Unit 2

The Blake Manufacturing Corporation manufactures and sells folding umbrellas. The corporation’s condensed income statement for the year at 31 December 2011 follows:

Sales (200,000 units)

£1,000,000

Cost of goods sold

600,000

Gross margin

400,000

Selling expenses

£150,000

Administrative expenses

100,000

Net profit (before income taxes)

£150,000

Blake’s budget committee has estimated the following changes for 2012:
30% increase in number of units sold
20% increase in material cost per unit
15% increase in direct labor cost per unit
10% increase in variable indirect cost per unit
5% increase in indirect fixed costs
8% increase in selling expenses, arising solely from increased volume
6% increase in administrative expenses, reflecting anticipated higher wage and supply price levels

Any changes in administrative expenses caused solely by increased sales volume are considered immaterial.

Because inventory qualities remain fairly constant, the budget committee considered that for budget purposes any change in inventory valuation can be ignored. The composition of the cost of a unit of finished product during 2011 for materials, direct labor and manufacturing support, respectively, was in the ratio or 3:2:1. In 2011, £40,000 of manufacturing support was for fixed costs. No changes in production methods or credit policies were contemplated for 2012.

In this Shared Activity, your group will assume this consultancy role. You will review current and historical financial data. You will have the opportunity to discuss the organisation’s behaviour and reactions to your analyses of this data. Your group will make a recommendation based on a what-if analysis.

To prepare for this Shared Activity:

Review this unit’s readings and the above scenario.

Blake has established a budgeted target profit of £200,000. There is a debate brewing within the management ranks of Blake regarding which strategies will put the company in best position to reach that objective. Blake CEO would like to adjust prices. The sales manager would like to focus on increasing the number of units sold while maintaining current prices. Your job is to provide an analysis aimed at helping to reach a decision.

To begin this analysis:

Compute the unit sales price at which Blake must sell its product in the current year in order to earn a budgeted target profit of £200,000.
Calculate a value in response to the following: Unhappy about the prospect of a price increase, Blake’s sales manager would like data regarding the number of units that must be sold at the former price to earn the £200,000 profit.
Calculate a value in response to the following: Believing that an estimated increase in sales is overly optimistic, a company director is requesting data predicting annual profit if the selling price calculated above is adopted but the change in sales volume only amounts to a 10% increase.
To complete this Shared Activity:

Post your opinion regarding the question of whether the company should pursue price adjustments versus a focus on increased sales. Given the data, would you be in favour of a price increase? What other factors would you like to consider in this analysis that have not been addressed yet, and how might they change your opinion?
Respond to at least two colleagues’ postings who have taken a different side of this debate. Discuss your reasons for recommending that company management should take a particular approach. Within your group, attempt to come to a consensus regarding what you, as a consulting group, would recommend to the company.
Individula Assignment:

The Final Project for this module is a consultancy report to Anthony’s Orchard, an expanding apple orchard and distributor. The company has been entertaining the idea of expanding its product line to include apple juice. In order to do this, a major investment in an apple press is needed. The aim of your consultancy report is to analyse all relevant data and make a recommendation to the management of the company in regard to this idea. Each of the remaining Individual Assignments Submission in this module will focus on one component of this consultancy report; in Unit 6 you will compile these, complete your analysis and submit the Final Project.

Measuring and regularly monitoring the financial health of a company, using budgeting and control methods, is a vital concern for managers. By acquiring and analysing timely and accurate financial data, decision-makers will have the tools to facilitate operational and strategic decisions. These decisions may concern reactions to business or environmental conditions, resource acquisition, expansion and more.

This Individual Assignment will provide the opportunity to analyse financial data for Anthony’s Orchard. As you heard from company CEO Bob Frost in this unit’s media piece, Anthony’s Orchard would like to make aggressive plans for its future, including the expanded product offering described above. At the same time, unforeseen circumstances can impact the current health of the company as well as its future plans. What-if analyses are valuable aids in assessing a variety of planned and unplanned events. You will utilise the analysis you conduct here as part of the Final Project.

