Finance for Strategic Managers Paper

Please note that this sample assignment is for our suite of level 7 qualifications instrategic management which became available on October 1st 2016.
Unit A/615/2677
Finance for Strategic Managers
Level 7
15 Credits
Related Qualifications
ATHE Level 7 Diploma in Strategic Management 603/0629/4
ATHE Level 7 Extended Diploma in Strategic Management 603/0630/0
Sample Assignment
Pietro Yon, a local businessman, owns and manages a number of retail stores that
sell a range of homewares.
Pietro is a member of the local business Chamber of Commerce and has been
asked to chair a committee to research and study the success of Samsung PLC. The
Chamber believes that there may be some useful learning from this study which
members of the Chamber could use. You have been asked to provide specialist
support to the committee and you are required to produce a range of materials for
members of the committee to use.
You have been provided with the following link to view Samsung PLC’s annual
reports and investor information.
https://www.samsung.com/global/ir/financial-information/audited-financial-statements/
Task 1 – Financial Data and Strategic Decision Making
You must produce a presentation for Pietro Yon to use at the next meeting of the
Chamber of Commerce. The presentation should be based on your research of
Samsung PLC and other relevant information. It must be accompanied by supporting
notes.
Your presentation must include the following:
•
•
•
•
An evaluation of the sources of financial data which can be used to inform
business strategy.
An assessment of the need for financial data and information in relation to the
formulation of business strategy.
An analysis of the risks related to financial business decisions.
A review of methods that can be used for appraising strategic capital
expenditure projects and strategic direction.
LO1 AC 1.1, 1.2, 1.3
LO3 AC 3.1
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Task 2 – Discussion Paper
A meeting has been arranged with Pietro Yon and other members of the committee
and you have been asked to produce a paper for discussion which provides:
•
•
An interpretation of the financial statements of Samsung PLC to assess the
current viability of the organisation.
A comparative analysis of financial data using ratio analysis for Samsung
PLC. You are advised to download consecutive year’s accounts from the
Samsung PLC website.
Extension activities:
To gain a merit grade you must add further sections to your discussion paper that:
•
Makes recommendations to Samsung PLC based on your analysis and
interpretation of the financial position.
LO2 AC 2.1, 2.2
LO2 2M1
Task 3 – Information Leaflet
Extension activities:
To gain a merit grade you must produce an information leaflet for the Chamber of
Commerce to distribute to the members. The leaflet should assess the following:
•
•
•
The impact of ‘creative accounting’ techniques when making strategic
decisions.
The limitations of ratio analysis as a tool for strategic decision making.
The importance of cash flow management when evaluating proposals for
capital expenditure.
To gain a distinction grade you must prepare an additional section for the leaflet that:
•
Recommends, with justifications, methods and tools that allow businesses to
analyse financial data for strategic decision-making purposes.
LO1 1M1
LO2 2M2
LO3 3M1
LO2 2D1
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Task 4 – Capital Expenditure Appraisal
Pietro Yon has been supplied with information from a component manufacturer who
has asked for advice on the best project to accept for the purchase / replacement of
a piece of machinery.
The company are considering selling their old machine that has a capital cost of
£260 000 and replacing it with an up-to-date model costing £220 000. For
immediate purchase the company will receive £120 000-part exchange allowance.
Both the current and new machines are able to meet the expected company
demand, estimated at:
Year
1
2
3
Units
90 000
50 000
30 000
After three years, it is predicted that demand will be zero due to the technological
developments in the industry.
The following data has been provided for the existing and new machine:
Direct Materials
Direct Labour
Variable Overheads
Depreciation
Current Machine
£ per unit
1.80
0.75
0.45
0.35
New Machine
£ per unit
1.80
0.60
0.30
0.55
Additional information
(1) The selling price for each component is £5.00 and this will remain constant for
the next three years.
(2) The company expect the cost of direct materials and direct labour to increase
by 5% each year.
(3) The company predicts that repair and maintenance costs for the current
machine will be £7000 per annum.
(4) The current machine is expected to have a zero-residual value at the end of
year 3.
(5) The company predicts that repair and maintenance costs for the new machine
will be £1000 per annum.
