Business and Marketing Strategy- Level 7

Contents
Task 1:.........................................................................................................................................................3
1. Identify the various stakeholders involved and their level of interest in Marks and Spencer.............3
2. Management of the stakeholders group in the effective and efficient manner by the utilization of
the resources available to the business...................................................................................................5
Task 2:.........................................................................................................................................................6
1. An audit of Ford Motor Company that elaborates the organization’s current position in the market 6
2. Identification of the business management strategy in terms of financials currently employed by
the organization by focusing on performance analysis and intangible resource utilization to obtain
competitive advantage............................................................................................................................6
3. Evaluation of the financial position including costing systems of the organization...........................10
Task 3:.......................................................................................................................................................13
Evaluation of the investment proposals by the use of project appraisal methods................................13
References.................................................................................................................................................16

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Task 1:
1. Identify the various stakeholders involved and their level of interest in
Marks and Spencer

The stakeholders are very important for a business as they are the group of people who are
influenced and can influence the activities and outcomes of the business organizations and they
are the ones who have got their interest in the business. They are the group of people and also the
organizations who are effected by the outcome of the business. The stakeholders are mainly
segregated into two main types which are namely the primary stakeholders and the secondary
stakeholders and the analysis of the stakeholders for a business is considered as one of the
important tasks for the efficient management of the business (Bbc.co.uk, 2015).
The primary stakeholders are mainly the managerial and the non- managerial employees of the
business and also the board of directors, along with the organizational shareholders, is
considered as the primary stakeholders. On the other hand, the secondary stakeholders are
forming the large group of people and the organizations (Buscher & Simon, 2006). The
customers, suppliers, other trade creditors, trade unions, governmental bodies are forming the
group of secondary stakeholders of the business. However, as per the recent business studies the
business competitors are also included in group of secondary stakeholders of a company.
Generally the larger the business the number of stakeholders is higher; therefore, for the business
like marks and Spencer, the number of stakeholders is also huge, owing to the nature and the
structure of the organization. The Marks and Spencer is one of the leading retail businesses of
the world and it has got a number of business branches in different parts of the world. There is
the huge number of people and the organizations which forming the stakeholders group of the
entire business. The respective groups of business shareholders have got their individual interest
on the business.

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Figure 1: Types of stakeholders of a company
Source: Annual Report of Ford Motors, 2013

The owners and directors: The owners and the board of directors are considered as the primary
group and they are interested towards the business for the return and the profit of the business
also the growth of the same (Crilly, 2012).
The managerial and the non- managerial employees: They are concerned about the pay and
the growth of the business which would result in their personal growth.
The shareholders: The organizational shareholders are contributing to the business by the way
of making investment through buying company shares and they expect a better return for their
contribution (Dawson, 2009).
The consumers: The consumers or the ultimate buyers of marks and Spencer, their main interest
towards the business is the products and the services provided by the company and how
beneficialare those product and the services prove for them for the amount paid by the
consumers while buying the same (Greenwood, 2001).
The suppliers and other trade creditors: The suppliers’ interest in in the quantity purchased by the
company from them and the efficiency with which the business is able to meet with payment
obligations and other trade creditors are interested towards the payment made by the business for
the liabilities and the also timely payment of the interests.
The governmental bodies and trade unions: The legislative policies and norms made by the
governmental bodies affect the operations and activities of the business.The trade unions and

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other unions are concerned about the ethical approach and the strategies followed by the
company.
The competitors: The other players of the same industry or the other retail organizations get
affected by the policies and business moves made by marks and Spencer and vice versa (Sobczak
& Havard, 2014).

