Strategic Management for Competitive Advantage and Performance

This report assesses a company's strategic management and its impact on competitive advantage, focusing on key performance indicators across four rounds of simulations. Initially, the company faced challenges in meeting objectives like market share, research investment, and strike days, but succeeded in gross and net profit margins and return on assets. Subsequent rounds involved strategy adjustments, including increased production, workforce skill enhancement, and debt management. Financial analysis reveals improvements in return on assets, gross profit margin, and shareholder returns, alongside better productivity and market share for models S11 and L13. The final round demonstrates significant debt reduction, enhanced asset utilization, and improved liquidity, reflecting effective financial management and increased investor appeal. The report concludes by highlighting the company's progress in achieving its strategic objectives and enhancing its competitive position.

Strategic Management for
Competitive Advantage

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
COMPANY PERFORMANCE.......................................................................................................3
CRITICAL REFLECTION..............................................................................................................8
CONCLUSION..............................................................................................................................13
TEAM PERFORMANCE..............................................................................................................13
REFERENCES..............................................................................................................................16

INTRODUCTION
The objectives of the company includes the securing maximum market share, attaining
the at least 60% of the productivity with 0 strike days, investing minimum £85 mn in the
research and innovation. Along with this, it aims at maintaining 30% gross profit margin and the
8% net profit margin and achieving 30% return on assets. The performance of the company is
provided in the table and along with this the company has been able to accomplish it GP margin
and net profit margin objectives along with the return on assets financial indicator. The company
has invested £72.24 mn in research which is below the set objective. But the company failed to
achieve the 0 strike days but accomplished the productivity percentage.
Particulars Amount (£m)
Total sales 10553.96
Total unsold stock 115.21
Shareholder's funds 4807.47
Closing bank balance 2952.55
Outstanding loan 50
COMPANY PERFORMANCE
The strategies of the business play an important role in determining the future growth and
success of the organisation. The four rounds have been conducted to achieve the key
performance measures of the car company. These rounds will provide the simulations about the
company regarding the operations and achievement of key performance Indicators. The Stuart
corporation has been manufacturing cars. The simulations from the 4 rounds are derived to
assesses the performance and results of carrying out the business for the year. It is hard to
achieve the performance measures at once (Narkunienė and Ulbinaitė, 2018). The performance
of company would be evaluated through the 4 rounds on how it will achieve the targeted
performance objectives.
Round 1

In round 1 it could be evaluated that the business has produced two models S11 and L13.
In quantity they are 75000 & 60000 respectively and sold all the cars produced. Model S11 was
produced with workforce of 1800 and L13 with 1500. The total workforce for producing the two
models was 3300. The productivity measure in round 1 show that each worker has produced
40.91 cars in a year.
Round 1
Outstanding Debt 100
Return on assets % 20.16%
Current Ratio 1.363
Gross Margin % 26.60%
Quick Ratio 1.363
Post Tax profit / Sales % 7.09%
Liquidity Ratio 0.084
Profit / Employee 63636.36
Return on Shareholders Funds % 29.64%
Evaluation of Round 1 Profit and loss using ratio analysis it has been identified that
Stuart Corporation had debt of 100 million where the shareholders funds were 710.61 million.
The share of debt against shareholder's fund is considerably low which shows the capital
structure is not adequate and cost of capital due to this would be higher. Return on assets that is
used to measure the management efficiency to generate returns using the assets of company
effectively. It could be seen that company had ROA of 20.16% in round 1 which is adequate at
the initial stage of the business (Anghel and Calotă, 2016). Return has to be increased by more
effectively using the existing resources and also by reducing the unproductive assets. Current
ratio was 1.36 where the standard ratio is 2:1. The existing current assets are not adequate to
meet the short term obligations of company. Weak current ratio imposes threat to suppliers that
there due may not be paid on time and may cause them to stop supplies. It has to managed
through effective management of cash cycle. Gross margin has been achieved as 26.60% which