(6) The new machine is expected to have a £75 000 residual value at the end of
year 3.
The company’s cost of capital is 15%
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Extract from the present value table for £1 at 15%
Year
1
2
3
4
Units
0.870
0.756
0.658
0.572
Pietro would like you to produce a business report that can be given to the company
offering advice on the best course of action for the purchase / replacement machine.
REQUIRED
Prepare a report that evaluates the capital expenditure proposals using appropriate
financial techniques.
Extension activities:
To gain a distinction grade you must include an assessment of the impact of the
business proposal on the strategic direction of the organisation.
LO3 AC 3.2
LO3 3D1
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Guidelines for assessors
The assignments submitted by learners must achieve the learning outcomes and meet the standards specified by the assessment
criteria for the unit. To achieve a merit or distinction grade, the learners must demonstrate that they have achieved all the criteria
set for these grades. Where work for the pass standard is marginal, assessors can take account of any extension work completed
by the learners. The suggested evidence listed below is how learners can demonstrate that they have met the required standards.
Task
number
1.
LOs and AC
LO1:
AC 1.1, 1.2,
1.3
LO3:
AC 3.1
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Suggested evidence
Suggested additional
PASS
evidence MERIT
The learner will provide an evaluation of
the sources of financial data which can be
used to inform business strategy and an
assessment of the need for financial data
and information in relation to business
strategy. The assessment and evaluation
should be balanced identifying the relative
importance of different types of data in
supporting and determining decisions on
strategy. The learner work needs to lead to
conclusions and personal judgements. The
learner should use appropriate examples to
illustrate the points which are made, and
this will help to demonstrate their
understanding.
The learner will continue with an analysis of
the risks related to financial business
decisions. The analysis should be detailed
and comprehensive considering the nature
of different businesses and the context in
which they operate.
The review must be directly related to
Suggested additional
evidence DISTINCTION
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strategic capital expenditure projects and
strategic direction of businesses. The
learner needs to refer to different methods
that can be used identifying any benefits
and issues and lead to conclusions.
2.
LO2:
AC 2.1, 2.2
2M1
3.
LO1:
1M1
LO2:
2M2
2D1
LO3:
3M1
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The learner is required to download 2 / 3
consecutive years’ accounts for Samsung
PLC using the link provided in the
assignment.
The learner will carefully interpret the
financial statements. The learner must
make an assessment and judgements on
current viability of the business and prepare
a comparative analysis of financial data
using ratio analysis.
The learner will make
appropriate specific
financial
recommendations. The
recommendations must
be directly linked to the
detailed analysis and
must be relevant to the
organisation.
The learner will provide a
detailed assessment of
the impact of ‘creative
accounting’ techniques
when making strategic
decisions.
The learner should use
appropriate examples to
demonstrate their
understanding of the
importance of accurate
financial data in
formulating and delivering
The learner will refer to a
range of methods and tools
that allow organisations to
analyse financial data for
strategic decision-making
purposes. The learner must
justify each of the methods
and tools described.
Appropriate examples of the
methods and tools used by
public and private sector
organisations should
illustrate the answer.
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business strategy
The learner will assess
the limitations of ratio
analysis as a tool for
strategic decision making
leading to balanced
judgements. There must
be full and clear
assessment of the
importance of cash flow
management when
evaluating proposals for
capital expenditure.
Appropriate examples will
aid the learner in
demonstrating the points
which are made.
4.
LO3
AC 3.2
3D1
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Using the data provided in the case study,
the learner is required to evaluate the
business proposals for capital expenditure
identifying benefits and issues and
reaching conclusions. The learner must use
appropriate financial techniques including
payback, accounting rate of return, net
present value and internal rate of return.
Based on the data in the case study the
learner is required to evaluate the business
proposals for capital expenditure using
appropriate financial techniques. The
The learner is required to
provide an assessment, with
appropriate justifications of
the impact of a business
proposal on the strategic
direction of a business
organisation. The learner
should use the information in
the case study and refer to
other examples from
business. Reference to
appropriate theory and
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learner could consider non-financial factors,
cost benefit analysis and value for money.
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research should also be
made.
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