Strategic Management Assignment: Competitive Advantage

Strategic Management for
Competitive Advantage

Executive Summary
The strategic management is an important aspect in the organisation as competitive
advantage may be gained with the help of strategic management. The functional areas such as
marketing, HR, finance and operations management plays essential role for better and effective
decision making for the betterment of the firm. Moreover, leadership intends to have effective
performance of team by motivating them to accomplish goals effectually. This gives organisation
better results within stipulated time.

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
Company Performance...........................................................................................................1
Critical reflection..................................................................................................................10
Critical evaluation of team performance and personal reflection........................................15
CONCLUSION..............................................................................................................................16
REFERENCES..............................................................................................................................17

INTRODUCTION
The organisation should have effective strategic management so that it may earn more
profits by beating competitors'. This report deals with business game in the European car
industry. The company which had played in the game is Excel Auto in the business simulation
exercise (Peteraf, Gamble and Thompson, 2014). For effective achievement of goals, strategic
management is required to be achieved beforehand. Moreover, four functional areas such as
marketing, HR, finance and operations management are important for the company so that better
and effective decisions may be taken in the best possible manner. Moreover, these functional
areas should be performed carefully so that effective outcome may be accomplished by the
organisation with much ease. Leader also plays vital role in motivating and inspiring employees
so that they may perform well for the successful attainment of organisational goals.
Company Performance
It is essential to analyze the results of simulation clearly using various key performance
indicators including both the financial and non-financial measures.
Round 1 results
KPIs: Key performance indicators are the best tool that are used for the purpose of
examining financial results of the organization. Simulation outcome for the round 1 present
following financial results as follows:
KPIs R1 R2 R3 R4
Return on assets -6.93% 31.76% 25.23% 5.74%
Gross margin 38.65% 32.69% 29.15% 16.74%
Net margin -6.58% 11.45% 9.19% 1.75%
Current ratio 2.94:1 2.01:1 1.50:1 1.56:1
Liquidity ratio 1.85:1 1.09:1 0.62 0.65:1
Return on shareholder
capital
-14.90% 47.06 35.20% 6.96%
1

Figure 1 P&L breakdown for Round 1
The findings of the round 1 results presented that Excel auto suffered loss on their total
assets as ROA is found to 6.93%. It shows poor performance due to loss-driven. Gross margin
which shows excess of total revenues over cost incurred. It is found that overall gross margin
shows impressive results for the company for the 1st round to 38.65%. Model wise, gross margin
percentage on Kaurum is 35.70% whilst on Luxxis, Excel Auto get a greater margin of 49.48%.
However, excessive overhead incurred by the firm leads to operating loss worth £31.05m at a
post-tax loss of £64.85m. As a result, profitability ratio shows 6.58% loss on total sales revenues
indicates poor performance of Excel Auto because the operations were not gained any return to
the entity (Madsen and Walker, 2015). Due to loss, Return on shareholders’ fund is negative to
14.90%, as a result, shareholders may be dissatisfy and would not be interested to put their
money.
2

Figure 2 P&L breakdown for Round 2
In R2, ROA and ROE shown favourable results as they both rose to 31.76% and 47.06%
is a sign of excellent performance because this year, P&L statement present post-tax profitability
of £386.80 due to controlled overheads (Wheelen and Hunger, 2017). However, due to overall
increase in cost of sale, gross margin shows slightly decline to 32.69%, still, net margin present
improvements to 11.45%. Thus, it can be interpreted that the decisions made this year drive
favourable improvements.
3