Strategic Analysis & Recommendations for Touchstone Exploration Inc.

This report provides a comprehensive analysis of Touchstone Exploration Inc.'s strategic environment, focusing on its financial and business performance. The analysis includes a review of key financial ratios such as ROCE, profit margin, and current ratio, revealing a declining financial performance. The report employs frameworks like the Five Forces model and PESTLE analysis to assess the competitive landscape and external factors affecting the company. Recommendations are made for strategic moves, including market development, to improve financial performance and gain a competitive advantage. The report also emphasizes the importance of adapting to the changing business environment and making strategic investments for long-term profitable growth. Models like industry lifecycle, degree of turbulence, key success factors, competitor analysis, and customer analysis are considered to grow the business in the coming 3 to 5 years. It concludes with a critical reflection and recommendations aimed at guiding Touchstone Exploration Inc. towards achieving its goals and enhancing its overall performance.

ANALYSING THE
STRATEGIC
ENVIRONMENT

Table of Contents
EXECUTIVE SUMMARY.............................................................................................................3
Strategic Audit.................................................................................................................................4
Financial and business performance............................................................................................4
Analysis...........................................................................................................................................6
CRITICAL REFLECTION...........................................................................................................12
RECOMMENDATION AND CONCLUSION............................................................................13
REFERENCES................................................................................................................................1

EXECUTIVE SUMMARY
Strategic actions:
Management of the company would perform well only with the framing of adequate
strategies in respect to the growth and success of the organization. The recommendation in
relation with the strategies is based on the financial health and performance of the company. The
management report is an important document in respect to the support of the management under
which an evaluation of the company’s current performance would be made that will assist the
management in taking of appropriate steps towards the support of company and making an
improvement in the existing performance of the company.
Touchstone Exploration Inc is an international upstream oil and gas company with the
persistence of experienced management and team with a track record of delivering value to its
stakeholders. The main aim of the company is to raise the liquidity for shareholder along with
gaining of access to London Capital market. As the financial performance of the company is not
showing well which make it important for the company that it can take certain strategies which
will lead to raise the market share along with gaining competitive advantage. Thus, it is
recommended to the Touchstone Exploration Inc that it can focus towards the strategy of Market
development under which it can raise the existing product share in new market. With this
strategy the company can raise the share of market along with focussing towards the financial
growth and success. Along with concerned strategy the company can also opt the performance of
five force model, Pestle analysis, Industry life cycle, Degree of turbulence, Key factor for
success, competitor analysis, customer analysis and various other so that in the coming 3 to 5
years it can grow and meet the challenges which may have a negative impact towards the
financial performance of the company. With the implication of the concerned model the
company can make an adoption of most appropriate strategy which will lead to success and
performance improvisation along with meeting changing business environment.
This report would make an analysis of the financial and the business performance followed
with the strategic recommendation which the company need to adopt for the improvement in
financial performance. Focus towards the concerned strategic moves the company can direct
towards the meeting of its goal along with meeting the changing situation and the business
environment. The report also make a critical reflection followed with the conclusion and
recommendations.

For attaining long term profitable goals such as 3 to 5 years, new extended strategic
investments should be done for attaining competitive capital profits on wider working scenarios.
It will enable company to significantly advance focus on stronger business performance domains
and collectively expand untapped goals for higher consumer oriented goodwill. Internationally
company working goals should be ideally analysed for extended working synergies, determined
working paradigms towards finance goals and business performance benchmarks. In long term
management and workforce should be given competitive training for improved vision abilities,
higher strategic expertise and untapped diverse functions to evolve on primitive returns.
Strategic Audit
Financial and business performance
For analysing the financial performance, the financial ratio plays an important role. This
is because with the evaluation of financial ratio, the organizational financial performance can be
evaluated.
Figure 1Key Ratios
Source: Key Ratios, 2020
While evaluating the financial performance it is analysed that the ROCE which shows the
return in respect to the employment of capital is declining i.e. in 2018 it was 15.67, in 2019 it

become -0.94 while in 2020 it become -17.72. This shows that the ratio is continuously declining
and reflect that financial performance of the Touchstone Exploration Inc is declining. In the
same way while evaluating the profit margin of the company it is found that the ratio is showing
at a declining stage i.e. in 2018 it was 0.95 which decline in 2019 and become -14.54 that further
decline in 2020 and become -56.30 (Key Ratios, 2020). As the profit margin ratio shows the
profit earning of the company which is directly related with the financial aspect and analysis.
However, with the declining profit margin ratio directly shows that the financial performance of
Touchstone Exploration Inc decline. Likewise, in case of evaluating the Current ratio which
shows the ability of the company in terms of making a payment of short term liability is also an
important financial ratio (Zhang, He and An, 2020). In respect to Touchstone Exploration Inc the
financial performance of the company fluctuates i.e. in 2018 it was 0.83 which raise in 2019 i.e.
0.93 that raise in 2020 and become 1.79. This shows that the financial performance is declining
and thus need to be improved.
Thus, with reference to the financial performance of the Touchstone Exploration Inc it
can be right to said that the financial and business performance of the company is not showing
well which is also justified with the declining financial ratio. It is to be noted that the financial
ratio is the reflector of financial health of the company which in case of Touchstone Exploration
Inc decline and thus shows the negative financial performance of the company.

