Corp Planning PPT 1 4

Corporate Performance & Planning
Introduction
The Corporate Charter
Learning outcomes
The students after attending the lectures will be able to understand:-,
--What is a corporate /corporation. Definitions
-The history and evolution of Corporate Charter
-The Characteristics /Legal status and attributes of a corporation.
-The Shareholders .Stakeholders ,Owners of Corporation
-The Corporations in Pakistan
-.The Registrar of joint Stock companies
- The Board of Directors in a corporation. Constitution
- Board of Directors in a corporate. The Internal/external directors
-Functions ,Roles, duties of the BOD. Executive/non executive
directors
- Corporate Management ,Performance & Governance
“CORPORATION”
“ Corporations are, in theory, accountable to the
law, since corporations are legal entities”
“ Corporations are fictions, invented by nobility,

to help them grab Authority Without
Responsibility.”
THE “CORPORATE CHARTER:”

HISTORY: EVOLUTION
What refers to Corporate ?
“Corporate is a “ legal entity “ formed into an

association and endowed by law with the rights
and liabilities as of an individual and termed as
Incorporated”
Corporate / ‘ Company “
What is a company?
- A company is deemed to have a indefinite perpetual life
- Just as a individual has a signature .
- The company has a Common sea l any contract entered
by the company must have a common seal affixed to
make it binding on the company.
- The management of the company is entrusted to people
called ‘Directors’ who are answerable to the shareholders
A ‘ COMPANY “
What is a company?
A company is a form of a business ownership
with the following characteristics
-Its capital consists of several units called shares which
are sold to a large number of persons
- The shares are freely transferable, the transfer of shares
from one person to another does not effect the company
-The shareholders being a separate entity have no liability
Towards the company's debts but only to the extent of the
par value of the share held by them
The “Corporate Charter-”

History
The English monarchy in Dec 1600 granted as under :-
-British East India Company a 15-year Charter/ monopoly

on trade to and from the East Indies and Africa.
-The British East India Company “a society of merchants ",
symbolized the dazzlingly rich potential of the corporation,
as well as new methods of business.
-The shareholders in the lucrative East India Company
were subsequently able to earn huge profits through the
trade, an almost 150% profit.
A Corporate / Corporation “
Elements
-A corporation is created (incorporated) by a group
of shareholders who have ownership of the
corporation, represented by their holding of
common stock.
-The Shareholders elect a Board Of Directors
(generally receiving one vote per share)
-The B.O.D oversee management of the corporation.

“ Corporate”
The Objectives
- “A corporation does not necessarily operate to
earn profit,”
- When one purchases stock/shares of a company,
he/she becomes ‘part owner ‘of that corporation.
- The vast majority of corporations however are
incorporated/setup with the goal of providing a
‘ return ‘for its shareholders./stakeholders
The “Corporate/ Characteristics:

Features
- It is a legal entity
- It is separate and distinct from its owners.
- It enjoys most of the rights and responsibilities
that an individual possesses;,
- A corporation has the right to enter into contracts,
- It has a legal Right to borrow loan, money,
- It can sue , be sued, in a competent court of Law
- It can hire employees,
- It can own assets and pay taxes .
.
“A Corporation”
The Share holders/ Rights
-Share holders are entitled to a share in the profits,
through dividends and/ or the appreciation of stock,
-Share holders are not held personally liable for
the company's/corporations debts/liabilities.
-Corporations are often called "C Corporations
The important aspect ;
- They owe a “limited liability. “
The “Corporate Law “

“Evolution /Public interest”
- In Mid 19th century the Corporate law was
promulgated which focused on protection of the
“public interest, “and not just the interests of
corporate shareholders.
- Forming a corporation usually required an act of
legislation & the Corporate charters were regulated
by the state.
- “Investors “ generally had to be given an equal say
in companies,
- Corporations were required to comply with the
purposes expressed in their charters
The “Joint Stock Companies Act,”

The Limited Liability legislation
The British Parliament in 1844 initiated legislated
the following :-
- The ‘Joint Stock Companies Act, ’ which allowed
‘Businesses companies ‘to’ incorporate’ without a
“Royal charter “or under an Act of Parliament.
- Ten years later, the “limited liability,” the key
provisionof modern corporate law, was passed into
English law: This was in response to increasing
pressure from emerging capital interests,
The “Joint Stock Companies “

Limited Liability Act 1855.
The British Parliament Subsequently passed the
“Limited Liability Act 1855,”.
The Act established the principle that any
corporation could enjoy limited ‘legal liability’ on
both “contract “ and “tort “claims simply by
registering as a "limited" company with the
appropriate government agency.’
In Pakistan also the authority rests with the
“Registrar joint Stock companies”
“ Corporations Features”
“ Individuality’ ’ Immortality’.
By the beginning of the 19th century, government
policy began to change globally , reflecting the
growing popularity of the corporations .
- In 1819, the U. S. Supreme Court granted corporations,
rights that had not previously recognized or enjoyed.
- Corporate charters were deemed "inviolable", and
not subject to arbitrary amendment or abolition by
state governments.
-The Corporation as a whole was labeled an
"artificial person", possessing both ‘individuality’
and’ immortality’.
‘ Corporations’ in Pakistan
A ‘Company’ as per law adopted in Pakistan is
defined as:
“An ‘association of individuals formed for the
purpose of earning profit possessing a common
capital contributed by the members constituting
it”,
Such capital being commonly Divided into shares,
of which each possesses one or more which are
transferrable by the owner”
-Section 2 of the Companies Act 1984
“Modern Corporation”
The 20th century saw a proliferation of laws across the
world, which helped to drive economic booms in many
countries before and after World War I.
-Starting in the 1980s, many countries with large state-owned

corporations moved towards privatization, the selling of
publicly owned or 'nationalized' services and enterprises
to corporations or Deregulation (reducing the regulation of
corporate activity) .
Another major postwar shift was toward the development

of conglomerates, in which large corporations purchased
smaller corporations to expand their industrial base.
.
The Corporations
“ Articles of incorporation, “
The corporation charter, also known as ‘Articles of
incorporation,’ is the legal instrument used to establish
a corporation, is a written document filed by the founders
of a corporation detailing the major components of a
company such as
- The Company's objectives,

- The Company's structure and
- The Company's planned operations.
The Corporate “Incorporation“

-Corporations are now usually registered with the
state, province, or national government and regulated by
the laws enacted by that government.
-Registration is the main prerequisite to the corporation's
assumption of limited liability.
-The law requires the corporation to designate its principal
address, as well as a registered agent (a person or company
designated to receive legal service of process). I
-It may also be required to designate an agent / other legal
representative of the corporation ,
The Corporations
‘Articles of Incorporation’- Bye Laws’
A corporation in Pakistan files ”articles of incorporation
with the government, declaring
-The general nature of the corporation,
-The amount of ‘stock’ ( shares) it is authorized to issue,
and the names and addresses of directors.
-The article of incorporation is approved,
The Corporation's Directors meet to create the by
laws that govern the internal functions of the
corporation,
‘ Modern Corporation ‘
‘Articles of Incorporation’- Bye Laws
-The law of the jurisdiction in which a corporation
operates will regulate most of its “internal activities
as well as its” Finances”.
- If a corporation operates outside its home state,

it is often required to register with other
governments as a foreign corporation, and is almost
always subject to laws of its host state pertaining
to employment crimes, contracts, civil actions.
‘ Modern Corporation ‘
“ Title/ Name “
- Corporations generally have a distinct name.
- Corporations in most jurisdictions have a distinct
name that does not need to make reference to their
membership.
-In most countries, corporate names include a term
or an abbreviation that denotes the corporate status
of the entity ,example,
-"Incorporated" or "Inc." in Pakistan or the limited
liability of its members for example, "Limited" or
"Ltd.".
‘ Modern Corporation ‘Title/Name

“ In Pakistan ‘
- In Pakistan the word” Corporation ” is mandatory.
-Their use puts everybody on constructive
notice that the entity has limited liability :
- Meaning One can only collect whatever assets
of the entity owns/controls when one obtains a
Court judgment against it.
- Some countries do not allow the use of the word
"company’ to denote corporate status, since it may
refer to a partnership or some other form of
collective ownership
“ Corporations “
The constituents
- The Shareholders –
Are those who own the company
- The Directors –
Are Guardians of the Company’s assets for the
Shareholders
- The Managers
Are one who use/ manage the ‘Company’s assets’
The ‘ Shareholders’
A corporation is, in theory owned and controlled by its
“Members.”
-In a joint-stock company the members are known as
"shareholders” and each of their shares in the
ownership,
- The control and profits of the corporation is determined
by the portion of shares in the company that they own.
-Thus a person who owns a quarter of the shares of a
joint-stock company owns a quarter of the company, is
entitled to a quarter of the profit (or at least a quarter of
the profit given to shareholders as dividends) and has a
quarter of the votes capable of being cast at general
meetings.
The “ Stakeholders”
The Stakeholder s of a corporation in general as
cited below have legal rights i.e. the rights of
interested parties e.g.;
- The Employees,
- The Community,
- The Suppliers,
- The Customers etc.
Its incumbent to encourage co-operation between
the company and its stakeholders in creating
-Wealth, jobs and Economic stability
The Management “Board of directors ‘

