COMPANY FINANCIAL STRATEGY

You are a Management Consultancy practice and have been approached by McTavish and Company
to advise them on future strategy. This should be undertaken by groups of three to five students. Details
of the company with accounts and project profile was 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:

i) 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.

ii) The bidding strategy for contracts, the target profit margin, the method of allocation of overhead cost.

iii) The strategy for speculative housing work, the target profit margins, possible land purchases, etc.

iv) The financial strategy to accomplish the above strategy, the requirements for working capital, sources of funding and likely costs.

v) 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 the 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 groups 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 9 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 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 are 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 the 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 mark-up for profits and for overheads should be specified including the approach to the 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 the 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 tasks 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 PowerPoint slides to illustrate the talk.