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Integrated Reporting Assignment

Executive Summary

Bellamy’s Organic is one of Australia’s leading firms in the organic baby food industry, catering to toddlers to children. The company has seen fast growth across its product line in Australia, and as a result, the company has expanded to the global market, mainly to Asian countries like China and Malaysia, and to New Zealand. The company has also started focusing on the digital marketing front recently and has been highly successful in the markets.

The business has been evaluated from new age reporting style like Integrated Reporting against a Traditional Financial reporting, considering the multifaceted challenges that the company faces amidst global competition. The focus of this approach is to encourage the company to build a sustainable business which can reach its strategic long term objectives while focusing on its operational goals.

The current strengths of the company have been analysed by identifying the 4 Capitals or Pillars on which the company is highly reliant on, these being

  • Natural Capital involving utilisation of natural resources, social outlook and environment considerations
  • Social and Relationship Capital, regarding relationship with existing stakeholders and society at large
  • Human Capital, which involves the employees, the diversity practice followed, and growth
  • Financial Capital, which has allowed the company almost to double their revenues

A Balanced Scorecard with Strategy mapping is also considered here to evaluate the broader, long term goals and align them with their operational activities-based target, thereby allowing for growth direction. Aspects like Finance, Customer, Internal Processes and Learning & Growth have been considered here for evaluating the short term goals and linked with the strategic business objective of improving Shareholder Value. A Strategy map here has ........

ntries like China and Malaysia, and to New Zealand. The company has also started focusing on the digital marketing front recently and has been highly successful in the markets.

The business has been evaluated from new age reporting style like Integrated Reporting against a Traditional Financial reporting, considering the multifaceted challenges that the company faces amidst global competition. The focus of this approach is to encourage the company to build a sustainable business which can reach its strategic long term objectives while focusing on its operational goals.

The current strengths of the company have been analysed by identifying the 4 Capitals or Pillars on which the company is highly reliant on, these being

  • Natural Capital involving utilisation of natural resources, social outlook and environment considerations
  • Social and Relationship Capital, regarding relationship with existing stakeholders and society at large
  • Human Capital, which involves the employees, the diversity practice followed, and growth
  • Financial Capital, which has allowed the company almost to double their revenues

A Balanced Scorecard with Strategy mapping is also considered here to evaluate the broader, long term goals and align them with their operational activities-based target, thereby allowing for growth direction. Aspects like Finance, Customer, Internal Processes and Learning & Growth have been considered here for evaluating the short term goals and linked with the strategic business objective of improving Shareholder Value. A Strategy map here has helped in the visual representation of the Organizations long term strategy and understand how each goal are linked with one other to achieve the final objective.

On the whole, the course has helped greatly in understanding Strategy and Finance and how the two are taken into consideration by the management in evaluating business strategies and decision-making.

 

 

Table of Contents

Executive Summary. 1

1.    About Integrated Reporting. 3

2.    About Bellamy’s Organic. 3

3.    Capitals of Bellamy’s Organic. 3

3.1.     Natural Capital 4

3.2.     Social and Relationship Capital 4

3.3.     Human Capital 5

3.4.     Financial Capital 5

4.    Balanced Scorecard and Bellamy’s Organic. 6

4.1.     Financial Perspective – Price to Earnings ratio growth. 8

4.2.     Customer Perspective – Increase repeat customer ordering base. 8

4.3.     Internal Business Process Perspective – Reduce Manufacturing Lead Time. 8

4.4.     Learning & Growth – Increasing number of employees. 9

5.    Strategy Map. 9

5.1.     Advantages. 10

5.2.     Disadvantages. 10

6.    Reflective Journal 12

Module 1. 12

Module 2. 12

Module 3. 13

Module 4. 13

Module 5. 13

Module 6. 14

7.    References. 15

 

 

 

  1. About Integrated Reporting

Traditionally, financial metrics have been considered to be the key factors in understanding the success of any business. As a result of it, business performance reporting mainly consisted of the financial statements and the financial performance of the business. However, more organisations now realise that financial performance is one of the success measures of the business and not the only one.

Integrated Reporting is based on the philosophy that business performances are influenced by multiple factors ranging from environment, knowledge, people, society, and others, which helps in creating long term value for the business as well as the society at large. As a result of this holistic view of the business, Integrated Reporting is considered to be the future of Business reporting (Ernst & Young, 2014).