A “Single Committee” ‘BOD’
The Corporations are controlled /managed by a
"Committee “ or by “Committees “where the
activities are controlled by “individuals “appointed
by the members.
. There are two kinds of “Committee structures.”
A single committee known as a’ Board of
directors’ is the method favored in most common
law countries.
-The Board of Directors-BOD

“Executive and Non-Executive directors,”
The day to day activities of a corporation is managed
by individuals appointed by the members. which is
characterized as the Board of Directors
-The Board of Directors is composed of both
‘executive and non-executive directors’,
-The Non executive directors are meant to supervise

the former's management of the company.
“Board Of Directors”
“ Non Executive Directors”
The Board of Directors is composed of both
executive and “non-executive directors”,
-The Non executive directors are entrusted to
supervise the former's management of the
company. through a “Management Committee”
- A two-tiered committee structure with a
Board of Directors and "Management Committee”
is common in Pakistan
“ Corporate Performance “
Corporate performance refers to a composite
assessment of how well an organization executes on
the following important parameters, typically
“Financial, market and shareholders performance.”
Corporate performance analysis is a subset of
“Business Analytics/ Business intelligence “
(BA/BI) that is concerned with the “Financial Health"
of the organization, which has traditionally been
measured in terms of financial performance.
However, in recent years, the concept of corporate
health has become broader
Corporate Performance –
Key Performance Indicators
Like the concept of “business sustainability and
the corporate health is now considered to involve
not only financial considerations but also other
factors including :
- Social Responsibility
- Social reputation & innovation besides
- Employee morale and Productivity.
Corporate Performance –
Key Performance Indicators
Corporate Performance thus s no longer
measured only on key performance indicators
(KPI) such as
-Revenue,
-Return on investment (ROI),
-Overhead and operational costs.
“Corporate Performance Management”

The Corporate performance management includes
overseeing the following Financial functions :-
- Forecasting ,
- Corporate Budgeting &
- Corporate Planning .
Performance results are often shared publicly
rather than only with financial stakeholders and
investors, as was formerly the case.
“ Corporate Budgeting”
Corporate budgeting is the process of business estimates/
finances for a future period plans operations accordingly. I
n developing a corporate budget, a business usually starts with a
project plan, then determines the amount of time, goals and
costs of the project. Budgeting involves creating a definite and
detailed financial plan .
Budgeting is to establish financial objectives for the coming year
and identify exactly what has to be done to accomplish these
objectives. Budgeting encourages a business to articulate its
vision, strategy, and goals.
Budgeting imposes discipline and deadlines on the planning
process.
“ Management controls”
Budgets also serve a management-control function.
Achieving the financial goals and objectives of the
business requires comparing actual performance
against benchmarks and holding individual managers
responsible for keeping the business on schedule to
achieve its financial objectives.
By using budget targets as benchmarks, managers
can closely monitor progress toward (or deviations
from) the budget goals and timetable.
“ Management controls”
Significant variations raise “red flags,” in which case
business unit heads can determine that performance
is off course or
-That the budget needs to be revised because of
unexpected developments.
-By using budget targets as benchmarks, companies

monitor progress toward (or deviations from) the
budget goals and timetable.
“Corporate Performance Management”

The Non-financial areas are monitored for
‘corporate performance management ‘and reporting
which include
- Strategic Planning
-The Processes and Efficiencies management
- Brand equity , management
- Risk management and
- Human Resource management .
“Corporate Governance”
What refers to corporate governance?
‘Corporate governance ‘is a relationship among
stake holders that is used to determine and control
strategic direction and performance of the business
organizations
“It is used in corporations to establish order between
the companies owners and its top level managers ,
Corporate Governance History:

Contemporary corporate governance started in
1992 with the Cadbury report in the UK
-Cadbury was the result of several high profile
company collapses
-Is concerned primarily with protecting weak and
widely dispersed shareholders against self-
interested Directors and managers
- Its primarily concerned with public listed
companies i.e. those which are listed on a Stock
Exchange Focused on preventing corporate
‘Corporate Governance’
The Four Pillars
The following attributes are characterized
as the four pillars in a Corporate Governance
relationship
- -Accountability
- Fairness
-Transparency
- Independence
“ Four Pillars of Corporate Governance”

- Accountability
Ensure that management is accountable to the
Board &Ensure that the Board is accountable to
shareholders
- Fairness
Protect Shareholders rights
Treat all shareholders including minorities equitably
Provide effective redressal of violations
“Four Pillars of Corporate Governance

-Transparency
Ensure timely, accurate disclosure on all material
matters, including the financial situation,
performance, ownership and corporate governance
- Independence
Procedures and structures are in place so as to
minimize, or avoid completely conflicts of interest
Independent Directors and Advisers i.e.
free from the influence of others
Sustainability ?
No generally accepted definition
Most commonly used is from the Brundtland Report
for the World Commission on Environment and
Development 1987 which defines it as ;
‘Development that meets the needs

of the present without compromising
the ability of future generations
to meet their own needs’
‘ Elements of Corporate Governance ‘
-Good Board practices
-Control Environment
-Transparent disclosure
-Well-defined shareholder rights
-Board commitment
‘ Good Board Practices’

What are good Board Practices ?
-There should be Clearly defined roles and

authorities
-The Duties and responsibilities of Directors
are well understood
-The Board is well structured
-The Board should have Appropriate composition
and mix of skills
“ Good Board procedures”
The Board should adopt /have

-Appropriate Board functional procedures
-The Director Remuneration is & should be in line

with best practice
-There should be a mechanism for

“Board self-evaluation and training conducted
periodically”
“ Control Environment”
-Internal control procedures

-Risk management framework present
-Disaster recovery systems in place
-Media management techniques in use
-Business continuity procedures in place
-Independent external auditor conducts audits
-Independent audit committee established
-Internal Audit Function
-Management Information systems established
-Compliance Function established
“Transparent Disclosure”
The BOD should ensure that :

-The corporate’s Financial and
-Non-Financial Information is properly disclosed
-Financials prepared according to International
Reporting Standards (IFRS)
-Companies Registry filings are up to date
-High-Quality annual report published
-Web-based disclosure
“Well-Defined Shareholder Rights”
-Minority shareholder rights formalized
-Well organized shareholder meetings conducted
-Policy on related party transactions

-Policy on extraordinary transactions
-Clearly defined and explicit dividend policy

“ Board Commitment”
Corporate governance committee.
-The Board discusses corporate governance
issues and has created a corporate governance
committee
- The company should have
A corporate governance champion
- A corporate governance improvement plan has
been created
- Appropriate resources are committed to
corporate governance initiatives
Board Commitment
-Policies and procedures have been formalized
distributed to relevant staff
-A corporate governance code has been

developed
-A code of ethics has been developed

-The company is recognized as a corporate
governance
“ Business Ethics”
Established values and principles a company

uses to inform and conduct its activities
-Should permeate a company’s culture and

drive its strategy, business goals, policies and
activities usually found in a code of ethics
CORPORATE PERFORMANCE
& PLANNING
Corp Planning& Management

Scope Analysis. Systems Of Control
“ Chapter Topics /Contents”

-Scope of Corporate Performance *
-Performance evaluation as a Tool if management Procedure*
-Review of Systems of control*
-Corporate objectives, Strategies Plans & performance*
-Evaluation of Working papers.
-Evaluation of overall performance /Analysis of Financial position
-Ratio analysis, Corporate Budgeting
-Determining source of Purchases. Purchase price
-Appraisal of Production management
-Quality control management R & D *
CORPORATE PERFORMANCE & PLANNING
Course Contents
-Scope of Corporate Performance
-Performance evaluation as a tool of management, procedure
-Review of systems of controls
-Corporate objectives ,Strategies Plans & performance
-Evaluation of working papers
-Evaluation of overall performance/analysis of Financial
position
-Ratios & analysis
-Corporate Budgeting
-Determining the source of purchases -Purchase prices
-Management Quality control Management R&D
Learning outcomes
The students after attending these lectures would be able to
comprehend the following
-What is Corporate Performance
-What defines the Scope of corporate Performance
-Performance evaluation as a tool of management and
,procedure
-What are systems of controls
-What are Corporate objectives ,
-The Strategies Plans & performance
Scope of “Corporate /Performance’