is very low and it reflects that company is not having good return from its trading activities.
Round 1 GP is low and requires business to reduce the costs using cost effective strategies that
would increase profits. Quick ratio measures ability of company to meet the short term liabilities
without including inventory. As it sold the cars produced during the year there was no inventory
left at year end. Therefore, there will be no difference between the quick ratio and current ratio.
Post tax profits % also known as net profit margin are 7.09% which are very lower than the
benchmarks. Lower profit margins in round 1 shows that they are required to put increased
efforts and have to implement new strategies that improve the returns of Stuart Corporation. As
the profits are low the distribution among employees is also lower (Cavaco and et.al., 2016). On
the other it could be seen that return on shareholder's fund 29.64% which is very lower from the
performance benchmarks. Lower return could make the investors to shift the investments and
lower demand would decrease the share prices affecting the market cap of company. Results of
round 1 shows that has to make considerable amount of improvements to reach closer to
performance benchmarks.
Round 2
The round 2 has been performed to assess the results of implemented new strategies to
achieve the performance benchmarks. Company increased the production of both the models and
also sold all of them. It raised the production to 94500 and 82000 with the same workforce. In
round 1 workers were less skilled and also not aware of the processes to be carried out. Hiring
skilled employees and advanced machineries increased the productivity to 53.48 car per worker
per year which was high from round 1. The financial performance and position of company has
been evaluated to know the success of new strategies implemented. It raised the debt to 176.08
million from 100 in round 2. Increase in debt will reduce the cost of capital as it has higher tax
benefits.
Round 2
Outstanding Debt 176.08
Return on assets % 21.13%
Current Ratio 1.66
Gross Margin % 33.49%
Quick Ratio 1.66

Post Tax profit / Sales % 10.32%
Liquidity Ratio 0.33
Profit / Employee 139312.12
Return on Shareholders Funds 39.28%
Round 3 and Round 4
Return on assets has also increased from 20 to 21% which is not very high. The plans for
utilising assets have not worked efficiently and only slight increase is seen. This was due to rise
in assets. Current ratio has improved slightly to 1.66 which shows that steps taken for cash cycle
are required to be further modified. It has to reduce the creditors by making timely payments to
them. GP margin is 33.49% that has shown considerable increase due to the negotiations with
suppliers and advanced manufacturing techniques that reduced the labour costs. Issues were
faced in making the workers adopt these changes successfully. Quick ratio is again the same as
all the produced cars were sold (Palandeng and et.al., 2018). NP margin was 10.32% with 3%
rise from round 1. Revenues were increased with string control over cost and expenses. Liquidity
ratio is still low and has to be improved. Profits per employee has increase due to increase in
profits through adoption of strategies for increasing sales. Return over shareholder's fund has
been increased to 39.28% which shows that measures taken in round 2 are working effectively to
achieve the results as per benchmarks.
On making a comparison between the financial indicators of the round 3 with the round
4, it can be stated that there the outstanding debt amount has declined from £238.65 to £50 in
round 4 which indicates that the company has paid off its debt to the maximum extend which
means that the financial burden of the company is less. The return on assets of the company has
further enhanced from 45.41% to 50.75% which depicts that the company is efficiently making
use of its assets in generating income for the company (Firdaus and Endri, 2020). This is majorly
because of the reason that there is approximately 2 times increase in the profits as well as the
total assets of the company. This conveys that the company is utilizing its assets to its maximum
capacity which has resulted into generating revenue for it and this has led to the higher return.
The current ratio of the organization is has further improved as it has increase to 2.57 times as

compared to the 2.08 times which means that company is having sufficient funds for meeting up
with the short term business requirements effectively and efficiently without the need to take
additional funds (Sabour, 2020). The another crucial factor is the gross profit margin which has
also increased in from round 3 to round 4 which is because of the reason that the gross profits of
the company has increased over the period along with the decline in the cost of sales. This means
that the company is effective in managing its direct cost. Another financial indicator is the quick
ratio which is a more conservative form of current ratio as it excludes the stock value as this
cannot be sold on a quick basis. This ratio has also risen in round 4 which depicts that the
company has invested less or the limited amount in its stock which has resulted into greater
quick ratio highlighting sound position of the company.
Financial indicators Round 3
Outstanding debt 238.65
Return on assets % 45.41%
Current ratio 2.08
Gross margin % 35.08%
Quick ratio 2.08
Post tax profits/sales % 16.20%
Liquidity ratio 0.85
Profit/Employee 424699.28
Return on shareholders Funds % 50.04%
Financial indicators Round 4
Outstanding debt 50
Return on assets % 50.75%
Current ratio 2.57
Gross margin % 41.51%
Quick ratio 2.52
Post tax profits/sales % 23.36%
Liquidity ratio 1.34

