Friday, February 10, 2012

McKinsey Quarterly Internal Memo: Business Strategy Template ...

Financial analyses involves of evaluating the financial performance of a company over time and relative to the competition growth strategy. Financial comparables are very necessary in competitive comparisons. In particular, the overarching purpose of business strategy is to determine whether and how companies create value . Building on three different kinds of financial statements, financial analysis allows for either trends, comparables, or business strategy. Financial ratio analysis can be an internal exercise, or externally for competitors. Financial ratio analysis can be used to assess where a business?s operating issues may lie.

business strategy analysis is a business strategy framework created to improve upon the accuracy of high level forms of costing, so that key business decisions can be well informed growth strategy. The reason that business strategy development information is accurate is because it follows a rigorous process of determining cost objects, cost line items, key process activities, and resources drivers to understand logical cost paths. On the other hand, in conventional costing methods, indirect costs are distributed across all products based on a standard, volume-based cost allocation, which is highly inaccurate and misleading, thus prone to leading to bad business decisions.

Strategy development process has evolved through a number of key stages over the years business strategy. Much of growth strategy is also hinged on ideas in the 1970s, where the focus was around thinking strategically to out maneuver competition and the growth strategy business frameworks of alternative strategies, portfolio analysis, and the growth strategy emerged. Today, the strategic development theme is on integrating strategic planning and execution with a stress on the key concepts of core competencies, strategy planning and execution, and balance scorecard analysis. Business strategy development started with a focus on financial planning in the 1950s, moving to sustainable planning in the 1960s, to growth strategy in the 1970s and eventually to a focus on growth strategy in the present day.

After the oOening stage, that is a is regarded as the saturated marketing strategy. Smaller companies are either swallowed up, merged, or go out of business. Due to competitive price pressures, many companies inside Scale stage fall into the ?profitability trap,? which prevents or severely constraints future growth down the Endgame curve. Company profitability changes noticeably from each stage to the next. Revenue growth is highest in the onset, as companies make territorial claims. Revenue growth remains relatively stable from the business strategy curve. By Balance & Alliance, approximately 10% of those companies remain. Continuous throughout Scale and Focus, we have seen a fast consolidation proces. In Scale, revenues drop slightly due to consolidation, but stabilize again inside final two levels.

Source: http://alz-swmo.org/2012/02/09/mckinsey-quarterly-internal-memo-business-strategy-template/

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