What refers to ‘Scope of Corporate Performance’?
“The scope of a corporate firm can be described

as an activity of the. collection of physical assets
over which a single manager has been granted.
exclusive right of control by shareholders ,” thus
“Performance evaluation” exercise is a useful tool
of management, & procedure”
“Corporate objectives”
What refers to a Corporate objectives ?,
Corporate objectives can be explained as /are
-“Well “defined “and “Realistic” goals
set by a business/company that often influence its
- Internal strategic decision making ‘.
Most corporate objective targets used by a business also
specify the “time frame “anticipated for their achievement
and how the company's success /progress in doing so is to
be assessed.
“Scope of corporate performance “

“Performance evaluation as a tool of management,
procedure
-The Scope of corporate performance refers to the
combined objectives and requirements needed to
complete a project. ...
-Properly defining the scope of a project induces
managers to estimate costs and the time required to finish
the project.
-This makes ’scope management ‘ an important part of
business—
-it saves both time and money
The Scope of corporate performance

”Corporate Resources “
What refers to corporate resources
The scope thus primarily involves recording Inventory
of all the company's business activities ie ;
-Programs,
-Employees,
-Tangible and Intangible assets
- Finances and anything else that is relevant to; the
company's vision and mission.
-This should enable a clear picture of where the
business/company stands and where it wants to go.
“ CORPORATE PLANNING”
Definition , Elements ,Purpose

Objectives,Strategies
What is a corporate plan
“A corporate plan identifies the resources available
and sets out the actions required, to deliver the
stated aims and objectives”.
A corporate plan is an important ‘document ‘that
helps to continually
- Monitor finances and liabilities
- Identify opportunities and
- Control organizations internal systems and
structures.
What refers to Corporate planning?
“Corporate planning is the act of creating a
‘long- term strategy to improve a company's
business.”
“A corporate plan examines a business's
internal capabilities and lays out strategies for
how to use those capabilities to improve the
company thus enabling it to achieve its objectives /
goals.”
The “Corporate objectives”
State and prioritize the corporate businesses objectives
as laid down in the ‘Mission statement ‘and how
these goals /objectives will be measured.
Resultantly the corporate plan will let employees and

other stakeholders know where the company stands
so as to identify & initiate the needed actions .
CORPORATE PLANNING PROCESS

Corporate Objectives
“The Mission Statement;”
The process of corporate planning starts with the
Preparation of the company’s ‘mission, statement ,its
goals and objectives.
The organization’s ‘mission statement ‘should clearly
elucidate its purpose of existence.
Through this exercise the organization projects a
“corporate image “to the customers and provides
direction for the employees.
“CORPORATE PLANNING PROCESS”

A well-written corporate plan should clearly
communicate the company's vision and strategy
to its employees, investors and bankers. includes
the following elements, Preparation of
- A Mission statement
- A Vision statement
-The company's resources and scope
- The listing of corporate objectives
- listing of strategies to achieve those objectives
The Corporate planning process
The process involves actions preparing the
organizations mission and its objectives ;
Corporate planning is thus a important vital
business process. wherein the organization's top
management acts to :-
-Formulate policies and strategies and
-Communicate them downward for implementing/
realizing Company's mission, statement
“CORPORATE PLANNING “
Strategies to reach those objectives
The ‘corporate plan ‘can also help for connecting
with clients update about business offerings ;-
-How its different from other company,

-Better communication with valued clients.
-How Clients will also benefit from a tighter focus on
the companys core competencies, or need an
- Expansion of companys services and products to
meet their needs.
.
CORPORATE PLANNING
‘ Strategies to reach those objectives
The corporate Lists the possible future strategies
namely ;-
-Developing new products.
-Entering new markets
- Devising Tactics .
-A well-written corporate plan will communicate
vision and strategy to all its stakeholders ,the
employees, investors and bankers and even
consumers enabling the, stakeholders to see if
they are aligned with the plan or working at cross-
purposes.

’Corporate Objectives’
”Vision statement “
The mission statement of the organization is followed by a
“vision statement.”
A vision statement describes what a company desires
to achieve in the long-run, generally in a time frame
of five to ten years, or longer
The ‘objectives ‘are tangible and measurable targets the
organization aims /intends to achieve.
With these tentative measurable targets, in sight the
organization can monitor its growth and make necessary
interventions as and where required.

’Corporate Objectives’
”Vision statement “
A good vision statements is written in the present,
not future tense.
-The statement describe what we will ‘feel, ‘hear’
‘think,’ say and ‘do ‘as if we had ‘reached’
our vision now.
-It is summarized with a powerful phrase.
“CORPORATE PERFORMANCE”
Financial & Non Financial Aspects
“Business Intelligence”
What is Corporate Performance ?

‘ Definition/Elaboration.’
”Corporate performance ‘ is a composite
assessment of how well an ‘organization ‘
executes on its most important parameters”,
namely in context of ;-
1.The financial aspect

2.The market /business environment
3.The shareholder performance.
Corporate Performance Management.(CPM)

What is Corporate performance Management ?
The C.P.M refers to a tool used by corporations to

formulate organizational strategies
“It is the area of Business intelligence which involves
monitoring and managing an organization's
performance, according to key performance indicators
(KPIs) such as
- Revenue,
- Return on investment (ROI),
- Overhead, and operational costs.
Corporate Performance Management

Business Intelligence “
What refers to Business intelligence ?
“Business intelligence refers to the procedural and
technical infrastructure that collects, stores, and
analyzes the data produced by a company's activities.
It processes all the data generated by a business and
presents it in the form of reports, performance
measures, and trends that facilitate management
decisions.”
Corporate Performance Management .(CPM)

Business intelligence
Business intelligence is an umbrella term that
enables ‘access’ to and’ analysis of information’ to
improve and optimize business decisions and
performance and includes the following
- Applications,
- Infrastructure
-Tools,
- Best practices

“ Business intelligence “
The term Business Intelligence also refers to the
collection,’ integration’, ‘analysis, and presentation’
of business information by the use of
-‘Technologies’,
-‘Applications &
-‘Practices’
The purpose of Business Intelligence is to support
better business decision making.

“ Business intelligence “
Business Intelligence In simple terms can be

interpreted as the business exercise of collecting
/compiling data categorized as ;-
- Accumulation, of ‘Data’
-Analysis, of business Data’
-Reporting,
- Budgeting &
- Presentation of business vitals

“Business intelligence”
The ‘Goal’ of Business intelligence
“The goal of utilizing business intelligence is
to improve the visibility of the organizational
operations and financial status to better
business management”
“ Corporate performance management ”
‘Key Performance Indicators ‘


‘Key Performance Indicators ‘
What refers to ‘Key Performance of an corporate ‘
The “Corporate performance Management “refers

to measuring the ’results of operational &
financial performance of the company by
reviewing the key operational data’ .
The Corporate Performance is thus measured by
identifying the financial indicators ,or the Key
performance indicators of the company over a given
period of time.
:-
-
“ Corporate Performance Management .”

“Key Performance Indicators “
The Key performance indicators / or ‘Data “of a
company are
- Revenue, statistics
- The Return on investment ( or ROI ),
- The Overhead and operational costs of the
company
The Financial Aspect.

&
The Non-Financial Aspects :
The Financial Aspect.

The “Corporate performance management “ relates to/
involves, consists of the following activities of a
business.
- The Forecasting.
- The Budgeting .
- The Planning
The performance results are often shared publicly rather
than only with financial stake holders and investors, as
was formerly the case.
“ Corporate performance management “

The Financial aspect: Forecasting
‘Business forecasting’ refers to the tools and
techniques used to predict developments
in business, such as Sales, Expenditures, and
profits.
The purpose of business forecasting is to develop
better business strategies based on these
informed predictions
The Financial aspects :

“ Budgeting”& Planning
Budgeting in a company involves creating a definite
and detailed financial plan .
Budgeting is to establish financial objectives for the
future and identify exactly what has to be done to
accomplish these objectives.
Budgeting encourages a business to articulate its
vision, strategy, and goals.
Budgeting imposes discipline and deadlines on the
planning process.
“ Corporate performance management “

The Non-financial aspects :-
The Corporate performance Management also
includes monitoring of the Non-financial areas
which includes
-Strategic Planning ,
-Process efficiencies
-Brand equity
-Risk management and
-Human resource management (HRM).
Corporate performance management
“ Corporate Performance Analysis “

“ Business sustainability “
“ Ratios”
“Corporate performance analysis’

“ What is corporate Performance Analysis ?
A sub set of c.p.m.
“Corporate performance analysis is a subset of
Corporate performance management which
Relates with the "health" of the organization,
C.P.A has traditionally been measured in terms
of “financial performance.” of the corporation .
“ What is corporate Performance Analysis ?

