ASSIGNMENT

MANAGEMENT OF FINANCIAL
RESOURCES AND PERFORMANCE

Table of Contents
Task.1 British Petroleum............................................................................................. 3
Task.2 Marks and Spencer........................................................................................... 6
Task. 3 - Profit revenue analysis.................................................................................... 11
References:............................................................................................................. 14

Task.1 British Petroleum

The analysis is made on British Petroleum where the different stakeholders of the companys
are identified and their interest in the company is identified. The way how they are managed
in effective manner in the company is also explained in this section. The company has a
good engagement with their stakeholders and they gain the very rich perspectives of the
issues on which the engage and listen. (BP, 2012)
Stakeholders:
They listen to their customers, the shareholders, clients, colleagues and they work in
collaboration with the governments, industry and also the non profit sector. This helps them
in addressing the issues which are of greatest importance for them and also to the business
where they serve.
Fig.1.1. Stakeholders of BP

Customers
and
clients
Industry
Associatio
ns

Employee
s

Stakehold
ers

Charity
and NGOs

Governme
nt and
regulators

Sharehold
ers

Suppliers

Source: (Broadbent, 2003)

Customers and clients:
The company can get the direct feedback from the customers and also the service teams so
that this helps them in enhancing their service levels. The complaints and the participation in
the multi stakeholder forums support the business. The company is committed in processing

all the existing and the new complaints from the customers so that they have the best
customer base. The access for the finance, the SME support, cost and the availability of the
credit, the services for the ones who are experiencing the financial difficulties are some of
the other offers which is done by the company. (British Petroleum, 2012)
Employees:
The opinion of employees is considered by taking the employee survey and this makes the
identification of the issues which are related to the diversity and the inclusive culture. The
senior management presentations are done so that they help in the identification of the
training and the development programs. The performance management process will assist
them in encouraging their partnership between the employees and also their managers so that
they regularly review their performance and agree to the developmental needs for the
discussion of their career aspirations. This helped the employees to continue with their
retirement planning with the online retirement education programme. The group employee
survey also revealed that the respondents are proud to be associated with British Petroleum.
(BP, 2012)
Shareholders:
The shareholders are the key stakeholder in BP and to make their relationship smoother they
conducted one to one group meetings with the institutions and also the analysis is made. The
results and the strategy presentations with the analysts and investor community are assessed
to that they give an idea about the returns. There is a total growth in the income and this has
increased from 3% and they benefitted the gains from their own credit and also the debt buy
backs. With the exception what they make in the BP capital there is an improvement in the
competitive position so that their major business will deliver the better income growth and
they remain more focused on the improvement of the quality of their assets so that they
ensure that they do not grow at the cost of future impairment. The shareholders do have the
very clear sense of purpose of the business since they help the individuals, the economies to
grow.

They demonstrate by the process of delivering the gross lending for the UK

households and also the business. (British Petroleum, 2012)

Suppliers:
The BP make sure that they make the prompt payment for their suppliers and they had signed
up a prompt payment code which helps them in tackling the late payments. The payment

which is made in the time has increased. The sustainable business practices will guide on the
implementation and the diversity and the inclusion is also done so that they help in attending
the conferences and the workshops which is related to the supplier diversity in the year 2011.
(BP, 2012)
Government and the regulators:
The company engage openly and in the more transparent manner so that they regard the BP
tax activity which will ensure the compliance which they have with the new tax laws which is
introduced. They work with the UK and also the other global regulators in the world with
regards to the issues of the consumers. They are the first company to make sure that their
customers are happy by solving their complaints. They also work with the SMEs for the
regulators and UK companies so that they support the Project. They help in the provision of
the extensive support for the international regulators for the environmental reforms.
(Blundell-Wignall, 2012)
Charities and the Non governmental organisations:
The changes which happen in their climate for the sustainability of the leadership will help in
the development cross- industry approaches and the risk which is posed by the climate
change. The sector lending and project finance will give the risk guidance which takes into
the account concerns based on the nuclear incidents. The continuation in the development of
the products and the services where they meet the vulnerable needs of the people is also done
by the company. (Broadbent, 2003) The development of the range of the solutions will be the
part of the companying where there is a change which increases the access to the financial
services. (Droms, 2010)
Industry associations:
They have the compliance with the rules of climate change, the environment and the social
risk management. They engage in the actively so that they have the wider debate with the
compliance and the prevention of the environmental change with the membership that they
have in the organisations. The company also continues to play the great role in the
development of the environmental standards and with the principle updates. They involve in
the review of UNEP which is an online risk management tool so that they participate in the
UK equality and the Human rights so that the business working group will give more input in
the key papers and the projects. The supply chain management is also maintained so that

