to generate cash in a short period
through liquidating the current assets.

However it is worth mentioning that although the current

Strategic Audit - ___________

liabilities exceed current assets, the company is still to

some extent in a good situation compared to the industrial
average.

Profitability Ratios:

Kitchen made Pies is lower than the industrial average

regarding the Net Profit / Sales due to the fact that the
costs are too high and its not being allocated properly,
this is obvious regarding the cost of the materials
purchased where it represent 54.3 % of the total costs.
Regarding the ROA, the company is not utilizing its assets
in an efficient way to generate profit; in fact the
negative percentage clarifies the low basic earning plus.
As for the ROE the negative results means that there is no
return on equity what so ever, and the ratio is
meaningless, on the contrary, the owners will assume the
losses of the company.

Activity Ratios:

May be this is the only good sign regarding Sales / Total

assets where the current level is higher than the industry
average which means that the company is generating
sufficient volume of sales out of its assets, however this
doesn’t mean that the company is gaining.
As for the collection period, this is a real problem where
the average collection period exceeds the market average by
22 days. This indicates that the company will not be able
to generate cash in the right time because of the delay in
collection, consequently it will have a liquidity squeeze.
This will prevent the company from using its productive
assets.
The sales ratio is below the average by 30.6 leading to the
conclusion that the working capital is not used efficiently
enough to generate acceptable volume of sales.

Student Name: Fadia Fadel

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For the inventory turnover ratio the current level is far

below the average due to the fact that the company is
holding an excessive stock of inventory and this excess
stock are unproductive representing an investment with low
or zero rate of return.

Leverage ratio:

The losses has exceeded the paid up capital which made the
calculation of the leverage ratio is meaningless as the
Strategic Audit - ___________

owners have nothing to offer to the company compared to the

creditors. This means that no creditor or financial
institution can take the risk of lending the company an
unsecured loan

3. Research and Development

4. Operations and Logistics

5. Human Resources

6. Information Systems

Internal Factor Analysis Summary IFAS (As Attached)

E. Analysis of Strategic Factors (SWOT)

ㅋ Situation Analysis

ㅌ Review of Mission and Objectives

F. Strategic Alternative and Recommended Strategy

ㅍ Strategic Alternative

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ㅎ Recommended Strategy
 Use TWOS Matrix and /or the SPACE Matrix to draw the strategic alternatives

 Explain what are the most feasible alternative strategies available to the firm and
what are the pros and cons of each?

 Consider cost leadership and differentiation as business strategies

 Consider stability, growth and retrenchment as corporate strategies

 Consider any important functional strategic alternative that might need to be

reinforced as alternative strategy
Strategic Audit - ___________

G. Implementation

1. Management commitment

2. Employee empowerment

3. Reward System

4. Integrating training

5. Process improvement

6. Quality at source

H. Evaluation and Control

I. Attachments

Student Name: Fadia Fadel

 10 Comprehensive Exam

ㄱ EFAS

ㄴ IFAS

ㄷ SFAS

ㄹ TOWS Matrix

ㅁ Financial Ratio Analysis

Strategic Audit - ___________

Student Name: Fadia Fadel