”Corporate performance analysis involves the following ;-
-Business analytics. .It is the process of using statistical
methods and technologies for analyzing historical data in
order to gain new insight and improve strategic decision-
making.
-Business intelligence ; leverages software and services to
transform data into actionable insights that inform ..
Business analytics and Business intelligence are
concerned with business operations
However, in recent years, the concept of corporate
health has become broader.
“ Corporate Performance Analysis “

“ Ratios”
What refers to Business ratio
A ratio denotes /shows the relative sizes of two or
more values.
Business ratios are :
The quantitative relation between two amounts
showing the number of times one value contains
or is contained within the other.
Example;
"the ratio of men's jobs to women's is 8 to 1"
Corporate performance Analysis“ C.P. A.

“ The Ratios
What financial ratios analysis reveals ?
What the users need to know?
The Financial ratios are grouped in the following
categories to provide a picture about company’s
profitability its financial position, use of its assets
efficiency, its debt financing. eg:
- Profitability ratios,- Financial ratios,
- Liquidity ratios - Market value /share ratios
- Debt /Equity ratios - Dividend policy ratios.
.
“Corporate performance management “

‘Corporate performance analysis’
“ Business sustainability.”
-”Corporate performance analysis” is no longer restricted
to / or to measure the ‘key performance indicators’ .
- The concept of “corporate health” in recent years, has

acquired critical importance and broadened to include.
Business sustainability.
- Business sustainability has become an integral constant
“ Corporate / business sustainability “

Elaboration
Business sustainability, also referred to /known as

“corporate sustainability,’
-It is the management and coordination of

environmental, social and financial demands and
concerns to ensure responsible, ethical and
ongoing success”.
“Corporate performance management “

-The concept of ‘Corporate health is now considered
to involve not only financial considerations but also
the following :
- Corporate Governance
- Corporate Social Responsibility
- Corporate Reputation
- Corporate Innovation
-The employee morale and productivity
“ Corporate Governance “
“Corporate Social Responsibility
“ Corporate Governance”
What refers to Corporate governance ?
Corporate governance is the way a corporation
polices itself.
In short, it is a method of governing the company
like a sovereign state, installing its own customs,
policies and laws to its employees from the
highest to the lowest levels.
Corporate governance is intended to increase the
accountability of your company and to avoid
massive disasters before they occur.
“Corporate Governance “
Failed energy giant Enron, and its bankrupt
employees and shareholders, is a prime argument
for the importance of a stable equitable corporate
governance.
Well-executed corporate governance should be

similar to a police department's internal affairs
unit, weeding out and eliminating problems with
extreme prejudice..
“ Corporate Governance ‘
A company can also hold meetings with internal
members, such as
- Company’s shareholders and
- Company's debt holders –
- The suppliers, customers and community leaders,
to address the request and needs of the affected
parties.
‘ Corporate Social Responsibility’

What is CSR….The Concept :
CSR is concept with many definitions and practices
-“The Corporate Social responsibility is an approach
which motivates the company's efforts that ;
-‘Think and go beyond the requirements of
regulators or environmental protection groups’
- Corporate social responsibility is a form of
corporate self-regulation integrated into a business
model.
“Social responsibilities of businesses.”

“ Corporate Social Responsibility”
Corporations/businesses often indulge in the following:
Business Ethics a priority :
-The Corporation must acknowledge the importance of
conducting business morally
-The Corporations must encourage their employees to take
moral responsibilities seriously’
-The Corporations should end public defensiveness in public
discussion and criticism.
-The Corporations must recognize the pluralistic nature of
the social system they are a part of
“ Corporate Social Responsibility “

. A Business approach - :
-’CSR’ policy functions as a self-regulatory
mechanism whereby a business monitors and
ensures its active compliance with the spirit of
the law, ethical standards and national or
international norms ...
-It applies to a company's efforts that go beyond
the requirements of ‘regulators or environmental
protection groups
‘The evolving CSR view’

The corporate social responsibility is a businesses
" Commitment to ‘societal Goals and Values ‘
‘Corporate Social responsibility is a commitment
of entrepreneurs to seek strategies to make such
decisions or carry out such activities, which are
desirable in terms of goals and values of our
society".
- Bowen, 1953
‘CORPORATE PERFORMANCE MANAGEMENT
“Systems of controls’
“Logistics”
‘ Systems of controls’
What refers to ‘systems of control’ of a company?
‘Systems of control’ in a company refers to
frameworks designed to manage an organization's
policies, procedures and processes and promote
continual improvement within.
“Controls of a business define and administer how

employees should conduct and perform job
responsibilities “ within the organization”
‘ Systems of controls’
“Policy Procedures and Processes “
“Controls of a business /company “define how its
employees should conduct themselves and perform
job duties.
“Business control systems consist of’ Policies,
procedures and processes’, which help an
organization achieve its mission and objectives .
The Company / Business owners and managers
implement prescribed policy ,standards, and they
track and monitor organizations and individuals
performance .
“‘ Systems of controls’
“Documents’ Marketing & HRM “
The Major systems of controls in a company /
business referred to as “Business control
systems consist of’ the following functional
,procedures and processes
- Document Control
- Marketing mechanics
- Human Resource management
“ Systems of controls”
‘Document Control’
Document control policy and procedures usually
include a master list of company's activity
documents.
Most businesses have controls that assure
standardized documents, namely
-Guides, Specifications,
-Work instructions or
-Policies and Procedures.
“ Systems of controls “
“ Document Control”
Naming “Assigning the document,”
-Documents must undergo approval identified with dates
and given control and revision numbers the documents
need approval before use.
The approval process may include:
-Naming the document,
-Assigning a control number and a date.
Revisions must also receive authorization control
procedures may also include a method of distribution
assign responsibilities for updating documents.
“ Marketing”
The marketing objectives ,concerns broadly refer
to and are in context of the following
- Business Sales
- Business Volume,
- Businesses Market share and
- Business Profits.
“ Marketing”
“Business ‘ Sales Volume, “Market share “and
“Profits.”
Marketing or performance objectives cover a wide
variety of standards, such as sales volume, market
share and profits.
The marketing function develops a plan and
establishes marketing objectives.
The schemes include controls to measure, monitor
and regulate marketing campaigns and related
activities.
“ Marketing "Sales
The “Sale control mechanisms” may include
provision & effective monitoring of company's:-
-Budgets,
-Sales targets to match ‘market share ‘
-Credit criteria and
-Work force automation ,
The company’s make use of a range of reports to
track progress and make comparisons, including
-Variance analysis or
- Expenses-to-sales analysis.
‘ Systems of controls ‘
“Human Resources Management”
Systems of Controls also extend to the following Human Resource
management concerns/aspect .
The corporations/ businesses critical focus and professionalism in
execution of the following HRM functions is essential for ensuring
a motivated performance by its work force needed to achieve its
business objectives.
- A Human Resource Manual
- A Recruitment & Selection /Hiring, Policy & Process
-The Training & Development of new and existing staff for efficient
update in their performance
-Compensation & Benefits ,Salary /Pay management. System
“Systems of controls “
“Human Resources management”
“Performance Appraisal & Management”
Businesses require techniques for assessing employees' skills,
and assuring the business has staff with the necessary skills
and abilities to move the organization toward its objectives.
HR must also put in place workplace rules and policies that
keep the business in compliance with union contracts, safety
regulations and labor laws.
“Systems of controls ‘
“Quality Control “or QC
The companies /.managements pursue the businesses
mission and vision ,engaged in production, or offering
services to the satisfaction of the consume/,customer to earn
profits.
The companies therefore are continuously engaged and

focused to ensure the desired quality of their end product or
services thus need to determine what quality assurance
methods to use. and to ensure their marketability and sales.

The corporate Businesses must have quality control
systems and procedures in place to review and check
the business operations outputs in context of the
following;
- The quality of materials,

- The quality of products &
- The services rendered


What is meant by Corporate Strategy. ?
“The corporate strategy is not just about the

competitive advantages in business strategy
through prescribed methodologies “...
A Corporate Strategy focuses on how to manage the
following “differently ‘ but effecively
- Resources,
- Risk and
- Return across a firm,
Business owners may use statistical techniques
to ascertain the quality of raw material on arrival
to the plant, or may perform visual inspections of
finished products
The manufacturing process for example may
require controls at specific phases, such as
-Pre-production,
-Mid/during production and
-The finished product.