To prepare for this Individual Assignment:

Review the readings and media for this unit, including the Anthony’s Orchard case study media.
Familiarise yourself with the Anthony’s Orchard company and its current situation; this can be done by exploring each of the tabs across the top of the screen in the Anthony’s Orchard case study media. Hint: You should focus on the financial information.
To complete this Individual Assignment:

Review the Financial Statements: Analyse the current financial state of Anthony’s Orchard and evaluate the impact of a major customer cancelling their expected order. This analysis should include the following:
Your view of the current financial health of the company
Your assessment of the materials and labor costs
Your assessment of the income statement
Your assessment of the cash flow statement
Your assessment of each of the business units in Anthony’s Orchard
C-V-P analysis of the current year’s financials
Conduct a What-If Analysis: This what-if analysis concerns an unforeseen circumstance that could impact the company’s current health as well as its future plans. A major customer is considering cancelling their order for prepared apple products. This customer accounts for 25% of the prepared apple product revenue. Evaluate the impact of this on the budgeted statements contained in the case study.
Notes:

You should fully state and justify any assumptions that you choose to make in relation to the financial data you use. For example, if you make assumptions about the state of the economy or the industry over the period you cover in your analysis, be sure to state these and identify why you believe they are worth consideration here.

Be sure to include references to any sources you use as well, including external sources of economic data or industry statistics.

This Individual Assignment forms the basis for Section 1 of your Final Project. You will receive feedback on this work from your Faculty Member, and will be expected to incorporate any suggestions into the Final Project.

Your submission (excluding appendices) should be 1,000 words (+/- 10%) in length.

Submit your Individual Assignment to your Faculty Member for feedback. Be sure to submit by the end of this unit in order to receive timely Faculty Member feedback. Contact your Faculty Member for permission to submit an assignment early, to submit an assignment after the end of the unit or to resubmit an assignment on which you have already received feedback.

To complete your Individual Assignment, do the following:

Please answer the Individual Assignment in a single Word document.

UNIT 3

Consider the following:

The company, according to Anthony’s Orchard Strategic Plan, is hoping to purchase an apple press in order to start a new line of prepared apple products—apple juice.
The company estimates this new product offering will generate an additional $95,000 net income per year and estimated cash flows of $90,000 per year. The cost of the apple press will be $950,000 and this expenditure, as shown in the budgeted cash flow statement, is expected to take place in the fourth quarter of 2012.
The apple press is expected to have a seven-year life and no salvage value.
The company requires a 10% return on investment for new capital investments and the company uses a cost of capital of 8%.
The company’s revenue goal for 2015 is $25 million.
Assume a minimum 12% gross margin on revenue.
To complete this Individual Assignment, answer the following:

Do you think the company’s revenue goal of $25 million by 2015 is realistic?
Explain how purchase of the apple press might affect the company’s revenue goals. Based on this information, explain whether Anthony’s Orchard should invest in the apple press. Support your response with relevant information provided in the case study, the previous year’s financials for 2010, the current year’s financials for 2011 and the budgeted year’s financials for 2012.
Draft budgeted financial statements from 2012 to 2015 under both options that provide a realistic assessment of expected revenues and costs, and explain how you have arrived at these budgeted figures.
Notes:

You should fully state and justify any assumptions that you make in relation to the financial data you use. Be sure to include all references as well.

This Individual Assignment forms the basis of Section 2 of your Final Project. You will receive feedback on this work from your Faculty Member, and will be expected to incorporate any suggestions into the Final Project.

Your submission (excluding appendices) should be 1,000 words (+/- 10%) in length.

Submit your Individual Assignment to your Faculty Member for feedback. Be sure to submit by the end of this unit in order to receive timely Faculty Member feedback. Contact your Faculty Member for permission to submit an assignment early, to submit an assignment after the end of the unit or to resubmit an assignment on which you have already received feedback.

To complete your Individual Assignment, do the following:

Please answer the Individual Assignment in a single Word document.
Individula Assignment:

Consider the following:

The company, according to Anthony’s Orchard Strategic Plan, is hoping to purchase an apple press in order to start a new line of prepared apple products—apple juice.
The company estimates this new product offering will generate an additional $95,000 net income per year and estimated cash flows of $90,000 per year. The cost of the apple press will be $950,000 and this expenditure, as shown in the budgeted cash flow statement, is expected to take place in the fourth quarter of 2012.
The apple press is expected to have a seven-year life and no salvage value.
The company requires a 10% return on investment for new capital investments and the company uses a cost of capital of 8%.
The company’s revenue goal for 2015 is $25 million.
Assume a minimum 12% gross margin on revenue.
To complete this Individual Assignment, answer the following:

Do you think the company’s revenue goal of $25 million by 2015 is realistic?
Explain how purchase of the apple press might affect the company’s revenue goals. Based on this information, explain whether Anthony’s Orchard should invest in the apple press. Support your response with relevant information provided in the case study, the previous year’s financials for 2010, the current year’s financials for 2011 and the budgeted year’s financials for 2012.
Draft budgeted financial statements from 2012 to 2015 under both options that provide a realistic assessment of expected revenues and costs, and explain how you have arrived at these budgeted figures.
Notes:

You should fully state and justify any assumptions that you make in relation to the financial data you use. Be sure to include all references as well.