2. Management of the stakeholders group in the effective and efficient manner

by the utilization of the resources available to the business

Effective management of the different stakeholders group is one of the main concerns for every
business organizations and so as for Marks and Spencer. The business would not be able to
continue with its operations without the contribution and support of each of the stakeholders
groups and so as the stakeholders also have their respective interests in the operations and
growth of the business. The Marks and Spencer group are following an effective business
governance measures in order to meet with responsibilities towards each of the organizational
stakeholders.
This organization considers that the consumers are the among the primary group of stakeholders
of the business and therefore,they try to maintaina high quality in the products and services
offered by the business and the core values of the organization is that trust can be developed by
the way of “doing the right thing at the right time”, which is acting as the driving force for the
entire group in the process of managing the stakeholders in the effective and efficient manner
(Corporate.marksandspencer.com, 2015).
Moreover, the Plan A has proved to be one of the effective policies that have earned ample
recognition for the business by the way of making the different stakeholder satisfied.Plan A has
enabled the organization to improve the efficiency of energy by 23 percent and has help in
reduction of the carbon emission by 13 percent (BITC, 2015). This business has been also able to
diminish the waste by 34 percent and recycling level of 98 percent has been achieved by the
business.
This is further reflecting at the fact that Marks and Spencer is making aproductive utilization of
the resources which is further enabling the business to management the varied stakeholders in the
effective manner. This group is providing training to over 37000 supply chain employees which

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would further result into personal development of the employees and at the same time this is also
improving the operations and service qualities of the business (Hughes-Cromwick, 2011).
Moreover, the consideration of the Plan A has also proved to be beneficial for the business in the
financial terms and thus, enabling the business to earn better return for the shareholders also, as
Plan A has facilitated the business to generate a net beneficial return of £70 million during the
year of 2012.

Task 2:
1. An audit of Ford Motor Company that elaborates the organization’s current
position in the market

American car makers, the Ford Motors is the second largest Automaker in US and world’s fourth
largest vehicle seller based on the records of the automobile sell across the world and Europe in
2010. The company has a very strong position in the US market and experiencing significant
growth in Chinese marker. Team ford introduced a new strategy to enjoy competitive advantage
in 2000. The strategy aimed at increasing the market share, production of smart fuel efficient
cars for the cost conscious market and increase revenue earning in the highly competitive vehicle
sector. Incorporation of unique business strategy led to implementation of centralized decision
making system (Call and Summit, 2015). The team management also engaged to develop
customer focused products. The new strategy helped in improving the overall communication
system by leading to absolute transparency from top to bottom level.

The strategy of maintaining low production cost by eliminating excess expense from the daily
operations helped in overall all revenue saving. Introduction of online manufacturing process
also helped in saving money from huge expenditure if raw materials. The system of developing
car by employing one single process that is online manufacturing system helped in streamlining
the overall system by using one process instead of various segments of engineering as well as
production. This strategy helped in experiencing cost advantage over the competitors in the
market. They also introduced fuel effective cars for new age users (Corporate.ford.com,2015).

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Soon the market position of Ford enhanced. There are several factors which encouraged such
matchless growth in the past few years, firstly, the company managed through its economic
down turn successfully without taking any assistance from the government. This helped in
increasing the trust of the buyers. Secondly, the widely accepted products helped in increasing
market share. Thirdly, the newly adopted strategy of launching smart cars to offer fuel efficient
benefits helped in increasing product sell and boosted market share. The demand of fuel efficient
car is continuously rising. The consumers in the post recession affected market searches for
value for money products. In such as scenario the concept of economic car quickly helped in
becoming consumer’s favorite brand in the vehicle market (Call and Summit, 2015). Besides this
they use innovative technology, such as ford SYNC which enables the driver to stay connected to
a variety of options while driving. Such innovative technology coupled with fuel efficiency
engine, helped Ford evolve as consumer favorite brand. Thus they earned revenue of $134.4
billion in 2012 and enjoyed a profit of $5,665 billion in the same year.

Besides focusing on business developing strategy, they concentrated of supporting ‘green’

vehicles and initiated CSR programs by developing new emission standards and fuel efficient
vehicles. Focusing on environment friendly approaches they have introduced Ford Fiesta and
Ford Focus ECOnetic. The brands are flexible to fuel selection and equipped with hybrid engines
helped in saving fuel and money while driving.

The external environment of the vehicle market is flooded with intense competition from various
angles which demand appropriate market analysis and incorporation of right strategies
(Corporate.ford.com,2015). After conducting the internal audit it may be mentioned that
selection of adequate technique, not only helped Ford to overcome the financial problem suffered
due to bankruptcy, but also reestablish the brand as consumer’s favorite automakers in the world.