“Systems of controls”
“ logistics”
- Logistics originally, referred to & played the vital
role of moving military personnel, equipment and
goods. the term logistics today is critically relevant
& important as ever in the business environment
too .
- The term today is more commonly used in the
context of moving commercial goods within the
supply chain.( from the production house to the
market/consumer)
“Systems of controls“
“ logistics”
What refers to Logistics ?
Logistics in a business environment refers &
involves the process of Planning and Executing :
-The Efficient storage of commercial goods
-The Efficient transportation of commercial goods
from the point of origin to the point of
consumption
“ logistics”
What is the goal of Logistics ?
The goal of logistics in a business context is focused
to facilitate/ ensure that :
-The business is able to meet customer/consumers
requirements in a
-Timely,
-Cost-effective manner.
Why logistics is important for business

The manufacturers, distributors and retailers need to improve
their logistics processes to meet the demand for quicker, more
convenient delivery of a wider variety of goods.
They integrate their processes and systems to improve through
a efficient “supply chain management.”
As on-time delivery of intact packages has always been
important throughout the supply chain, it has become even
more mission-critical in recent years, as The Omni channels
commerce, “with its same-day home or retail delivery of
customized products ordered from smart phones, has becomes
more common.
“ logistics "providers”
Some Large manufacturers own the full gamut of ‘logistics’
infrastructure, from jet planes to trucks, warehouses and
software, majors parts of their logistics network. businesses
own the full gamut of ‘logistics’ infrastructure, while others
specialize in one or two parts .
Most companies, outsource this function to third-party logistics
providers ,Such companies specialize in logistics, providing the
service to manufacturers, retailers and other industries with a
growing need to transport goods.
FedEx, UPS and DHL are well-known logistics providers Large
retailers or manufacturers own majors parts of their logistics
network.
CORPORATE PERFORMANCE &
PLANNING
3
EVALUATION OF PERFORMANCE
ANALYSIS OF FINANCIAL POSITION
Business Analysis
“ Chapter Topics ”
Performance evaluation as a Tool of management Procedure

-Corporate objectives, Strategies Plans & performance
-Business Analytics Ratio analysis, Corporate Budgeting
-Quality control management R & D
The Discussion Topics &

Learning outcomes
The students after attending these lectures will have basic
understanding in context of & the importance of:-
- Evaluation of over all performance
- The “Working Papers “. -Categories .Evaluation
- Evaluation of and Analysis of Financial status.
-The need of over all performance evaluation of a business /
- The various analytical tools .brief
- The SWOT ,the PEST, and ‘VARIO’
- The concept and meaning of ‘value chain’
- The different business competencies
“Evaluation of Business Performance “

A periodical exercise
A successful business organization needs to be in tune with
& responsive to the "internal as well as external environment
There must be a strategic fit between what the environments
Needs and what the corporation has to offer as well as between
what the corporation needs and what the environment can
offer.
The complexity of a dynamic business environment due to
globalization, and other related factors mandate a professional
monitoring & vigil to safeguard the interests of all stake
holders & company's success & growth achievement of its
objectives. through a periodical evaluation and analysis of the
“Evaluation of overall Performance “

A mandatory Exercise
The Corporate performance evaluation of an organization is a
mandatory Exercise in a competitive environment at the
‘Internal and external “key performance indicators ‘ in context of
Financial ‘but also the non financial aspects ‘
The ‘exercise ‘is an ongoing activity by the ‘apex management’

is mandatory & often regulatory requirement too..
Aimed to ensure the stakeholders interests the “Corporate

governance “ followed by the ‘ Corporate Social responsibility “ is
becoming a competitive advantage / tool for facilitating business
Performance evaluation
“A Tool of management Procedure”
Value Creation is the final objective of a business company
In order to achieve this purpose, a business cannot ignore the

context in which it operates.
A network of relationships connects the company to a great number
of interrelated individuals and constituencies, the stakeholders .
These relationships influence the way a company is governed and,
in turn, are influenced by the company’s behavior.
Thus its long-term value, is determined by its relationships with
critical stakeholders’ .
‘Any stakeholder relationship may be the most critical one at a
particular time or on a particular issue’.
Performance evaluation
A Tool of management Procedure
‘Balanced scorecard’
During the past years many proposals were advanced to integrate
and overcome the traditional methodologies, focusing on the financial
dimension of corporate performance.
Tools such as the balanced scorecard , the environmental and social
reports were introduced, many companies measure and assess their
own performance considering the impact of their own activities, on
human, social and natural capitals.
The listed companies, corporates, have left the shareholder approach
and adopted a more comprehensive stakeholder one.
 ‘Performance Analysis
“ The objectives ”
- Performance analysis aims to identify the areas at

operations which warrant strategic business initiatives.
- This exercise can increase the effectiveness of the organization

by ensuring that everyone involved has a shared understanding
of this process augmented by a common set of tools and
techniques that can deliver the projected reliable, outcomes.
-The major purpose of performance analysis is to reenforce the

organizations alignment to its Mission and Vision statement & install
remedial measures if needed to support business decisions.
 ‘Performance Analysis
“ The objectives ”
- Business analysis reduces waste significantly by reducing the

number of doomed initiatives.
- Can increase the effectiveness& efficiency of the organization

/stakeholders by ensuring that everyone Involved has a shared
understanding of this process augmented by a common set of tools
and techniques that can deliver reliable, outcomes.
-The major purpose of business analysis is to deliver the factual

component to support business decisions.
“ Working papers “
In context of
Corporate business ,Entities

Evaluations of
What refers to Working papers in context of business ,company ?
“Working papers are ‘documented records’ / Reports the’ Mission/Vision

statements ,Information examples
-Various Reports .Annual report, Audit Reports

-Records of the Procedures applied,
-Organizations Policies ,Manuals
Conclusions ,Assessments in context of the Organizations operations
Strategies Formulation Papers/documents that can be or are characterized on
the basis of the Data / information contained ,& Conclusions ,reached /
Evaluations of
Besides the previous mentioned there are many different . Types of
working papers,
Three of the common categories are
-Operational summaries,
- Worksheets, and
- Performance documents.
- A white paper is a report that informs readers concisely about a
complex issue and presents the issuing body's on the matter. It is meant
to help reader understand an issue, solve a problem, or make a
decision.
Each of these ’”working papers” or document is a different
type of audit evidence and test, but should be supported /inclusive
of some basic information.
“ Types and evaluation of

‘Working Papers’
There is no single template or format for any working paper.
Based on the categories and different types of businesses

undertaken by a company ,
Formats can be designed for particular inference

Performa of need specific working papers are adopted by
companies
The organizations, Articles of association, incorporation
,Manuals Procedures
Organizational policies and Strategy initiatives &
activities that yield exemplary results ,
“ Working Papers”
Annual Report
An annual report is a comprehensive report on a company's
activities throughout the preceding year.
Annual reports are intended to give shareholders and other
stakeholders information about the company's activities and
financial performance. .
Most companies prepare and disclose annual reports, and many
require the annual report to be filed at the company's registry.
Companies listed on a stock exchange are also required to report at

more frequent intervals (depending upon the rules of the stock
exchange involved).
Technical report
A technical report is a document that describes the operational

process, progress, results or identify problems
It may also include recommendations and conclusions .
Where there is a review process, it is exclusive to the originating
organization.”
A pamphlet is an unbound book & defined as "a non –periodical
printed / published containing explanatory information about a
product ,services and made available to the public"
“ Types and evaluation of

‘Working Papers’
There is no single template or format for any working paper.
The Company's
Financial and Non Financial operational results
The KPI for a specific date & period
The existing management Information systems in a

Electronic Data Processing environment has simplified it
There is no ''best example'' of working papers, but a few

types commonly used by corporate entities are cited
that tend to be useful.
Evaluations of
The Working papers in context of business entity may

also include all Data/ records pertaining to one or
any of the following categories.
- Observations made regarding the operational results

of an business /company organization ,as under.
- The operational results .,

- Information obtained,
- Pertinent conclusions /results witnessed/
- Analysis ,Inferences
“Annual Report”
The law requires companies to prepare and disclose annual reports,
to be filed at the company's registry.
The annual report of a company contains a comprehensive
Periodical account of the company's activities throughout the
preceding year
Annual reports are intended to provide the company ,stakeholders
/ shareholders and other vested interested ,information about the
company's activities and financial performance.
Companies listed on a stock exchange are also required to
report relevant data at frequent intervals .
“ White paper”
A white paper is a report or guide that informs readers concisely
about a complex issue and presents the issuing offices
body's philosophy on the matter.
- The white paper is prepared to help readers understand an

issue, solve a problem, or compel a decision.
- A white paper may be closer to a form of marketing presentation,

a tool meant to persuade customers and partners and promote a
product or viewpoint
Corporate Performance Analysis ‘Internal “

‘ Ratios & ‘Financial position’
“Corporate performance analysis” is a subset of Corporate

performance management “ which Relates with the
“Financial health" of the organization,
Corporate Performance /evaluation is traditionally been

measured in terms of “financial performance.” of the
corporation
Business Analysis
The’ Corporate Performance Analysis
“Internal Analysis ’
An internal analysis is an exploration of an organization's

- Internal professional competency,
- Cost position and
- Competitive viability in the marketplace.
- Conducting an internal analysis often includes measures that

provide useful information about the organization's “strengths
and “ weakness”, -
What refers to “Business Ratios”
A ratio denotes the relative sizes of two or more values.