This Individual Assignment forms the basis of Section 2 of your Final Project. You will receive feedback on this work from your Faculty Member, and will be expected to incorporate any suggestions into the Final Project.

Your submission (excluding appendices) should be 1,000 words (+/- 10%) in length.

Submit your Individual Assignment to your Faculty Member for feedback. Be sure to submit by the end of this unit in order to receive timely Faculty Member feedback. Contact your Faculty Member for permission to submit an assignment early, to submit an assignment after the end of the unit or to resubmit an assignment on which you have already received feedback.

To complete your Individual Assignment, do the following:

Please answer the Individual Assignment in a single Word document.
UNIT 4:

In this unit, you have been introduced to the Balanced Scorecard (BSC), a tool that can provide a unique combination of quantitative and qualitative metrics for performance measurement and evaluation. The scorecard incorporates measures derived from an organisation’s strategy.

Not all organisations make use of tools such as the BSC; those that do often enjoy benefits in planning, budgeting, reporting and more. As with any tool, the BSC is only helpful when developed and used properly. You reviewed an example of a BSC in this unit, and should review several others to identify the relevant components that make a BSC effective.

To prepare for this Shared Activity:

Identify an available Balanced Scorecard (from your organisation or another). If you are having trouble securing one, a number of examples are available online.

To complete this Shared Activity:

Post a summary of the following four measurement areas within the BSC of this organisation:
Objectives
Measures
Targets
Initiatives
Note: Include a link to this BSC if available.

Explain how useful you think the BSC is as a form of performance measurement and management for this particular organisation.

Discuss with your group your recommendations and best practises for utilising BSCs in general. Note the various formats that may be used across examples, and discuss any advantages you may see to one style of presentation over another.
Individual Assignment:

You will now develop a BSC for Anthony’s Orchard. The company has a number of strategic goals; measuring performance towards those goals will be critical to its sustained success.

To prepare for this Individual Assignment:

Visit the Anthony’s Orchard case study in the unit resources. Review again the current and historical financials. Consider that one of the company’s key goals in its strategic plan is to exceed revenue of $25 million dollars by the year 2015.

To complete this Individual Assignment:

Explain the potential value of a BSC to Anthony’s Orchard. Describe specific ways that the introduction of a BSC can contribute to this organisation.
Develop a BSC that is aligned to the key goal in the strategic plan, i.e. exceeding revenue of $25 million dollars by 2015. Develop, quantify and justify suitable key performance measurement criteria for Anthony’s Orchard in each of these four key areas:
Financial
Customer
Internal Business Processes
Learning and Growth
Notes:

You should fully state and justify any assumptions that you make in relation to the financial measurements you use. You should also make suitable use of appendices to include relevant financial performance measurement information you include. Be sure to include all references as well.

This Individual Assignment forms the basis of Section 3 of your Final Project. You will receive feedback on this work from your Faculty Member, and will be expected to incorporate any suggestions into the Final Project.
Your submission (excluding appendices) should be 1,000 words (+/- 10%) in length.

Submit your Individual Assignment to your Faculty Member for feedback. Be sure to submit by the end of this unit in order to receive timely Faculty Member feedback. Contact your Faculty Member for permission to submit an assignment early, to submit an assignment after the end of the unit or to resubmit an assignment on which you have already received feedback.

To complete your Individual Assignment, do the following:

Please answer the Individual Assignment in a single Word document.

Unit 5:

ssessing Benchmarking Efforts

While quality measurement and management tools can be highly effective drivers of strategy, they must be thoughtfully developed in order to be effective. The theme that recurs throughout this module applies here as well: timely and accurate data is vital to developing effective decisions and strategies. Accurate data is also vital to developing responses and corrective action when achievement of objectives may be in jeopardy. Quality management tools such as benchmarking are valuable in taking these corrective actions.

