Global Business Strategy: Analysis and Recommendations for Centrica plc

Global Business Strategy

TABLE OF CONTENT
EXECUTIVE SUMMARY.............................................................................................................3
Strategic audit of organization's financial and business performance over the past 3 years.......4
Analysis that explains and justifies the strategic actions.............................................................6
Critical reflection.......................................................................................................................17
Recommendation.......................................................................................................................18
CONCLUSION..............................................................................................................................19
REFERENCES..............................................................................................................................20

EXECUTIVE SUMMARY
A global business strategy is the method used by many companies in order to develop
and expand into the global market and gain good position. The major purpose of developing a
global strategy is to improve performance and increase sales across the world. Nowadays,
companies are always looking for best ways to improve their business performance. Every
business need effective strategic action and planning, it takes model to implement that strategy.
This can be done through finding out internal and external environment which can impact the
business operation.
In today's business environment companies are focusing on using strategic plans which
take at least one year to complete. The below report is based on Centrica plc which is a leading
energy services and solutions provider situated in UK. The firm is focusing on helping people
Live simply, sustainably and affordably. A firm provide services like supply of gas and
electricity to customers and provide services to over 26.2 million people in the UK, via brands
like British Gas. There are many engineers and technicians working in the company in order to
provide good service. As the company is having large number of customer they need to focus on
developing its business performance and financial stability. Strategic actions are projects outside
the firm's day to day operational business operations which can help the firm to achieve its
strategic goals and strategy easily. An effective Action plan will be helpful to create something
new and better for the business activities which later is useful to improve performance. Different
types of strategic actions are porter's generic strategies, PESTLE analysis and value chain
analysis. By using these model company can easily find out external environment which can
impact its business operations and influence its financial condition. It is a technique used by
companies to gain a macro picture of a business environment and make necessary changes by

adopting opportunities and reducing threats. In addition to this, porter generic strategies discuss
how a firm can easily gain competitive advantages in the market and chose effective scope.

Strategic audit of organization's financial and business performance over the past 3 years
Strategic audit is a systematic method or process used by company in order to find out
and determine the extent of implementing a firm's strategies, it goals, its aims, its purposes and
how to meet those goals effectively (Moon, 2022).
Profitability ratio
Profitability ratio analysis 2019 2020 2021
Gross Profit GP 2525 3119 1522
Net profit NP -1103 -117 1361
Sales revenue Sales 12994 12249 6918
Earnings before interest and tax
or operating profit
Capital employed
Net income
Average total assets
GP ratio Gross profit / sales * 100 19% 25% 22%
NP ratio Net profit / sales * 100 -8% -1% 20%
Profitability ratio of the business show how much the business is able to earn in the
organization out of all its operations. The profitability ratios for this organization shows upward
rising trend as it was facing negative balances which affected the growth of the organization. The
business needs to increase its sales in order to achieve the effectiveness in the performance.
Liquidity Ratio :
Liquidity ratio analysis 2019 2020 2021
Current assets 8296 10412 9826
Current liabilities 8885 7665 6877
Inventory 431 324 320

Prepaid expenses 7865 10088 9506
Current ratio
Current assets / current
liabilities 1.08 1.35 1.42
Quick ratio
(Current assets –
Inventory)/Current
Liabilities 1.02 1.31 1.38
This is the ratio which provides the analysation of the liquidity of the organization which
is considered to be affected due to the poor capacity of the business to pay its short term
obligations. This ratio shows that currently the business is moving towards better liquidity and
hence has the improved its efficiencies. Current ratio is considered to be idea if it is at 2:1.
Hence, it can be said that the business is moving towards idea current ratio.
Efficiency Ratio :
Particulars Formula 2019 2020 2021
EBIT -1034 -577 907
Interest 1306 843 840
Interest coverage
ratios EBIT/ interest -0.792 -0.684 1.080
Particulars Formula 2019 2020 2021
Account receivable 4839 2801 2926
Sales revenue 12994 12249 6918
Account receivable
turnover
Account receivable /
sales *365 135.927 83.465 154.378
Particulars Formula 2019 2020 2021
Account receivable
turnover
Account receivable /
sales *365 135.9269662921
83.4651808
311
154.378433
0731
Average collection 365/account receivable 2.685 4.373 2.364