Business ratios are :
The quantitative relation between two amounts showing the
number of times one value contains or is contained within
the other.
Example;
"the ratio of men's jobs to women's is 8 to 1"
‘
C.P .A.“ Ratios & ‘Financial position’

What financial ratios analysis tells us?
What the users need to know?
The Financial ratios are grouped in the following categories they
provide a picture about company’s profitability its financial
position,
besides the use of its assets efficiency, its debt financing. eg:
- Profitability ratios,
- Financial ratios,
- Liquidity ratios
- Market value / market share ratios
- Debt /Equity ratios or Dividend policy ratios.
Corporate ,Forecasting & Budgeting .
Corporate Budget is a “financial plan “that takes into account

estimated revenue and expenses over a certain period often a
year& reviewed periodically
-“Corporate Budget ” is based on a Forecast of revenue and
expenses for a specified future period.
-”Budgeting” for companies serves as a plan of action for

managers as well as a point of comparison .
-“Forecasting “exercise is the process of making predictions

based on past and present data and most commonly by analysis
“Corporate Budgeting ‘Categorization

Corporate or Incremental budgeting. takes last year's actual
figures and adds or subtracts a percentage to predict /obtain the
ensuing year's budget. It is characterized on the
circumstantial /needs or compulsions ...
-Activity-based budgeting. ...

-Value proposition budgeting. ...
- Zero-based budgeting. ...
- Imposed budgeting. ...
- Negotiated budgeting. ...
- Participative budgeting.
Business Analysis
‘ Resources ‘,Capabilities and Competencies’

Business Resources & Business Capabilities
It is important to evaluate the importance of a company’s

Resources ,Capabilities and Competencies
-The Objective
To ascertain whether they are internal strategic factors
or the particular strengths and weaknesses that can/
will help determine the future growth of the company .
Business Analysis
What is termed as a’ Business Resource ‘?

Resources are an organizations assets
Resources are the basic building blocks of the organization
The Human ,Financial ,Physical assets
What are Capabilities ?
Capabilities refer to an organizations ability to exploit its
resources which include business processes ,routines that manage
the interaction among resources to turn inputs
into outputs.
A capability is functionally based and is resident in particular
function, eg a ‘Marketing capabilities,, manufacturing capabilities,
and Human resource management capabilities.
Business Analysis
“ Financial, ‘Physical and ‘Human assets “
What are functional resources & capabilities?

The Functional resources and capabilities include
-The Financial,
-The Physical and
-The Human assets in each area besides
The capability of the Human capitol is integral to formulate and

implement the policies ,strategies and facilitate organizational
growth .
Business Analysis
The Financial, Physical and Human assets .

The “Analytical concepts
The resources and capabilities includes the knowledge of
analytical concepts and procedural techniques common
to each area and the ability of the people to use them
effectively
These resources and capabilities serve as strengths to support

strategic decisions
The simplest way to begin an analysis of a corporations value
is by carefully examining its traditional functional areas for potential
‘strengths and weaknesses’.
Business Analysis
The Analytical Tools

Overview & Role
The Role of Analytical tools is not necessarily to help develop
strategy only, but also to provide a basis for communication,
discussion and sense-making
The following slides provide an overview of some of the more

commonly used strategic analysis tools.
A simple but widely used tool is SWOT analysis that helps in

understanding the strengths, weaknesses, opportunities and
threats perceived to a project or business activity.
Business Analysis
“ Analytical tools “
Aims & The Application
The aim of the analytical tool is to sharpen the focus of the

analysis and to ensure a methodical, balanced approach.
All the analytical tools rely on
- Historical, backward looking data to extrapolate future
assumptions.
- It is important to exercise caution when interpreting strategic
analysis results otherwise the analysis may be unduly influenced
by preconceptions or pressures within the organization which seek
to validate a particular strategic assumption.
Business Analysis
‘ The Analytical Tools ‘
The analytical methods & Tools used in strategic analysis used for
strategic decision making include the following
-Four corner’s analysis

-Value chain analysis
-Early warning scans
-war gaming..
It is therefore a business advantage to develop good strategic analytical

skills at an early stage.
Business Analysis
“ Analytical tools . The Application”
Important considerations for using analytical tools:
-The expected benefit of using the tool needs to be defined
and it must be actionable.
-The more clearly the tool has been defined, the more likely
the analysis will be successful.
- Many tools benefit from input and collaboration with other
people, functions or even organizations
. -There should be sufficient time for collaboration and advance
warning given so that people can accommodate the analysis.
-The tool must address ,help to answer the question that the
organization has asked.
.
.
Business Analysis
The Analytical Tools
Methods of strategic analysis of Internal environment of

an organization
- MOST method
- LOTS method
Methods of strategic analysis of External environment of an

organization
- PEST Analysis
- Ansofs Model 5product market growth matrix
- Porters Model of 5 competitive forces
Methods of strategic analysis of External /internal environment

of an organization
- SWOT analysis
Business Analysis
Analytical Tools . The Application
Important considerations ,using analytical tools:
- It is important to ensure that all key stakeholders,

The BOD, Senior Directors and company departments are
aware of this exercise, otherwise they may not be able to
provide the necessary commitment to complete the analysis.
- Proper use of analytical tools may be time consuming
-There should be sufficient time allocatied for collaboration and

advance warning given so that people can accommodate
the analysis.
Business Analysis
Strategic analysis Tools

‘ S.W.O.T ’analysis
This tool is a straightforward model that analyzes an

organization's
-Strengths,
-Weaknesses,
-Opportunities and
-Threats
It creates the foundation of a marketing strategy.
- To do so, it takes into account what an organization can and
what the organization cannot do as well ...
Business Analysis
The business corporations

“Value chain”
What is a value chain ?
A value chain signifies the business functions of
-Marketing ,
-Finance,
-Research & Development operations and
-Human Resources
-Through the Information systems (MIS) & technology
The ‘Organizational structure’ and ‘Organizational culture’ besides

the above are also key parts of a business corporations’ value chain’
Business Analysis
The ‘S.W.O.T .analysis
What is S.W.O.T analysis ?
A s.w.o.t analysis is a simple but widely used tool that helps in
understanding the Strengths, the Weaknesses, the
Opportunities and Threats involved in a project or business
activity.
Start up
It starts by defining the objective of the project or business activity
and identifies the internal and external factors that are important
to achieving that objective.
Strengths and Weaknesses are usually ‘internal ‘

Opportunities and Threats are usually external.
Business Analysis
Elaboration
The ‘Strengths’
• What does your organization do better than others?
• What are your unique selling points?
• What do your competitors and customers in your
market perceive as your strengths?
• What is your organizations competitive edge?
The ‘Weaknesses’
• What do other organizations do better than you?
• What elements of your business add little or no value?
• What do competitors and customers in your market
perceive as your weakness?
Business Analysis
Elaboration
The ‘Opportunities ‘
• What Political ,Economic ,Social-Technology (PEST)
changes taking place that could be favorable
• Where are there currently gaps in the market or
unfulfilled demand?
• What new innovation could your organization bring
to the market?
The ‘Threats ‘
• What (PEST) changes are taking place that could be
unfavorable .
• What restraints have to be confronted
• What is your competition doing that could negatively
impact the business /organization
Business Analysis
The Analytics
‘ M.O.S.T.’ Method
The Analysis Method
M.O.S.T. analysis is a highly-structured method for providing targets
to team members at every level of an organization.
Working from the top down, it ensures that you retain focus on the
goals which matter most to your organization
- M- Mission
- O- Objectives
- S- Strategy
- T- Tactics
Business Analysis
Business Analysis
The ‘Mission ‘ Statement of the organization
The Roadmap starts with the mission, statement

which is enduring.
- It declares the organizations purpose as a company and
serves as the standard against which the company’s
actions and decisions. are weighed
The Aim
-To refresh the world..
-To inspire moments of optimism and happiness...
-To create value and make a difference.
Business Analysis
The ‘Objectives’—Vision statement
 The organizations objectives can clearly be understood

by looking at the vision statements.
The vision serves as the framework for the strategic analysis
exercise Roadmap and guides every aspect of our business by
describing what we need to accomplish in order to continue
achieving sustainable, quality growth.
 People: Be a great place to work where people are inspired to be
the best they can be.
Portfolio: Bring to the world a portfolio of quality brands that
anticipate and satisfy people's desires and needs.
Business Analysis
The Objectives
The Four ‘P”
Partners:
Nurture a winning network of customers and suppliers, together we
create mutual, enduring value.
Planet:
Be a responsible citizen that makes a difference by helping build and
support sustainable communities.
Profit:
Maximize long-term return to shareowners while being mindful of our
overall responsibilities.
Productivity:
Be a highly effective, lean and fast-moving organization.
Business Analysis
The ‘P.E.S.T ‘analysis
‘PEST’ analysis is a scan of the ‘External macro-environment ‘in

which an organization exists.
-It is a useful tool for understanding the political, economic,

socio-cultural and technological environment that an organization
operates in.
-It can be used for evaluating market growth or decline, and as

such the position, potential and direction for a business.
Business Analysis
“ The Political factors.” (P)
The political factors may include

