BSkyB plc: Financial Performance Analysis, Challenges & Strategies

This case study analyzes the financial performance of BSkyB plc, comparing its financial metrics from 2013 to 2014. It identifies a decline in gross profit margin, operating profit margin, and overall profit margin. The report evaluates shareholder satisfaction, considering the company's increased customer engagement and dividend distribution. It suggests strategies for BSkyB plc to improve profitability, including cost management, market expansion, productivity enhancement, customer acquisition, and profitability ratio optimization. The analysis emphasizes the importance of understanding market dynamics and implementing effective strategies for sustained growth and profitability. Desklib offers a platform for students to access similar solved assignments and past papers for academic support.

Introduction to
business studies
Table of Contents

INTRODUCTION ..........................................................................................................................3
TASK...............................................................................................................................................3
1. Case study...............................................................................................................................3
2. Explain to what limit BSkyB plc's shareholders would be happy with company's financial
performance of 2014 in comparison to 2013..............................................................................4
3. Suggest various options to BSkyB plc that would help company to improve its profits and
performance from financial point of view..................................................................................4
CONCLUSION ...............................................................................................................................5
REFERENCES................................................................................................................................6

INTRODUCTION
The report prepared highlights the working of BSkyB plc company. It provides the data
which would be helpful to understand the working of an organisation and have an idea what are
its strengths which would help the company to survive competition and be helpful in the long run
and its weaknesses which it must deal with, what are the areas which require more focus (Foss,
Mudambi, and Murtinu, 2019). The report also gives an idea that there are many hidden factors
which lead to decline in profitability and hinder the working of company which must be
addressed on time. It serves as a guide by providing certain ideas which would help to improve
its overall performance, increase profitability of the company & lead to expansion as well.
TASK
1. Case study
(I) Gross profit margin:
Gross profit / Revenue*100
Year 2013 :
2906 / 7235 * 100 = 40.165
Year 2014 :
3016 / 7632 * 100 = 39.51
(II). Operating profit margin :
Operating income / Sales revenue * 100
Year 2013 :
1330 / 7235 * 100 = 18.38
Year 2014 :
1275 / 7635 * 100 = 16.699
(III). Profit margin :
(Profit / net revenue) * 100
Year 2013 :
979 / 7235 * 100 = 13.531
Year 2014 :
865 / 7635 * 100 = 11.329

2. Explain to what limit BSkyB plc's shareholders would be happy with company's financial
performance of 2014 in comparison to 2013.
It can be observed that company has faced decline in gross profit margin by 0.655%,
Operating margin also fell by 1.681%, Profit margin noted to decrease by 2.202%. Company has
promised to meet customer expectations & serve them right during the year (Sadeghi, and et.al.,
2019). Company has achieved 33% growth in engaging customers and would focus to form a
chain during the life cycle of business. It has increased dividend distribution by 7% and 32% rise
in share of shareholders. Despite its performance for the current year is not sound but it can be
noted that it has increased its customer base which would help them to rise its sales and it would
lead to increase in revenue in the coming years.
Further it can be said that valuation of the company would increase which would provide
them a competitive advantage against their competitors in market. Further it would lead to
increase in market share of the company, add to its brand image and brand value. As it is
mentioned above that company is paying 7% more dividend to its existing shareholder's it will
satisfy their expectations to some extent and as result they will sustain in the company for a
longer period of time. Decrease in sales and profit margin during the year 2014 can not be judged
by simply comparing 2013 as there are many hidden factors that would affect company's
profitability in the year such as strike, political pressure, technology advancement, change in
government policies etc.
3. Suggest various options to BSkyB plc that would help company to improve its profits and
performance from financial point of view.
There are many ways with the help of which business can increase its profitability ratio
and improve its finance related operations. There are many factors which would help business to
work more efficiently, effectively, increase sales, revenue and contribute in expansion of
business as well. Some factors which can be explained are :
1. Management of costs : Managing costs is important for running operations in a business
such as BSkyB plc company and carrying out activities before time to make it sustainable
in nature. Reduction in costs can be done through tracking of expenses, manage variable
and fixed costs, make proper plans i.e. where & how much amount can be spent and
invested which would result in improving profit margins (Swab, and et.al., 2020).

2. Expansion of market : It can be seen that BSkyB plc company is required to expand its
operations and activities in market with time. It can be done with the help of new product
development or improving the existing product in market. Expansion can be in terms of
Customer base, market base through innovative ideas, lowering the prices, increase
quality of products, improving advertising techniques.
3. Increasing productivity : BSkyB plc company must focus on increasing productivity
which would lead towards increase in revenue, profit and improve company's overall
performance as well (De Angelis, R., 2018. Moura, R. and Brito, 2019). It would help to
increase company's supply in market and provide customer's with easy availability of
products which would keep them engaged during the cycle of company.
4. Acquire new customers from market : BSkyB plc is focusing mainly on tapping new
opportunities, new customer's from the market and also taking steps for sustaining the
available customers for growth and development of business.
5. Improve profitability ratios of company : Company can improve its profitability ratios
such as Gross profit, operating profit and all those ratios which contribute to have an
overview of business as an whole and understand the working of business. Find reason
because of which it is lagging behind and what is its strength and weaknesses & where it
is lacking in its operations. In case of BSkyB plc company It can be seen that there has
been decline in profit margin if compared with last year. There must be preventive
measures taken which would help to find out the quantitative & qualitative factors
hindering the profit earning process and how it can be sorted (Kassis-Henderson, Cohen,
and McCulloch, 2018).
CONCLUSION
It can be concluded from above report that BSkyB plc company needs to focus on
capturing market area which would help the business to grow with time, work efficiently and
effectively for improving the performance, operations and activities. It is also suggested that it
must focus more on expanding market base in context of customers and increase its productivity,
understand the requirements and expectations of clients, shareholders. It must always keep a
back up plan that how can it play smart at the time of decreasing profits and would attract
opportunities and retain stronger image.

REFERENCES
Books and Journals
De Angelis, R., 2018. Business models in the circular economy: Concepts, examples and theory.
Springer.
Foss, N.J., Mudambi, R. and Murtinu, S., 2019. Taxing the multinational enterprise: On the
forced redesign of global value chains and other inefficiencies. Journal of International
Business Studies. 50(9). pp.1644-1655.
Kassis-Henderson, J., Cohen, L. and McCulloch, R., 2018. Boundary crossing and reflexivity:
Navigating the complexity of cultural and linguistic identity. Business and Professional
Communication Quarterly. 81(3). pp.304-327.
Moura, R. and Brito, M.C., 2019. Prosumer aggregation policies, country experience and
business models. Energy policy, 132, pp.820-830.
Sadeghi, and et.al., 2019. An institution-based view of international entrepreneurship: A
comparison of context-based and universal determinants in developing and
economically advanced countries. International Business Review. 28(6). p.101588.
Swab, and et.al., 2020. “SEW” what do we know and where do we go? A review of
socioemotional wealth and a way forward. Family Business Review. 33(4). pp.424-445.