they attend the quarterly meetings and the corporate social responsibility forum. (Olson,
2004)

Task.2 Marks and Spencer

Audit of the current position of the business:
The audit analysis and the performance analysis is done for the Marks & Spencer. For the
analysis of this the ratios of the company for the past five years is analysed so that they give
the better details of the company. The Marks& Spencer is one of the UKs leading retailers of
the clothes, the home products, food and the financial services. They have their record of the
success and the profitability right from their establishment and they have their reputation for
the innovative and the quality products and they are offered at the reasonable price for the
customers. The company but had their decline in the mid 1990s and from there the volatility
was more. This report will analyse the current position of the business. (Marks and Spencer,
2012)
Ratios/ Year
Profitability ratios
Operating margin
Profit margin
ROE
ROCE
Financial Health
Dividend Cover
Interest Cover
Quick ratio
Current ratio
Growth
DPS growth
EPS Growth

2009

2010

2011

2012

2013

8.64
6.97
18.23
15.21

9.19
7.78
20.72
17.24

9.53
8.13
20.92
19.01

8.79
7.50
19.40
18.72

6.98
5.79
14.38
14.43

1.32
4.81
0.37
0.60

2.38
6.45
0.48
0.80

2.43
6.64
0.43
0.74

2.17
6.49
0.39
0.73

1.74
5.63
0.22
0.57

10.84
-31.27

-34.41
17.97

6.39
8.61

8.28
-3.48

0.00
-19.50

The M&S remains the leader in the UK in the clothing sector but they experienced a decline
in their market in the year 2012 and this made them to set a clear plan so that they can plan
their future performance and reassert their quality and the style credentials. The market share
in their food market section remained at the same level and the customers continued in
trusting the company and they have sourced the quality food.

The retail staffing cost

increased with their investment in the delivering customer service and investment is made in
the delivering of the customers service and this increases their space with the impact of the
annual pay review which is made. (M&S, 2012)

The review progress which is made over the year will have the business ongoing objectives
and objectives will increase from 100 to 180 where they have been increased. The financial
statements are made and they make accounting policies in line with the ones which is used
with the group. The undertakings in the group will power and they govern the financial and
the operating policies which will accompany the shareholder. The revenue with the sales of
the goods for the customers outside the group with the deduction in the actual and the
expected returns states the net value added tax and the revenue is recognised so that the goods
are delivered and there is significant risk and reward for the ownership which is transferred
for the buyer. The final dividends are recorded and they are approved by the shareholders.
The inventories are valued with the average cost basis and they are carried with the lower
cost and the net realisable value. The foreign currencies and the taxation comprises of the
current and the deferred tax. (Marks and Spencer, 2012)
The financial risk which is paid by the group and the funding strategy will ensure the mix
and funding of the sources where they offer the flexibility. The funding strategy will ensure
the mix of funding sources and they offer the flexibility and the cost effectiveness based on
the requirements. They will encourage the shareholders so that they have the dividend which
is paid directly to the bank account so that they ensure the payment.