To prepare for this Shared Activity:

Review the benchmarking efforts of your own organisation (or one with which you are familiar). In particular, examine how this organisation measures customer (user) satisfaction and how performance is benchmarked.

To complete this Shared Activity:

Create a post that addresses the following:
Explain this organisation’s benchmarking efforts (or lack thereof). If benchmarking is employed, identify how the currently used benchmarks align with or address international standards.
Explain the degree to which the existing benchmarks align with existing organisational goals. Propose improvements which would better align benchmarks as needed.
If benchmarking does not exist at any level within this organisation, identify some organisational goals that could benefit from benchmarking activities, and strategies you would recommend to employ benchmarking.
View the postings of your group members and comment on their analyses, suggesting any additional ways their organisations could improve the effectiveness of benchmarking activities, or how they could be implemented.
Individual Assignment:

In the media piece for this unit, Anthony’s Orchard Director of Operations Allison Sinclair expressed concern over the lack of successful efforts to measure organisational quality. Recall the following quote from her discussion of this issue:

As a family-owned business with a history of success, it is easy to fall into the trap of believing that we do things properly almost by default—the ‘we’ve always done it this way’ and ‘if it ain’t broke don’t fix it’ arguments. The danger with that line of thinking is what if it is broken? What if the way we’ve always done things is good but ignores some best practises that could lead to even better performance?
We are now at a point where we are ready to commit to a strategy of continuous improvement and quality management. This is a big step forward for us. But taking the next step is not so easy. Developing and implementing a process is new to us and will require careful analysis. In short, we know where we would like to be but are unsure how best to get there.
In this Individual Assignment, you will suggest an approach to address these concerns. You will propose strategies the company could implement to move from its current status towards its goals for 2015 using the processes of gap analysis and benchmarking.

To prepare for this assignment:

Review the media in the unit resources.

To complete this assignment:

Conduct a gap analysis for Anthony’s Orchard. This should include:
A statement of where the organisation wishes to be by 2015 (use financial data for this, such as targeted revenues and/or profit)
A comparison of the current financial state of the organisation and the desired state by the end of fiscal year 2015
Your suggestion for ways the company can bridge the gap identified in your comparison above
Devise a benchmarking review for Anthony’s Orchard. To do this, discuss recommended strategies and measures that will be useful to measure progress towards the objective in your gap analysis.
Notes:

You should fully state and justify any assumptions that you make in relation to the financial data you use. Be sure to include all references as well.

This Individual Assignment forms the basis of Section 4 of your Final Project. You will receive feedback on this work from your Faculty Member, and will be expected to incorporate any suggestions into the Final Project.

Your submission (excluding appendices) should be 1,000 words (+/- 10%) in length.

Submit your Individual Assignment to your Faculty Member for feedback. Be sure to submit by the end of this unit in order to receive timely Faculty Member feedback. Contact your Faculty Member for permission to submit an assignment early, to submit an assignment after the end of the unit or to resubmit an assignment on which you have already received feedback.

To complete your Individual Assignment, do the following:

Please answer the Individual Assignment in a single Word document.
UNIT 6:

Emerging Performance Management Topics

The field of performance measurement and management is an evolving one, and many theories have been proposed to effectively monitor performance and quality. As the business environment becomes increasingly competitive and global in nature, and as new social and environmental factors come into play, research that addresses critical issues in financial and performance management will become more important as organisations strive to meet objectives and remain competitive. Areas of research such as sustainability, ethics and performance of government and non-profit organisations are but a few examples.

As a student of a graduate programme, you will routinely review published research that aims to contribute new and emerging ideas to your field of study. As a professional, you will be expected to evaluate the value and applicability of new and emerging ideas to your organisation. This activity gives you an opportunity to identify emerging issues and discuss their implications for your current and future leadership roles.

To prepare for this Shared Activity:

Review current research published in recent (within the past 5 years) academic journal articles focusing on emergent performance management topics. These might include topics related to sustainability, ethics or any efforts to spark innovation in the field.

To complete this Shared Activity:

Create a post that presents your view of one or two key emerging performance management topics in current academic or professional debates. Provide references. Present the topics discussed in the articles and explain their importance to the field of study.
View the posts of your group members and look for common themes in the issues presented by the group. In your responses to colleagues, identify what you believe to be the top four or five areas of emerging issues and/or those that have potential for further research and application for business. Compare your perspectives on the most significant issues with those of your colleagues, and discuss their implications for managers and leaders. Consider the implications both for roles you current hold as well as those to which you aspire.
Final Project:

onsultancy Report for Anthony’s Orchard

Overview:

As your Final Project for Financial and Performance Management, you will prepare and submit a consultancy report to the management of Anthony’s Orchard, the company studied throughout this module. The company is considering expanding its product line to include apple juice. This expansion would require a significant investment in a piece of equipment known as an apple press. Your Final Project submission analyses this decision, and provides to company management a recommendation based on your analysis.