  1. About Bellamy’s Organic

Bellamy’s Organic is one of Australia’s leading producers and suppliers of organic baby food suitable for babies and toddlers. The company was founded in 2003 and has grown from an Australian organisation to a global one with an international presence. The company currently distributes its product range to countries in Australia, Asia, and New Zealand through the physical as well as online channels.

  1. Capitals of Bellamy’s Organic

Integratedreporting.org (2017)

An organisation can create value in the system using utilisation of different types of capitals including financial, human, social, natural, manufactured and intellectual. All these capitals help the firm is building a sustainable business based on a core strategy and developing a unique selling proposition.

The Capitals act as an input for the business which is acted upon by multiple inter-related activities, thus forming sustainable outputs for the customers, organisation, and society wherein the resources are regenerated, thus ensuring sustainability. The focus here is to ensure that the dependencies on unsustainable Capitals are reduced so that the value creation process is sustained.

    1. Natural Capital

As Bellamy’s Organic is in the business of offering natural, nutrition to children, the company’s focuses on building a natural farming ecosystem which can be ecologically as well as financially sustainable. The firm has been encouraging organic farming practices to farmers in Australia and Tanzania, in its bid to provide natural nutrition to all its customers (babies and parents) as well as protect the soil and crop from damage due to excessive use of pesticides, fertilisers and artificial additives.

Being certified by NASAA, the company maintains a high level of sustainability standards regarding ingredients, packaging and storage, thereby ensuring minimum wastage and natural products (Bellamy’s Organic, 2017).

The company also firmly believes in giving it back to the society and thus has an association with Clown Doctors, Australia. Clown Doctors provide healing through humour for children in hospitals, and means of fund donations involve Bellamy's, resources provision and volunteering services (Bellamy’s Organic, 2017).

    1. Social and Relationship Capital

Bellamy’s business has seen phenomenal growth on the back of strong relationship with its suppliers, manufacturers and its marketing channel partners. The company has put in place long term contracts with suppliers and manufacturers ranging from 5 years to 8 years for production of high-quality products as per specification (Bellamy’s Annual Report, 2016).

The firm has been working closely with dairies and cooperatives in improving access and quality of milk. The company is also working closely with farmers in encouraging them to take up organic farming and also organic milk.

The company is also looking atin-house facilities expansion through infrastructure building, skill development and new recruitments.

    1. Human Capital

Bellamy’s has managed to build a lean and efficient team, comprising of experienced professionals, who appreciate the culture and values of the company.

Growth

The company has been able to increase its human capital base by 50% in the FY 2016 and has added senior management professionals in its team. The company intends to grow its team organically with thepace of the business in the coming years.

Diversity

With 67% of the female workforce, Bellamy’s is a highly diverse setup with 50% of the Directors being women. Further, 33% of the Board members are women (Bellamy’s Annual Report, 2016).

The company also encourages thepromotion of people within the organisation to senior positions thereby promoting employee motivation and engagement.

    1. Financial Capital

The company has been attempting to build a sustainable business by ensuring costs are reduced, and profitability is improved by managing employment, distribution and marketing costs viz-a-viz revenue growth. The profits are ploughed back into people, infrastructure and marketing thereby building a sustainable chain of growth.

Strategies

  1. Product Innovation
  2. Improving Distribution network across Australia and Asia
  3. Improving market penetration and reach in Australia
  4. Leveraging partnerships, communications and supply chain-related knowledge for growth and sustenance

Bellamy’s has managed to grow revenue by 95% and Earnings Before Interest and Tax (EBIT) by 342% over the previous year. The company’s focus on growth and sustainability has been rewarded with a 133% growth in stock price in a year (Bellamy’s Annual Report, 2016).

  1. Balanced Scorecard and Bellamy’s Organic

A Balanced Scorecard is a Strategy tool which enables the organisation to breakdown its strategic objectives into performance measures, facilitating them to make improvements in their finances, customers, processes, and growth and development (Kaplan and Norton, 1993). This is a balanced approach towards performance goal setting and measurement as it enables the organisation to consider all round aspects of the business while decision making, rather than the traditional financial ratios and profitability measures.