Figure 2Income statement
Source: Income Statement, 2020
The above figure also shows that the financial performance of the Touchstone
Exploration Inc decline i.e. justified with the declining revenue of the company i.e. in 2018 it
was 35927 which raise in 2019 and become 38654 which again falls in 2020 and become 19592.
This shows that with the declining revenue the financial health of the company also declines.
While making an analysis of the income statement it was also found that the net income of the
company is declining because in 2018 it was 352.41 which falls in 2019 and become -5620 that
further fall in 2020 and become -11030 (Income Statement, 2020). This shows that the business
performance of the company is showing on a negative slope and declining which need to be
improved in order to meet the competition and retain in the market competition. With this
financial analysis it can be right to said that the company is not being meeting its financial target

and the goals with the persistence of negative financial health and declining financial
performance of the company.
Analysis
Five force analysis:
This is also an important model and strategy that will lead to assist the company in terms
of meeting the market competition along with improvisation of its financial and business
performance. The forces are:
Bargaining power of supplier:
It refers to the power of supplier which may have an impact towards the company (Fan
and et.al., 2020). In reference to Touchstone Exploration Inc the power of supplier is high
because of the presence of large number of supplier of dominant position which may decline the
revenue of the firm.
Bargaining power of buyers:
It refers to the buyer power in terms of lowering the prices and buying the product
(Gautam and et.al., 2019). In case of Touchstone Exploration Inc the bargaining power of
customers are high because of the presence of large number of substitute and thus impact the
profit of the company.
Threat of new entrants:
In respect to new entry in market the threat is low for Touchstone Exploration Inc. This is
because of the persistence of high restriction towards the entry of new companies and thus lead
to avail opportunities for Touchstone Exploration Inc in performing its business operations.
Threat of substitute products:
This force includes the presence of substitutes and its impact towards the sale of company
(Bruijl, 2018). in respect to Touchstone Exploration Inc the treat of substitute product is
moderate. This is because of the presence of large number of substitute products and its impact
towards the company.
Rivalry among existing competitor:
This is related with the market competition and its impact (Hole, Snehal and Bhaskar,
2019). With the raising competition this force has high impact towards the company and its
products. This means the intensity of this force is high towards the Touchstone Exploration Inc.

PESTLE analysis:
Political:
This is related with the force associated with political parties and groups (Shtal and et.al.,
2018). With respect to Brexit and its impact towards the trade restriction a negative impact has
been put towards the Touchstone Exploration Inc.
Economic:
This is related with the economic condition of the nation and its impact towards the
economy (Hans, 2018). With reference of inflation and high rate of interest the Touchstone
Exploration Inc will be negatively impacted that may further impact their business operations.
Social:
With the persistence of positive taste of people towards the innovative product, leisure, as
well as presence of high education level may lead to have a positive impact towards the
Touchstone Exploration Inc. This will lead to support its business operations.
Technological:
This is related with the force that is associated with the technology and its upgradation
(Bessière, and et.al., 2019). With the adoption of latest technology in terms of mobile
technology, and other digitalised technology the sector of oil and gas industry can succeed.
However, with the lack of technology Touchstone Exploration Inc has been negatively impacted.
Legal:
With reference to persistence of changes in the laws and regulations and changing legal
system may lead to raise issue for the Touchstone Exploration Inc. This is because it is highly
important that a compliance towards the legal structure need to be made by the company.
Environmental:
With the persistence of alteration in the environment and continuously changing
environment may lead to raise the issue towards the Touchstone Exploration Inc in terms of
adding cost and compliances. With such addition the Touchstone Exploration Inc would be
negatively impacted.
Industry lifecycle:

It refers to an evaluation of industry through four stages i.e. introduction, growth,
maturity, and decline (Cucculelli and Peruzzi, 2020). With this cycle a detailed analysis of the
industry and its growth would be able to get analysed.
In respect to the introduction stage of oil and gas industry of UK the level of production
raises gradually with the raise in drilling of wells. This is followed with the growth stage under
which the industry start grows and reach the stage of maturity. When the output stabilizes and
last for 2-3 years or longer then this is the stage of maturity. Under decline stage the production
decline and fall at a rate of 1-10% (The Life Cycle of Oil and Gas Fields, 2022). Here Oil and gas
industry constantly try to improve the rate of recovery.
Key factors for success:
In respect to the key factor of success that are associated with the Oil and Gas Industry
and Touchstone Exploration Inc may include the presence of trusting attitude of people towards
the company. With such attitude the success of the industry has been raised.
Other factors may include the shared and aligned goals that include serving the need of
customers along with taking care of market competition and environment (Zulkifli, Balqiah and
Hamsal, 2020). The commitment towards the enabling of best services is also included under the
success factor of Touchstone Exploration Inc. Honesty and supportive and open behaviour also
act as important factor which may lead to success of the Touchstone Exploration Inc.
Four Link analysis:
Government link and network:
In case of Touchstone Exploration Inc this link act as most advantageous. This is because
here the Government is counted as one of the customer which buy the product of Touchstone
Exploration Inc.
Complementors:
In reference to the product of Touchstone Exploration Inc they add value to the further
production. This means the product of Touchstone Exploration Inc act as best complementors.
Formal coop links:

With reference to Touchstone Exploration Inc an adoption of the approach of Joint
venture or joint shareholding, it can make an exploration of its business and perform expansion
of the business.
Informal coop link and networks:
In case of Touchstone Exploration Inc the company have legal connection as well as
trade association under which would allow the company to get positively impacted in reference
to the performance of business operation.
Competitor analysis:
In respect to the Touchstone Exploration Inc there is a high degree of market
competition. With the persistence of large number of market competition and market the
Touchstone Exploration Inc can be affected in terms of declining sales and revenue of the
company. Likewise, this will lead to make a negative impact the market shares too.
Customer analysis:
There are various factors which are related with the analysis of customers. These factors
may include the customer experience under which as per the experience of customers the
High Quality
High PriceLow Price
Low Quality
INDIIndus Gas
ENQEnQuest
GTEGran
Tierra
NS Energy

Touchstone Exploration Inc can raise the share of its products. In the same way it will also assist
in making changes in the existing products.
Customer loyalty is also counted as one of the important method through which the
effectiveness of company can be analysed. The high customer loyalty shows that Touchstone
Exploration Inc is showing good performance among the customers and in the market.
Customer lifetime i.e. the long term life and association of customer towards the
company shows the positive performance of company in the market and thus raise the success
and growth.
Environment basics:
The environment basic is related with the environment and its impact. In respect to the
functioning of Touchstone Exploration Inc and its steps towards the environment protection
plays an important role in terms of positively affected and influenced with the force. However,
with respect to creation of pollution and depletion of natural resources the environment is
affected and thus raise negative impact towards the environment.
Degree of turbulence:
It refers to the occurrence of unexpected and unpredictable event and its impact towards
the environment. With the concerned impact the business may either positively or the negatively
impacted. In respect to the sudden change in environment in terms of legal as well as political
environment the Touchstone Exploration Inc would be negatively impacted in terms of affection
towards the sales as well as revenue generation.
Ansoff Matrix
This is an important model that suggest the strategic action towards the company. As per
this model there are majorly 4 strategies which the company can adopt in order to grow and meet
the competitive business environment. These strategies include:
Market development:
As per this strategy the existing product will launched in the new market that will lead to
assist the company in its growth and making an expansion in the market (Dawes, 2018). With the
persistence of this strategy the company can make expansion of its serving market and thus
expand its business in the new market.

Market penetration:
As per this strategy the company can make sales of its existing product in the existing market.
With the adoption of this strategy the company can command and rule towards the existing
market and thus become the competitive in the market (Zanjani and et.al., 2020). Likewise, with
the persistence of this strategy the company can bind the customers of existing market (Agnihotri
and Bhattacharya, 2022).=
Product development:
This is also an important strategy under which new product will be sell in the existing
market. With the persistence of this strategy the company can rule over the existing market along
with beating the existing competition of the market (Matrix and Ansoff, 2020). As per this
strategy the company can make expansion of its product range and thus meet the market
competition.
Diversification:
This is also an important strategy under which new product will be sold in the new
market. This will lead to the expansion of the market along with the expansion of the product
range. It is to be noted that this is the risky strategy because here the product and the market both
are new which may also lead to bring negative impact towards the company and thus may lead to
affect the brand image of the company.
In reference to the Touchstone Exploration Inc the Market development is highly recommended
which will direct the company to make an expansion of its market and thus move towards the
direction of growth and success. With the adoption of the concerned strategy the Touchstone
Exploration Inc can make expansion of the market along with making an exploration of its
existing services so that it can raise the market share and along with raising awareness of its
products. With the adoption of concerned strategy, the company can make an exploration of its
services and thus meet the market competition. With the concerned strategy the company can
also make an improvisation in the financial performance under which with the exploration of the
market the company can raise its revenue and thus profitability of the company (Helmold and
et.al, 2022).