Profit/Employee 842723.66
Return on shareholders Funds % 51.27%
The net profit after tax as a percentage of sales has also increased at the high rate which is
shows that the net profit of the company increases with respect to its sales. This is mainly caused
because that the company has efficiently managed its operating and operating expenses has
resulted into rise in the post tax profit. Higher and rising percentage is used by the investors and
the other users in order to take decisions whether to invest in the company or not. The liquidity
ratio is a more intense form in which only easily realizable current assets are taken like cash and
marketable securities (Abolfathi and Taebi, 2020). The ratio provided shows that the liquidity
position of the company is good as the ratio has shown an increment which is a good sign. But
the company needs to implement control over the ratio as the higher ratio might not be good for
it as this might means that the company has blocked huge amount of cash, which is being left
idle and is generating no return. Thus, this situation should be avoided in order to avoid the
situation of additional liquidity generating no value for the business.
The profits by employee financial indicator shows the profit contributed by each of the
employees in amount. The last financial indicators is return on shareholders funds which has
further increased from 50.04% to the 51.27% which conveys that the company is providing
higher return to its shareholders as a percentage of money invested by them. The percentage has
increased from round 3 to round 4 which means that the company is providing greater return to
its investors. This increasing percentage depicts that the company is operating well and
efficiently making use of the amount invested by the investors in order to provide them with the
greater return. This is will attract more investors for making investment in the company.
By looking at the other factors or the report like the production report, it is clearly present
that in the Round 1 the market share of the model S 11 was 1.44 which increased to 2.25 in the
round 4 while that of L 13 is 2.44 in Round 1 which rises to 3.3 in the Round 4. In respect to the
productivity, the model S 11 and L 13 increased from 41.67 and 40 in round 1 to 83.33 and 65.33
in round 4 (Juárez, 2016). Apart from these two models, the third model M15 which started in
round 3 had the market share of 1.34 and the productivity of 155.56 which has also incremented
in the round 4 to 1.87 and 233.33 respectively. This means that the company has effectively
managed its production of cars which has resulted into gaining greater market share along with

the rise in the productivity. It can be further stated that the Stuart Corporation has effectively and
efficiently managed its production of the car which has resulted into acquiring larger market
share which is seen to have been increasing from Round 1 to Round 4. The company has handled
in its cost like material, labour, designing cost has consequently led to the increase in the gross
profit margin.
Model
name Round 1 Round 2 Round 3 Round 4
Market
share
Product
ivity
Market
share
Producti
vity
Market
share Productivity
Market
share Productivity
S11 1.44 41.67 1.82 52.5 1.83 58.33 2.25 83.33
L 13 2.44 40 3.22 54.67 3.33 61.33 3.3 65.33
M15 1.34 155.56 1.87 233.33
CRITICAL REFLECTION
Critical reflection on the use of financial marketing, operations and human resource
management materials to make responsible business decisions affecting one internal and one
external stakeholder of the organisation.
The performance of the 4 rounds has provided the company to identify different issues
that arise in carrying out business and how the business objectives have to be achieved by
implementing the strategies. As company has number of stakeholders every decision of the
organisations affects its stakeholders. It has to make business decisions considering the interests
of all the stakeholder groups both internal and external stakeholders.
Considering the financial factors which could be considered as most important sector in
any business it has to be managed very effectively. If financial funds are not managed properly
company would not be able to achieve the desired results. It has to ensure that source of capital
are adequate with minimum cost and also the capital structure should be formed with appropriate
mix of debt and equity (Bevilacqua and et.al., 2017). High debt shows high financial risk and
high equity will increase cost of capital. Managers has to evaluate the different operations and
select the most appropriate one. The above production of cars company has faced many issues
regarding the cost of raw materials, cost of labour, cost of overheads and also the other operating

expenses. Company first had higher cost of materials as not making bulk purchases from
suppliers and also the relations with shareholders were weak. Management adopted new
inventory management strategies and made bulk purchases that provided company trade
discounts and also prices were decreased. It increased the gross profits to the required
benchmarks. Control over labour costs as the advanced machineries increased the efficiency of
employees and at the same time increased worker productivity per year. The net returns from the
company were improved gradually in round 4 by continuous implementation of effective steps
and improvement in the strategies. It could be evaluated that profits affect both internal and
external stakeholders of the business. The management is highly affected by the profits of
company as it reflects the efficiency of management in using the assets and managing the
operations and expenses. It shows that their policies and strategies are not helping the company
to improve the returns and this will not motivate the employees as well. On the other profits also
affect the external stakeholder like shareholders that have invested funds in the company with the
motive of earning adequate returns. Shareholders make investments analysing the performance
of organisation about how efficiently they are managing their resources to generate profits over
investments (Fai and et.al., 2016). Returns are evaluated using NP margin return over
shareholder's fund and other forms. It could be seen that returns have increased gradually
through implementing the strategies to increase the revenues with strong control over costs.
Increase in returns boosts the confidence of the shareholders and also demand of such share rises.
This increases the market price of shares increase the value of market cap of company and
wealth of shareholders.
From the marketing perspective, the various factors being taken into consideration which
involves the key perception factors. In this the perception of the people is been evaluated for the
design and the R&D based upon the 6 perception based upon which the decision is being
undertaken. The factors included the comfort, safety. Speed, green, style and hi-tech. Along with
this, the popularity factors are also been carried out which is classified on the basis of the age
group of under 25, between 25 and 40, 41 to 55 and over 55. The decision undertaken by the
company has affected both internal and external stakeholders (Chahal and et.al., 2020). From the
side of the internal stakeholders, the decision being undertaken by the company in respect to
making use of the multi-segment approach for its marketing activities. It has affected its
employees in respect to considering different factors and then based upon this undertaking the