The profitability

analysis shows that the operating margin is decreasing over the years. The profit margin will
be very much volatile and this will increase and they are decreasing. (M&S, 2012)
The ROE has decreased over the past five years and the ROCE will also decrease over the
years which show that the profitability is not performing well for the companies. The
financial health of the company is analysed by the dividend cover where this has been
increased over the five years. The interest coverage ratio is fluctuating over the years and in
the year 2013 this has been decreased. The working capital of the company will measure the
short term and routine of the company. The working capital is very less in the company and
this makes the analysis that the company performance is less. The company has the trouble
with their short term funds. (Marks and Spencer, 2012)
On the analysis of the growth of the company it is well understood that the company has
trouble even in the dividends that they are providing for their company. The growth of the
company with respect to their EPS growth is also very less and for the past two years they do
have the negative growth which is not good for the company. On an overall the analysis does
not show a satisfied result for M&S. (Olson, 2004)

Business planning and current strategy in the organisation with special reference to
performance analysis and resource utilisation for competitive advantage:
The Marks and the Spencer will be operating in eh very competitive environment so that
there are many factors which will be affecting the company which is outside the environment.
They operate in many of the segments like the food and the clothing as well as in the home
and also in the beauty products so that the company needs to deal with a lot of competition.
The M&S will be very much sensitive for the technological, economic and also the social
factors. They need to keep up with their growing and also the changing trends of clothing so
that they are competing in the market. There are many key drivers which will affect the
M&S so that there are changing trends and the online purchasing where they have the full
control over it. (M&S, 2012)
The core values of the M&S is the quality, their affordability and service which has their
attack from their competitors. The other retailers like the Top shop, Debenhams, Next,
Warehouse and also Gap so that the customers are provided with the better and the more
fashionable designs with the good value. The food chains like the Tesco, Waitrose and
Sainsbury has started moving into the frozen foods and readymade food products. This
makes the M&S to have the challenge from the business activities which they do and where
they compete. The M&S has not changed to be much competitive and this resulted them in
losing their profits and their market share.

Fig.1.2. Market position of M&S

Source: (Marks and Spencer, 2012)

The M&S is also trying to gain more markets share for them so that they can regain their
market share and their dominance will be required for the investing. In the current position
the M&S will take on the larger market share so that they will suffer all their profits. This
will imply the weakness and rather in the cut throat competition of the retail world. They
give more access for the quality food and clothes for their vision. They are more committed
to the understanding and also meet the needs of the customers in the consistent manner which
will make them remain more competitive in the retail environment. The M&S has their 90%
of the revenues from the UK and they have their increased food and the fuel prices which will
have an impact in the disposable incomes of the consumers so that they lead to the more
weaker demand for the non-food products where the M&S is responding to their trend of
cutting prices and this will have a very great impact in their sales. (M&S, 2012)

Environmental analysis:
Strength:

The main strength of the M&S is that they have the excellent and the high quality products,
they have the good relationship with their employees and they are treated well and they are
paid well. They have their stores all over the high streets in the London. The profitable
company and the large market share will be in the retail sector. They have their long term
relationship with their suppliers and they have been into the business for more than 100 years
so that they have the better history of trade. (M&S, 2012)
Weakness:
They are heavily reliant on the British suppliers so that the competitive use of the foreign
suppliers will have for their low cost products. They have their old and also the classical
fashion image where the advertising which is poor and they do not offer so that they will
discount the sales during the festivals like the Easter and the Christmas where the customers
will buy many things. There is no customer focus and the technology is very poor so that
they do not provide the reading of their inventory and there is no knowledge of their market
for the younger generation. (Marks and Spencer, 2012)
Opportunities:
The M&S will enter into the e- business effectively like their competitors and their
expansion in growth of their product areas are food, Home and Beauty where the customers
trust for their quality and innovation. The home business and areas like the home furnishings
are the fast growing market. (M&S, 2012)
Threat:
The M&S operate in many segments like the food clothing and also other competitors like
the Tesco, Zara, Gap and Top shop. The customers are always looking for the new fashion
clothes. The internet will also allow the customers to shop from home online. (Marks and
Spencer, 2012)

Task. 3 - Profit revenue analysis

USA

Running expenses

210K pa

Expected revenue

USD 700K pa (523.629)