2. Identification of the business management strategy in terms of financials

currently employed by the organization by focusing on performance analysis
and intangible resource utilization to obtain competitive advantage

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From the financial outcome of the business during the recent financial years it is apparent that
the business has been quite efficient in managing better returns for the business and its
shareholders. The total revenue earned by the Ford Motors are more compared to that of the
earlier years the revenue earned during the financial year of 2013 is $ 139,369 mil and which
was $ 126,567 milduring the previous financial year. At the same time it is further apparent
from the statement showing financial position of the business that the assets of the entire group
has also increased from $ 189,406 to $ 202,026, as it is evident from the consolidated balance
sheet of the organization provided below. Moreover, the average growth of the business over the
period of last four financial years are being provided below along with the graphical
representation in order to reflect on the efficiency with which Ford group has been able to
perform and how the effective management strategies considered by the business has facilitated
the business to gain competitive advantage. Moreover, the One Ford strategic business plan and
other proficiency of the entire group can be considered as the intangible asset of the business
which has further enabled business to stand out among the severe competition on the market.

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Source: Annual Report of Ford Motors, 2013
The average growth report of the business over the period of last four financial years:
Financial Years 2011 2012 2013 2014
Revenue %        
Year over Year 5.67 -1.48 9.43 -1.93
3-Year Average -2.34 4.3 4.44 1.88
5-Year Average -3.18 -4.89 0.09 4.02
10-Year Average -1.74 -1.95 -1.11 -1.74

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 Revenue %
12
10
8
6
4 2012
Axis Title 2013
2
2014
0
r ge ge ge
-2 Yea ra ra ra
r v e v e v e
-4ove rA rA rA
ar Yea Yea Yea
Ye -6 3 - 5- 0-
1
Axis Title

From the above it apparent that the growth in the revenue has decreased marginally in 2014
otherwise the average reflecting a mixed trend over the period of study
Financial Years 2011 2012 2013 2014
Operating Income %        
Year over Year 70.83 -44.69 -13.54 -31.15
3-Year Average — — -6.52 -30.95
5-Year Average — -4.77 — —
10-Year Average — -4.39 -3.92 -9.95

Operating Income %
80
60
40 2011
20 2012
Axis Title 2013
0 2014
ar ge ge ge
-20 r Ye era era era
e v v v
r ov ar
A
ar
A
ar
A
-40
a e e e
Ye -Y -Y -Y
3 5 10
-60
Axis Title

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In case of analysis the operating income also it is apparent from the above graph that in most of
the time the operating income is reflecting a negative prospect of the business over the period of
study.
Financial Years 2011 2012 2013 2014
Net Income %        
Year over Year 208.08 -71.97 26.3 -55.46
3-Year Average — 27.75 2.93 -45.98
5-Year Average — — — 3.24
10-Year Average — — 30.62 -0.9

Net Income %
250
200
150 2011
100 2012
Axis Title 2013
50 2014
0
ar ge ge ge
-50 r Ye era era era
e v v v
r ov ar
A
ar
A
ar
A
-100
a e e e
Ye 3 -Y 5-
Y -Y
Axis Title 10

The net income average of the business is also pointing a mixed trend such as in case of average
operating income percentage.
Financial Years 2011 2012 2013 2014
EPS %        
Year over Year 197.59 -71.26 23.94 -54.55
3-Year Average — 18.19 1.97 -45.49
5-Year Average — — — -1.44
10-Year Average — — 20.62 -7.42

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 EPS %
250
200
150 2011
100 2012
Axis Title 2013
50 2014
0
ar ag
e
ag
e
ag
e
-50 r Ye er er er
ve A v A v A v
-100ro ar ar ea
r
Ye
a Ye Ye -Y
3- 5- 1 0
Axis Title

The EPs is also showing a decreasing trend which are further resulted in the negative results of
the average percentages of Ford Motors.

