Strategic Management Homework

Learning Activity 1

Financial Ratio Analysis

Financial ratio analysis is one of the best techniques for identifying and evaluating internal strengths and weaknesses. Potential investors and current shareholders look closely at firms’ financial ratios, making detailed comparison to industry averages and to previous periods of time. Financial ratio analysis provides vital input for developing an IFE Matrix.

Source: David, F. R. (2013). Strategic Management. A Competitive Advantage Approach. New Jersey, NJ: Pearson Education Inc.

Learning Acitivity

Step 1  –  Using one of the following companies:

• Eastman Kodak
• JC Penney
• Blackberry
• Hewlett Packard

Prepare a table that represents a minimum of 10 financial ratios for the most recently available year-end financial data for this company. 

Step 2 – For each ratio add a column which indicates whether you consider the calculated ratio to be a strength, a weakness or a neutral factor. Include a brief explanation to support your findings.

The attached links from the course materials for this week will assist you in this process.

·         Fourteen Key Business Ratios Used by D&B

          https://www.dnb.com/product/contract/ratiosP.htm

·         The Seven Key Ratios Used in Key Ratio Analysis

           http://ezinearticles.com/?The-Seven-Key-Ratios-Used-         in-Key-Ratio-Analysis&id=5873597

Learning Activity 2

1. A summary step in conducting an internal strategic-management audit is to construct an IFE Matrix. This strategy-formulation tool summarizes and evaluates the major strengths and weaknesses in the functional areas of a business, and it also provides a basis for identifying and evaluating relationships among these areas.

2. Intuitive judgments are required in developing an IFE Matrix, so the appearance of a scientific approach should not be interpreted to mean this is an all-powerful technique.

B. An IFE Matrix is developed in five steps:

• 1. List key internal factors as identified in the internal-audit process. Use a total of from 10 to 20 internal factors including both strengths and weaknesses.
• 2. Assign a weight ranging from 0 (not important) to 1.0 (very important) to each factor. The sum of all the weights must equal 1.0.
• 3. Assign a 1-4 rating to each factor to indicate whether that factor represents a major weakness (1), minor weakness (2), minor strength (3), or major strength (4).
• 4. Multiply each factor’s weight by its rating to determine a weighted score for each variable.
• 5. Sum the weighted scores for each variable to determine the total weighted score for the organization

C. Additional IFE Matrix Information

• 1. The total weighted score can range from a low of 1.0 to a high of 4.0, with the average score being 2.5. Scores well below 2.5 characterize organizations that are weak internally, whereas scores significantly above 2.5 indicate a strong internal position.
• 2. When a key internal factor is both a strength and weakness, the factor should be listed twice in the IFE Matrix, and a weight and rating should be assigned to each statement.
• 3. An example of an IFE Matrix is provided in Table 4-9 for a retail computer store.
• 4. In multidivisional firms, each autonomous division or strategic business unit should construct an IFE Matrix. Divisional matrices can then be integrated to develop an overall corporate IFE Matrix.

Source: David, F. R. (2013). Strategic Management. A Competitive Advantage Approach. New Jersey, NJ: Pearson Education Inc.

Learning Activity 3

Walt Disney has five major division as follows: 1) Media Networks, 2) Parks & Resorts, 3)Studio Entertainment, 4) Consumer Products, and 5) Interactive Media. Complete a IFE Matrix for Disney by following the steps below:

Step 1 – Go to http://corporate.disney.go.com/ and review Disney’s five major divisions.

Step 2 –  Review Disney’s most recent Annual Report at http://corporate.disney.go.com/investors/annual_reports.html. Determine what you believe are the four major weaknesses’ and the four major strengths critical to strategic planning within each of Disney’s five business segments.

Step 3 – With the information from Step 2, develop divisional IFEMs for each Disney Division.

Step 4 – Prioritize the 20 weaknesses and the 20 strengths developed in the prior step so Disney’s top executive can develop an IFEM for the overall company.