Company Financial Strategy
You are a Management Consultancy practice and have been approached by McTavish and Company
to advise them on future strategy.Details of the company with accounts and project profile were
enclosed in Teaching Paper Number One.
The Report should seek to address the current trading and financial difficulties faced by the company
and should focus on the following:
O The type and scale of contracts that the company should concentrate on in the future, and also the
geographical scope of the contracts bid for.
O The bidding strategy for contracts, the target profit margin, the method of allocation of overhead
cost.
O The strategy for speculative housing work, the target profit margins, possible land purchases etc.
O The financial strategy to accomplish the above strategy, the requirements for working capital,
sources of funding and likely costs.
O The management and organizational structure suitable to implement the above, the scope for the
use of consultants rather than employing staff, etc.
The above could take account of the national and local economic environment and be referred to
relevant forecasts and projections. The financial implications of the strategy should be taken into
account. For example, an aggressive marketing strategy for speculative housing will require
expenditure on advertisement. Equally, a proposal to expand geographically will certainly increase
overhead costs.
Submission
The Business Plan should be submitted in the form of a Technical Report detailing and justifying the
chosen strategy. It should include cash flow forecasts, projected profitability, complete with relevant
location maps, etc. In addition the Report should contain a submission for funding to the appropriate
bank.
The Report is to be submitted jointly by the group. Each member should append a paragraph
outlining their specific contribution to the group’s work and a summary of what they have learned
from undertaking the project.
A slide presentation for the main findings and recommendations should be included with the report.
This should be submitted by Friday of Week 14 via GCU Learn. A hard copy may also be submitted on
the same day.
Deliverables
The key deliverables are as follows:
1.The type and scale of contracts that the company should concentrate on in the future, and also
the geographical scope of the contracts bid for.
The report should contain recommendations as to which type of project, client, and procurement
route should be encouraged, accepted or avoided. It should also detail the preferred project size and
duration and upper and lower limits that is acceptable for each. The preferred geographical scope of
the company should be specified.
2)The bidding strategy for contracts, the target profit margin, the method of allocation of overhead
cost.
The report should outline the recommended turnover target for contract work. The percentage
mark¬up for profits and for overheads should be specified including the approach to allocation of
overhead costs between projects.
3)The strategy for speculative housing work, the target profit margins, possible land purchases etc.
The report should outline the recommended turnover target for speculative work. The minimum
percentage markup for profits and for overheads should be specified including the approach to
allocation of overhead costs between projects. The nature of speculative housing (upmarket or mass
market) should be specified. Also the ideal number of houses built in each phase should be noted.
The strategy for purchase of building land should be outlined. This will not apply if the
recommendations of the group are to avoid speculative work.
4)The financial strategy to accomplish the above strategy, the requirements for working capital,
sources of funding and likely costs.
The report should outline the financial strategy to achieve the above. How much money is needed to
tide the company over until the cash starts to come through? What loan should be requested and
over what period should be repaid. Give an application to a bank for a loan.
5)The management and organizational structure suitable to implement the above, the scope for the
use of consultants rather than employing staff, etc.
Identify the organizational structure needed to implement the above. Make recommendations for
redundancies and any recruitment. Identify what use, if any, can be made of consultants. The cost of
redundancy payments should be taken into account.
Note:
All elements of the report must be consistent with one another. For example the number of staff
employed (in task 5) will have implications for the company overheads and must be taken account of
in tasks 2 and 3. Similarly the repayments of any loan identified in task 4 must be consistent with the
planned profits outlined in task 2 and 3.
The final presentation will involve the submission of a printed report listing the main
recommendations giving reasons for each.
The presentation must include either overheads or power point slides to illustrate the talk.