-‘Government regulations’ such as
-Industrial relations /Employment laws,
- Industrial laws
,- Environmental regulations and the
- Taxation policy.
- Other political factors which can alternate are trade restrictions
,trade embargo, and political stability.
- Other related Regulatory factors
Business Analysis
The “ Economic factors.” ( E)

These are a broad array of
-Incidents ,Initiatives in the socio political context
which may /can affect the ‘cost of capital ‘and
‘purchasing power’ of an organization.
- Economic factors thus also include

Economic growth,
‘Interest rates’,
‘Inflation’ and
‘Currency exchange’ rates.
Business Analysis
The “ Social factors.” (S )

The social factors can be those which have an impact on the
consumer’s need and the potential
market size for an organization's goods and services.
Social factors include
- Population growth,
- Age demographics and
- Attitudes towards health.
Business Analysis
The “Technological factors.” (T)

The Technology dynamics refers to the influence barriers to
entry, make or buy decisions and
investment in innovation, such as automation,
investment incentives and the rate of technological change.
PEST factors thus can be classified as opportunities

or threats in a SWOT analysis.
It is often useful to complete a PEST analysis before
attempting ,completing a SWOT analysis.
Business Analysis
The ‘V.R.I.O’ Framework for Analysis

Barney in his VRIO framework of analysis proposes
the following four questions to evaluate a Firm’s competencies
- Value.
Does the company/product provide customer value and competitive
advantage ?
- Rareness.
Do no other competitors possess it
- Imitability.
Is it costly for others to imitate
- Organization.
Is the firm organized to exploit the resource
Business Analysis
‘ Value chain analysis’

What is ‘value chain analysis’ ?
Value chain analysis is based on the principle that organizations

exist to create value for their customers.,
It is critically important to understand how

“Activities” within the organization create
“value for customers”
if one is to conduct a value chain analysis.

.
Business Analysis
What value chain analysis means;

‘Separate sets of companies activities that add value’.
Simply it means that, the company’s activities are divided into

separate sets of activities that add value.
The organization can more effectively evaluate its internal

capabilities by identifying and examining each of these activities.
Each value adding activity is considered to be a
source of competitive advantage.
Business Analysis
What value chain analysis means;

‘Separate sets of companies activities that add value’.
A value chain analysis is a linked set of activities that begin with’

basic raw material coming from suppliers’ moving on to a
‘series of value added activities ‘involve in
‘ producing and marketing a product or service’ ,and

ending with the distributors getting the final goods in the
hands of the consumer.
“ The External analysis ”

‘ Cost leadership’ ‘Product differentiation’
An external analysis is an exploration of an organization's
environment and comprises ;
-The market forces,

-The competitors the consumers ,
-The regulators and others in competency and
competitive viability in the marketplace.
- Conducting an analysis often incorporates steps to determine the
‘cost leadership’& Product differentiation factors that provide
advantage to enhance product, or services sales
Business Analysis
“Cost Leadership “
What is Cost Leadership ? Definition: ‘
‘Cost leadership is a term used when a company projects itself as

the cheapest manufacturer or provider of a particular product
or service’.
In business strategy, cost leadership is ; Establishing a competitive

advantage by having the lowest cost of operation in the industry.
Business Analysis
‘Product differentiation’
What is ‘Product differentiation ‘?
Definition
In economic ,marketing terms product differentiation’ refers to
-The process of distinguishing a product or service from others

to make it more attractive to a particular target market’.
-Thus it involves actions to differentiating a product from the

competitors' products as well as a firm's own products.
This is ‘simple ‘product differentiation ‘
Appraisal of Production management

The activity that cannot be measured cannot be managed.
A manufacturer, who is intends to improve the production process

and take his business to the next level, needs to collect and
analyze the relevant data or suitable metrics.
Numeric/ input & output data s are powerful parameters for

measuring business output /growth.
The correct metrics can help a manufacturer to find the sticking

points or weak spots in his production floor by giving him all the
information and insights he needs to continuously improve and
refine his business.

Manufacturing Cycle Time
What refers to “KPI” in context of manufacturing unit
The KPI data measures the time taken for a product to pass through all the
machines, processes, departments, and cycle to be called the final product.
The availability of / sufficient relevant data to accurately measure the manufacturing
KPIs .is prime .
This allows a floor manager to improve and optimize the processes to get
better output from the factory
The Production managers of a manufacturing unit face either of the two
problems ; Depending upon systems and processes at the production floor,;
The two KPIs to be tracked enabling improvement of manufacturing cycle/ factory
performance

Manufacturing Cycle –Components ,Time line
- Machine, Equipment and labor output supervision /optimization

- Finished Goods Inventory /Actual Production
- Production Machines .Availability ,Monitoring & Technical
performance ,management issues, handling of production floor
operations
-Overall Equipment Effectiveness (OEE)
- Maintaining product quality during the entire manufacturing
process
- Alternate Plan (options)

- Manufacturing Cycle Time Line management
- Real-time, continuous and standardized production data

Manufacturing Cycle Time
Production KPI measures are supervised linked to the Status of

the product starting from the procurement of the Raw material and
the time taken at the machines, processes, departments,till its
completion as the final product.
This cycle activity canbe categorised as
-Pre Production
-Production
-Post Production
CORPORATE PERFORMANCE &
PLANNING
Purchase Price .
Determining Source of Purchases
Appraisal of Production Management
Quality Control R & D
“ Chapter Topics ”
-Mergers & Acquisitions Explained

-Performance evaluation as a Tool if management Procedure
-Corporate objectives, Strategies Plans & performance
-Ratio analysis, Corporate Budgeting
-Quality control & Assurance R & D*
“Mergers and Acquisitions”

What refers to “ Corporate mergers and Acquisitions”
“Mergers and acquisitions is also used as a general term to
describe the consolidation of companies or its assets through
various “ financial transactions, “ like
-“Purchase of Assets “
- Consolidations, and
- Management Acquisitions.

What refers to “ Mergers and Acquisitions “?
The terms mergers and acquisitions are used interchangeably
but they differ in meaning.
- A “Merger” is the combination of two firms, which subsequently
form a new legal entity under the banner of one corporate name.
-In “Acquisition”, one company purchases the other outright.
- A ‘purchase deal’ will also be called a “merger” when two
companies agree to join & “pool equity” & other resources to
pursue a common objective in the interest of stake holders of
both companies.
Mergers and Acquisitions

“ Mergers”
- In a merger, the Boards of Directors for two companies approve
the combination and seek shareholders' approval.
- In 1998 a merger deal occurred between Digital Computers and
Compaq, whereby Compaq “absorbed “ Digital Computers.
Compaq later merged with Hewlett-Packard in 2002.
-Compaq's pre-merger ticker symbol was CPQ.
This was combined with Hewlett-Packard's ticker symbol (HWP)
to create the current ticker symbol (HPQ).

“ Acquisitions”
- In a “simple acquisition”, the acquiring company obtains
the “majority stake” (shares) in the acquired firm, which
does not change its name or alter its organizational
structure
The case of M C B bank acquiring the majority shares
of ‘Adamjee Insurance” “ through Stock Exchange is a
example.

“ Hostile Takeovers “ and “Acquisitions “
A deal can be classified as a merger or an acquisition, based on
whether the acquisition is “friendly “or “hostile” and the way its
announced.
The difference simply lies in how the deal is communicated
to the target company's Board of directors , employees and
shareholders.
“Unfriendly or hostile takeover deals, where target companies do
not wish to be purchased, are always regarded as "acquisitions.”