Additional approval fee

22k

Running expenses

190K pa

Expected revenue

450K pa

Additional approval fee

25k

Royalty fee

25k

Running expenses

200K pa

Expected revenue

3800 swiss franc (3091.54 K pa)

License fee

30K

France

Switzerland:

Inspection every three years =

70k ( per year it is 23.33)

Royalty fee

25k

Cost of the expenses in all three countries:

Cost of the new machinery

340k

Life time of machinery

5 years

Residual value

220k

700

700

Profit revenue analysis in USA:

Expected revenue in

700

700

700

700

Revenue
Expenses

USD
Expected revenue in

388.888

368.421

350

333.333

358.974

368.421

Euro
Running expenses
Additional
approval

9
210
22

1
210
22

210
22

3
210
22

4
210
22

1
210
22

44
276
57.3333

44
276
82.9743

220
44
496
-127.579

fee
cost of machinery
Residual value
Total expenses
Profit

340
44
616
-227.111

44
276
92.4210

44
276
74

Profit revenue analysis in France:

Revenue
Expenses

Expected revenue in Euro

Running expenses
Additional approval fee
Royalty fee
cost of machinery
Residual value
Total expenses

Profit

450
190
25
25
340
44
624
-174

450
190
25
25

450
190
25
25

450
190
25
25

450
190
25
25

44
284
166

44
284
166

44
284
166

44
284
166

450
190
25
25
220
44
504
-54

Profit revenue analysis in Switzerland:

Revenue

Expenses

Expected revenue in Swiss

3800

3800

3800

3800

3800

3800

franc
Expected revenue in Euro

2111.111

2000

1900

1809.52

1948.71

2000

200
30
25
0

200
30
25
70

4
200
30
25
0

8
200
30
25
0

44
299
3501

44
369
3431

44
299
3501

44
299
3501

Running expenses
License fee
Royalty fee
Inspection
cost of machinery
Residual value
Total expenses

Profit

200
30
25
0
340
44
639
3161

The analysis gives an idea that USA and France has the lesser income compared with the
investment which is made in the Switzerland and thus the investment which is made in eth
Switzerland will be more better. This makes the negative returns and these returns will help
them to obtain the very high so that they give the significance with the investment which they
make in the Switzerland.

200
30
25
70
220
44
589
3211

The cost which happens in their machinery will be same in all the country and this makes to
invest 340K and also in the case of the residual value there will be an end for the five year
which is 240 and they are further divided into 5 so that they are invested and they are later
used in the final year for the purchasing the new machinery so that the amount of 44 is
allocated. The previous year the 220k will be along with the 120 balance and they are used
for the purchasing new machinery.

On the whole the analysis which is made in the

investment in the Switzerland is made good.

References:
Blundell-Wignall, A. (2012). Solving the Financial and Sovereign Debt Crisis in
Europe. OECD Journal - financial market trends , 23 - 34.

BP. (2012, March 23). Our stakeholders. Retrieved December 15, 2013, from British
Petroleum: http://www.bp.com/en/global/corporate/sustainability/bp-andsustainability/our-stakeholders.html

British Petroleum. (2012, June 3). Input from external stakeholders. Retrieved
December 15, 2013, from British Petroleum:
http://www.bp.com/en/global/corporate/sustainability/about-our-reporting/identifyingissues/input-from-external-stakeholders.html

Broadbent, M. (2003). Managing Financial Resources. London: Elsevier

Publications.

Droms, W. G. (2010). Finance and Accounting for Nonfinancial Managers. London:

Basic Books.

M&S. (2012, March 23). Annual Report. Retrieved Decemeber 15, 2013, from Marks
and Spencer: http://corporate.marksandspencer.com/aboutus/our_plan

Marks and Spencer. (2012, December 12). Mark and Spencer corporate plan.
Retrieved December 16, 2013, from Marks and Spencer:
http://corporate.marksandspencer.com/aboutus/our_plan

Olson, K. (2004). Financial Management: Principles and Strategies. London: Wiley

Publication.