3. Evaluation of the financial position including costing systems of the

organization
In order to evaluate on the financial positioning of the Ford, a through ratio analysis has been
conducted in order to reflect on the financial position of the business over the period of last four
financial years. The ratio analysis is considered as one of the effective accounting management
tools that further facilitates in the process of analyzing the financial performance of the business
within the considered time period.
Ratio Analysis of Ford Motors:

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Financial Years 2011 2012 2013 2014
Profitability        
         
Net Margin % 14.83 4.22 4.87 2.21
         
Asset Turnover (Average) 0.79 0.73 0.75 0.7
         
Return on Assets % 11.78 3.07 3.65 1.55
From the above
         
Financial Leverage (Average) 11.87 11.95 7.66 8.41 table it is apparent
          that the net margin
Return on Equity % 281.62 36.58 33.81 12.45
          of the Ford group
Return on Invested Capital % 21.65 5.25 6.08 2.65 has reduced
          considerably over
Interest Coverage 2.96 11.83 9.45 6.36
          the period of last
Cash Flow Ratios         four financial years.
         
Similarly the other
Operating Cash Flow Growth -14.75 -7.55 15.47 38.9
return ratios such as
%
          the return on assets
Free Cash Flow Growth % -25.65 -35.22 8.15 83.1 and return on equity
         
Cap Ex as a % of Sales 3.15 4.09 4.49 5.18 has also fallen by a
          noticeable level and
Free Cash Flow/Sales % 4.03 2.65 2.62 4.89
in the same manner
         
Free Cash Flow/Net Income 0.27 0.63 0.54 2.21 the return generated
          from the utilization
Liquidity or Financial Health        
of the capital has
         
Current Ratio 1.82 1.94 2.04 2.01 also reduced by
          significant level,
Quick Ratio 1.74 1.83 1.94 1.91
          which was 21.65 %
Financial Leverage 11.87 11.95 7.66 8.41 during the year of
         
2011 which has
Debt/Equity 3.94 4.16 2.9 3.23
          fallen to 2.65
Efficiency         percent in the year
         
Days Sales Outstanding 208.93 218.7 210.74 228.17 of 2014. However, it
          is the free cash flow
Days Inventory 19.03 20.92 21.47 22.52 ratios which has
         
Payables Period 50.22 58.42 55.34 57.21 improved to a
         
Cash Conversion Cycle 177.74 181.2 176.87 193.47 13
         
Receivables Turnover 1.75 1.67 1.73 1.6
         
considerable level in the current financial years compared to that of the earlier years (D'Mello &
Farhat, 2008). Other bright prospects of the business is that the capital structure has been further
stabilized as the debt equity ratio has been reduced and the liquidity position of the organization
has been further improved, yet the current ratio of the recent years are more than 1, which is to
some extent reflect on the presence of ideal assets of within the business, means the assets are
not utilized efficiently. The efficiency ratios state that the business has been consistent here and
improved further (Houmes & Chira, 2015).
Therefore, from the overall financial analysis it can be said that Ford has been performing well,
yet, they have not been able to perform that well during the recent financial years, therefore, the
group must implement strategies which would further enable the business to improve the overall
financial performance and generate better returns.

Task 3:
Evaluation of the investment proposals by the use of project appraisal
methods
There are number of project appraisal methods which can be used for the purpose to determine
the feasibility of a project for the business, in the given case it is apparent that ABC Ltd. is
manufacturing concern of UK which is planning to make an investment in either of the three
countries USA, France and Switzerland. Therefore, in this respect the Net present value method
has been considered here in order to determine the financial viability of the three investment
options and then select the most viable project for the business.
The expenses and the income expected from each of the three projects are summarized in the
following table.
    Expenses  
Country Income Runnin Approva Licens Royalty Inspectio Machin Resale
g l e n e value
USA 700Dollar 210 22       340 220(5
s years)
France 450Euros 193 25   25   340 220(5
years)
Switzerlan 3800Swis 200   30   30(3year 340 220(5
d s Franc s) years)

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     UK Interest rate        
      10%          

The following table consists of the Foreign exchange rates which are being used to determine the
currency from the use of the conversion rates during the period of five financial years and also to
determine the variations in the cash flows from each of three project proposals.