“Consolidation”
In case of consolidation A new company is created by
combining two core businesses and abandoning the old
corporate structures.
Stockholders of both companies must approve the consolidation,
and subsequent to the approval, receive common equity shares
in the new firm.
For example “Citicorp” and “Traveler's Insurance Group”
announced a consolidation, which resulted in the formation
of the Citigroup.in 1998
‘ “ Mergers Acquisitions’‘
“Purchase Price’
Assessing the purchase price of a business
Ahead of a company takeover, regardless whether one is
buying or selling, two core questions have to be viewed
- What is a suitable ,realistic purchase price,
- How this suitable price can be derived ,computed
from the K.P.I s of a business ” legal entity” on a specific date
- Price-earnings ratio
- Discounted cash flow
- Enterprise-value-to-sales ratio
‘Mergers Acquisitions’‘
‘ Purchase Price’
What refers to purchase price in a merger /acquisition
“The ”purchase price ” thus can be simply defined as the

price an investor pays for an investment “
The said amount (purchase price ) becomes the investors
“cost basis “ for calculating gain or loss ,in case of selling
the investment.”
“Purchase Price”
What is and how purchase price is worked out ‘Elaboration “
“The purchase price is regarded as the “gross value “ of the
business, which may be if the “buyer “ requires an additional
“working capital” and thus may include debt that needs to be
deducted to arrive to the equity value of the company.”
What is “Working Capitol “
The capitol needed for a company's operations ,the current
assets, cash inventory ,receivables which the company is
turning over to materialize operating results is referred as
Working Capitol”
“ Purchase Price”
Assessing the purchase price of a business
One of many approaches to ‘determine’ a equitable purchase

price may include following considerations.
-The value of the equity,

-The value of the material assets (net asset value),
-The application of the future income stream method or
A discounted cash flow method to a market-oriented
purchase price estimates.
“Purchase Price”
’ Price-earnings ratio”
“The purchase price includes the total value of the items
delivered or services provided, which are traditionally referred
to as "shipping and handling" .
The charges include insurance for an item being shipped, or
delivered and commonly referred as handling charges. “
These charges are taxable even if they are separately
stated on an invoice
“ Purchase Price”
“Discounted cash flow “
The discounted cash flow method and the application of

multiples are commonly applied /used in the acquisitions and
mergers process / transactions of corporate businesses.
Both methods initially involve the calculation of a company value

.it however does not figure in the determined or corresponds to
the final purchase price.
“Quality Control “
&
“Quality Assurance”
The companies /.managements pursue the businesses
mission and vision ,engaged in production, or offering
services to the satisfaction of the consume/,customer to earn
profits.
The companies therefore are continuously engaged and

focused to ensure the desired quality of their end product or
services thus need to determine what quality assurance
methods to use. and to ensure their marketability and sales.

What is “Quality Control “or QC
The corporate Businesses must have quality control
systems and procedures in place to review and check
the business operations outputs in context of the
following;
- The quality of materials,

- The quality of products &
- The services rendered

“Quality Control “& “Quality Assurance”

Consistency in “Product Quality “ is critical to business
growth besides organizations “ customer centric straggles
so to enhance ,consumer or customer satisfaction
.
The quality of the business product is an important attribute
towards long-term revenue generation ,profitability. through
Quality Brand offerings besides securing customer loyalty
“ Quality control ”
What implies to ‘quality control ?
Quality control is a process through which a business seeks to
ensure that the specified quality of the product is maintained
or improved. ”
Quality control also involves testing of units and determining that
they Comply to the ‘production standard specifications including
‘technical.

“ Quality Control ” can be defined as a "part of “quality
management system “focused on fulfilling quality requirements."
quality control is more of the inspection aspect of quality
management.
“Quality Assurance ” on the other hand relates to monitoring
how the process is performed ,executed towards a quality
finesse product ,.
“ Quality control”
The Aims & Process
Components and characteristics of quality control
- Reliability.
- Maintainability.
- Safety.
- “Quality control process” is a series of actions /steps which
seeks to ensure that product quality is maintained or improved. ...”
- A major aspect of quality control is the establishment of well-
defined controls. These controls help standardize both production
and respond to reactions to quality issues.
Quality Control
“The Objective “
-To Pinpoint / detect flaws or variations in the raw materials
and the manufacturing processes in order to ensure
smooth uninterrupted supply of quality product production. from
the factory to the market.
-To evaluate and improvise the methods and processes making
it competitively cost effective so to enhance sales ,besides
contributing towards a quality brand image

“ Process”
Steps to develop a quality control process:
- Design quality standards. ...
- Decide which quality standards to focus on. ...
- Create operational processes to deliver quality. ...
- Review results. ...
- Frequent review of consumer feedback. ..
- Hard on improvements.

“ Benefits “
- Fosters .Customer Satisfaction. & Loyalty
- More Effective & Efficient use of Resources
- Reduce Inspection Costs. ...
- Boost Morale. ...
- Improves Production Methods.& output ...
- Products Uniform.
-Fosters Brand image ,Quality Consciousness among stakeholders

“ Quality Assurance”
skills /attitudes
-Attention to detail.
- Effective Time & management.
- Problem-solving.
- Multitasking.
- Effective delegation and meaningful communication.
- Team building Ability, motivate to work as a team.
- Knowledge of quality standards.

Disadvantages
• It does not prevent waste of resources when products are
faulty.
• The process of inspecting the goods or service costs.
e.g. the wages paid to the inspectors,
The cost of testing goods in the laboratory.
• It does not encourage all workers to be responsible for quality.

“ S.O.P.”
Standard operating procedure is a set of step-by-step instructions
compiled by an organization to help workers carry out routine
operations.
Standard Operating Procedures aim to achieve efficiency

quality output and uniformity of performance, while reducing
miscommunication and failure to comply with industry regulations.
“Determining
“Source of Purchases”
.
“Determining Source of Purchases”

Corporate sourcing refers to a system where divisions of
companies coordinate .
The ”procurement and distribution “ refers to an activity
involving of
-Purchases of
-Raw materials,
- Equipment's ,components parts,
-,General office ‘supplies ‘ like paper stationary supplies for
the organization.
This is a supply chain, purchasing/procurement, and inventory
function.
“ Procurement & Purchasing “

What refers to “Procurement ?
‘Procurement ‘ is characterized or concentrates on the strategic
process of product or service sourcing, for example
- Researching,
- Negotiation and
- Planning,
What is “ purchasing ’ in a company
This process focuses more on how the products and services are
acquired and ordered, such as raising purchase orders and
arranging payment.
‘ Determining source of purchases”

The common sources of information /price for seeking
business supplies are :-
- Newspaper advertisements.
- Trade directories.
- Catalogue, price lists etc.
- Trade journals.
- Advertised tender.
- Telephone directories.
- Exchange of information between similar companies.
• What refers to “outsourcing.”

When a company arranges’ outsiders /suppliers’ to provide
goods and services that were previously provided/managed
by the company internally. the said function is said to be
outsourced
• What refers to “Insourcing.”
Delegating a job to someone within the company.
• Few or many suppliers. ...
• Joint ventures. ...
• Virtual enterprise.
Research and Development (R&D)

Business ,Organizations
Research & development in a business organization
includes activities that companies undertake to innovate
and introduce” new” products and services.
It is often the first stage in the development process.

The goal is typically to develop/& offer new products and
services to / consumers market and add to the
company's bottom line
.
Research and Development (R&D)

The Advantages
-An organizations R&D activities allows the company to stay
ahead of its competition
-The R&D undertakings reflect the companies capabilities/and
capacity to invest for innovating and introducing new
products and services or to improve their existing offerings.
-Companies in different sectors and industries conduct R&D;
pharmaceuticals, semiconductors, and technology
companies generally spend the most.

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Corporate Performance & Planning

“ Corporations are fictions, invented by nobility,

THE “CORPORATE CHARTER:”

“Corporate is a “ legal entity “ formed into an

The “Corporate Charter-”

-British East India Company a 15-year Charter/ monopoly

-The B.O.D oversee management of the corporation.

The “Corporate/ Characteristics:

The “Corporate Law “

The “Joint Stock Companies Act,”

The “Joint Stock Companies “

-Starting in the 1980s, many countries with large state-owned

Another major postwar shift was toward the development

- The Company's objectives,

The Corporate “Incorporation“

- If a corporation operates outside its home state,

‘ Modern Corporation ‘Title/Name

The Management “Board of directors ‘

-The Board of Directors-BOD

-The Non executive directors are meant to supervise

“Corporate Performance Management”

-By using budget targets as benchmarks, companies

“Corporate Performance Management”

Corporate Governance History:

“ Four Pillars of Corporate Governance”

“Four Pillars of Corporate Governance

‘Development that meets the needs

‘ Elements of Corporate Governance ‘

-Good Board practices

-Well-defined shareholder rights

‘ Good Board Practices’

-There should be Clearly defined roles and

“ Good Board procedures”

The Board should adopt /have

-The Director Remuneration is & should be in line

-There should be a mechanism for

-Internal control procedures

The BOD should ensure that :

“Well-Defined Shareholder Rights”

-Minority shareholder rights formalized

-Well organized shareholder meetings conducted

-Policy on related party transactions

-Clearly defined and explicit dividend policy

-A corporate governance code has been

-A code of ethics has been developed

Established values and principles a company

-Should permeate a company’s culture and

Corp Planning& Management

“ Chapter Topics /Contents”

Scope of “Corporate /Performance’

“The scope of a corporate firm can be described

“Scope of corporate performance “

The Scope of corporate performance

Definition , Elements ,Purpose

Resultantly the corporate plan will let employees and

CORPORATE PLANNING PROCESS

“CORPORATE PLANNING PROCESS”

-How its different from other company,

CORPORATE PLANNING PROCESS

CORPORATE PLANNING PROCESS

What is Corporate Performance ?

1.The financial aspect