decision which approach or design is more suitable. The employees are provided with the final
decision upon which the production of the cars is being made like the S 11 small care with the
design of 3/5 Door Hatchback with small petrol engine along with the additional options of
extended warranty, wireless charging pads, metallic or pearlescent paint. The marketing
employees are required to understand the different options and combination can be made
available in order to meet with the expectations of the customers.
From the external shareholders perspective, it can be stated that the decision of the
management has affected the customers decision. The products provided by the company will
affect the choice of the consumers or the clients. The consumers will look out for the feature that
will meet with their needs and wants thus, the decision which are being taken by the
management will affect the final decision and the taste and preferences of the target market
(Laczniak and Murphy, 2019). The marketing activities are majorly done and focused on the
consumers and not the customers. Therefore, the company has bifurcating the various features
and styles, design and research and development into different categories which will help in
effectively meeting with the desires of the customers. If the company fails to identify the needs
of the customers then this might cause failure of its products in the market. Thus, the decision
taken by the company pertaining to the marketing management has affected all its stakeholder
especially those who are having the key interest in the business (Domegan and et.al., 2019).
Thus, the marketing employees and the consumers are the two stakeholders who will be affected
by the organizations decisions largely. Along with this, the decision can be further improved if
the management look into the other aspect as well that can overly meet with the consumers
expectations. These factors will led to support the organization in making effective and highly
improved decision which can turn out to be very much beneficial for the company in respect
increasing its brand value and corporate reputation along with improving its financial position as
well.
The marketing of the cars was made very effectively due to which the Stuart corporation
was able to clear all its stock by the year end. It is essential that to overcome the issues of
business enterprise all functions are to be managed effectively. It could be realised from the
marketing function that brand awareness and the quality of products is very essential for the
company to grow successfully in market. It could be seen that marketing function affects both
internal and external stakeholders of the organisations (SULAIMAN, AHMED and SHABBIR,

2020). If products of company gets market acceptance its employees would be getting higher
rewards and incentives and the consumers will be also getting higher satisfaction for the money
spent.
Along with other functions management is also required to pay high attention over its
operational functions. Business operations has to be managed properly after assessing the
different processes and procedures to be performed by the company. Being automobile company
it has number of functions to perform to make the product available for sale. The operations start
from procuring the raw materials to the finished products. Operational efficiency is very essential
for the business to increase the productivity of the business and its employees. At the beginning
the percentage of waste was high in the raw materials and in the processes. It increased the cost
and time to process products. Management to control the issues of waste, implemented total
quality management that caused the company to implement quality checks at different intervals.
Internal controls were established in the various processes that made the company to check the
raw materials at entry and reject materials that were not up to the quality mark. Further controls
were checking the ongoing processes and ensured that materials are used very effectively by the
organisation. Machineries and other equipments were given proper care to maintain their
efficiency and reduced time wasted at their repairs and maintenance. This reduced the costs for
repairs and expenses and increased the output. It could be seen that effective monitoring of
processes reduced the costs significantly and also company was able to produce new products
with same costs (Jabbour and de Sousa Jabbour, 2016). The productions were increased with
same workforce increasing their productivity per worker. When the operations are managed
efficiently the help the business in increasing their profitability and results.
The operational decisions directly influence the internal employees as they have to
manage the change their process. Company may face different issues for the decisions taken
relating to change in process or procedures. As employees may not be able to adopt new
processes and operations and resists. Managers through proper training and making them
understand the importance of new processes can make them comply with new processes. On the
other if decisions relating to operations are not effective customers will suffer with the quality of
products and will not get the expected satisfactions from products purchased. While decisions
such as Total quality management helps company to assess the issues and provide customers