Forex Rate
Country/ Year 1 yr 2 yr 3yr 4yr 5yr 6yr
USA 2.1 2.2 2.3 2.1 2.25 2.5
France 1.8 1.9 2 2.1 1.95 1.9
Switzerland 10 12 14 12 13 14

The final table has been used for the purpose to determine the net cash flows and which would be
further used for the determination of the net present values of all the three projects.

Country wise Expense and cash flow

    Year
Country   1st 2nd 3rd 4th 5th 6th
  Income In 333. 318.181 304.347 333 311.111 500
pounds 33 82 83 .3 11
USA Expense in 572 232 232 232 232 232
pounds
  Cash flow - 86.1818 72.3478 101 79.1111 268
238. 18 26 .3 11
7
  Income In 250 236.842 225 214 230.769 456.
pounds 11 .3 23 84
France Expense in 583 243 243 243 243 243
pounds
  Cash flow -333 - -18 - - 213.
6.15789 28. 12.2307 84
5 7 7
  Income In 380 316.666 271.428 316 292.307 491.
pounds 67 57 .7 69 43
Switzerla Expense in 600 230 230 260 230 230

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 nd pounds
  Cash flow -220 86.6666 41.4285 56. 62.3076 261.
67 71 67 92 43

NPV of USA = 178.224 K

NPV of France = -227.838K

NPV of Switzerland = 127.713K

Therefore, from the above determination of the NPV it would desirable for ABC Ltd to select
USA for expanding their operations, the NPV in case USA is not only positive but also highest
and on the basis of the project appraisal criterion is can be suggested that considering the USA
project would be most financially viable.

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References

Bbc.co.uk, (2015). BBC - GCSE Bitesize: What are stakeholders?. [online] Available

at: http://www.bbc.co.uk/schools/gcsebitesize/business/environment/stakeholders1.shtml [Access
ed 25 Mar. 2015].

BITC, (2015). Marks and Spencer - Responsible Business of the Year 2012. [online] Available
at: http://www.bitc.org.uk/our-resources/case-studies/marks-and-spencer-responsible-business-
year-2012 [Accessed 25 Mar. 2015].

Buscher, M., & Simon, F. (2006). State Business “ Stakeholders: Ethical Perspectives on
Balancing Business and Public Interests. Journal Of Business Ethics, 66(1), 1-2.

Call, F. and Summit, F. (2015). Information for Investors: Financial, Sales and Stock News |
Ford.com. [online] Ford Corporate. Available at: http://corporate.ford.com/our-
company/investors [Accessed 25 Mar. 2015].

Corporate.ford.com, (2015). Sustainability Report 2013/14 - Ford Motor Company. [online]

Available at: http://corporate.ford.com/microsites/sustainability-report-2013-14/default.html
[Accessed 25 Mar. 2015].

Corporate.marksandspencer.com, (2015). Governance Framework. [online] Available

at: http://corporate.marksandspencer.com/investors/corporate-governance/governance-
framework [Accessed 25 Mar. 2015].

Crilly, D. (2012). Stakeholders: Threat or Opportunity. Business Strategy Review, 23(4), 59-61.
Dawson, L. (2009). Stockholders Versus Stakeholders. Philosophy Of Management, 7(3), 3-12.

D'Mello, R., & Farhat, J. (2008). A comparative analysis of proxies for an optimal leverage
ratio. Review Of Financial Economics, 17(3), 213-227.

Greenwood, M. (2001). The Importance of Stakeholders According to Business Leaders.

Business & Society Review, 106(1), 29-49.

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Houmes, R., & Chira, I. (2015). The effect of ownership structure on the price earnings ratio —
returns anomaly. International Review Of Financial Analysis, 37, 140-147.

Hughes-Cromwick, E. (2011). Ford Motor Company's Global Electrification Strategy. Bus Econ,
46(3), 167-170.

Sobczak, A., & Havard, C. (2014). Stakeholders Influence on French Unions CSR Strategies.
Journal Of Business Ethics.

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