The consultancy report should contain five distinct sections, plus an executive summary, that in total equate to 5,000 words (+/- 10%) in length. Necessary Appendices and a References section should also be included. Throughout this module, you will develop various sections of this report through your work on Individual Assignments (IAs). During Unit 6, you will compile these sections and make any refinements based on feedback received from your Faculty Member. You will also develop the additional sections required to complete and submit the Final Project.

Contents:

Your consultancy report should include the following sections:

Executive summary
Section 1: Financial Analysis
Section 2: Analysis of the Investment
Section 3: Developing a Balanced Scorecard
Section 4: Assessing Benchmarking Efforts
Section 5: Summary, Recommendations and Conclusion
Executive Summary (New)

In this section, you introduce the nature and purpose of your study. Summarise your study and its objectives, and briefly state your recommendations.

Section 1: Financial Analysis (Overview of the given case study organisation and its current financial situation) (Unit 2)

In this section, refine the assignment you completed in Unit 2, an analysis of the current financial health of the company. Using data provided, assess materials and labor costs, the income statement, the cash flow statement and each of the business units in Anthony’s Orchard. Additionally, conduct a cost-volume-profit (C-V-P) analysis of the current year’s financials.

Section 2: Analysis of the Investment (Future capital investment opportunities and strategic financial plan) (Unit 3)

In this section, refine the assignment you completed in Unit 3, an analysis of the proposed investment in an apple press. Consider the impact this investment has on the company’s stated revenue objectives, and draft projected financial statements that provide a realistic assessment of expected revenues and costs.

Section 3: Developing a Balanced Scorecard (Balanced Scorecard and performance indicators) (Unit 4)

In this section, refine the assignment you completed in Unit 4, an analysis and projection of various performance measures for Anthony’s Orchard. Develop a Balanced Scorecard (BSC) for the company to measure financial, customer, internal process and learning/growth performance. Add to this your opinion of any effects on organisational performance that may emerge as a result of expanding the product line.

Section 4: Assessing Benchmarking Efforts (Gap analysis and benchmarking, including quality assurance techniques (Unit 5)
In this section, refine the assignment you completed in Unit 5, an analysis of various quality measures for Anthony’s Orchard. Conduct a gap analysis and provide recommendations for the development of benchmarking efforts.

Section 5: Summary, Recommendations and Conclusion (New)

In this section, present your recommendations in more detail than you did in Section 1. Include your final recommendation to the management of Anthony’s Orchard regarding the expansion of the product line to include apple juice and the requisite purchase of the apple press. Present your reasoning for your position, and include any subsidiary recommendations you may wish to make (such as additional performance or quality efforts suggested) in support of your primary recommendation. Reiterate any assumptions you made.

Appendices (New)

Include any supporting documentation you feel is required in this section. This may include organisational data, historical information, additional information on tools or any other information that would be pertinent in support of your proposed solution.

References (Units 2-5)

In the Individual Assignments submitted in Units 2-5, you submit references to any sources of information or readings that you refer to in your analyses. In this section of your report, include these references. Be sure to make appropriate use of the Harvard Referencing Style.

Additional Guidance:

A recurring theme of this module is the value of data to decision-making. Be mindful that your audience for this consultancy report is the management of Anthony’s Orchard. The work you submit here should a useful tool to the organisation while it considers the idea proposed by company CEO Bob Frost in the media piece presented in Unit 2—the production and distribution of Anthony’s Orchard apple juice within the next 3 to 5 years. Your consultancy report should be well thought-out, and developed in a manner that provides insight and guidance.

Assessment and Grading

The Final Project: Consultancy Report (5,000 words) accounts for 90% of your grade for this module, which is broken down as follows:

Overview of the given case study organisation and its current financial situation (10%)
Future capital investment opportunities and strategic financial plan (20%)
Balanced Scorecard and performance indicators (20%)
Gap analysis and benchmarking, including quality assurance techniques (20%)
Summary, Recommendations and Conclusion (10%)
Writing style (10%)