 

Perspective

Measure

Type of Measure Financial/Non-Financial

Type of Measure—

Leading/Lagging

Financial

 

 

 

 

 

 

Revenue growth of 50% in the current FY

Financial

Lagging

Reduce operation expenses to 50% of sales in the current FY

Financial

Lagging

Improve Price to Earnings (PE) by 20% by June 17

Financial

Lagging

Customer

 

 

 

 

 

 

Improve market share by 20% in 18 months

Non-financial

Lagging

Reduce complaints by 30%

Non-Financial

Leading

Increase repeat ordering  customer base by 50%

Financial

Lagging

Internal Business Processes

 

 

 

 

 

 

Develop a network of 200 organic milk farmers in 2017

Non-Financial

Leading

Reduce manufacturing lead time 10% in 2017

Non-Financial

Leading

Optimize online order-delivery time by 20% in 8 months

Non-Financial

Leading

Learning & Growth

 

 

 

 

 

 

 

Improve employee retention by 95% in 2 years

Financial

Lagging

Increase number of employees by 30% in 2017

Non-Financial

Leading

Customer Service training to all (100%) front-end employees

Non-Financial

Lagging

 

    1. Financial Perspective – Price to Earnings ratio growth

The company has been growing profitably over the past few years with revenue growth of 95% year-on-year. Similarly, the stock price has also grown considerably over the past two years. As the company grows on account of Distribution expansion and marketing spend contributing to higher revenues, it becomes imperative for the organisation to increase the investor awareness about the company’s progress and future. This would allow the company to seek higher valuations for the business and generate additional capital which can then be used for business growth and expansion. This is a lagging financial indicator as the results of Price to Earnings is an outcome of other processes.

    1. Customer Perspective – Increase repeated customer ordering base

As the company is growing rapidly across the globe on the back of sustained social marketing presence, the regional offices as well as a strong supplier and manufacturing network of the company should ensure the customer acquisition. Though the new customer acquisition is important for growth and expansion, retaining existing buyers is equally important as that would mean recurring business for the company (Meola, 2016). From a company’s perspective, it is cheaper to retain existing clients as compared to acquiring new ones. Also, a higher repeat customer base indicates that the company has been successful in maintaining high-quality standards while producing products as baby nutrition quality is not comprisedof parents. As it involves new order revenues, it a lagging financial indicator dependent on the manufacturing output and customer service.

    1. Internal Business Process Perspective – Reduce Manufacturing Lead Time

As Bellamy’s has contracted manufacturers working for them for the production of its most important product lines, viz., Infant milk and baby milk formula, the company is ensuring that the production is achieved within a shorter period become very crucial for them. Shortage of inventories at the outlet level or the warehouse may cause consumers to switch to a competition brand, leading to loss of revenues (Tersine and Hummingbird, 1980). Further, it becomes extremely challenging to regain a lost client as the customer will always vary of the future availability and consistency of the products.

Having a reduced manufacturing lead time also ensures freshness of the products in the market, which would lead to better market reviews. As a result, this is considered as leading non-financial indicator results of which may be arrived at through process optimisation.

    1. Learning & Growth – Increasing number of employees

The company has grown its employee base by 50% in Australia & Asia in the previous year (Bellamy’s Annual Report, 2016). However, as the company seems to get aggressive in the international markets and with the increased focus on organic milk farming, the company will require more employees to thesource, educate, and sell its product offerings in the market. Also, increased revenues would lead to higher level of customer satisfaction and faster complaint resolution.

Similarly, the company will have to catch up with the increased demand in maintaining and improving operational efficiencies in the business. Identification and sourcing of right candidates and training them to align with the company’s values and systems would require consistent efforts and has to be in sync with the company’s expansion plans. This is a leading non-financial indicator as its implementation makes way for anincrease in sales and customer service.

  1. Strategy Map

A Strategy map is a strategy tool referred in conjunction with the Balanced Scorecard for assessing the long term strategies and inter-linking them with the day-to-day activities of the business, thereby ensuring advancement towards the strategic objectives (Kaplan and Norton, 2001).

Source: www.valuebasedmanagement.net

           

In a strategy map, all the organisational objectives concerning Finance, Customer, Process and Learning & Growth are stated in a chart, and their interdependent relationships are linked with arrows such that all are in sync with the long term strategic objectives of the organisation. Thus, it allows the management to align the organisation with the overall strategic goals, ensuring sustainability, clear direction and motivation.

    1. Advantages

One of the most important benefits of Strategy mapping is that it allows the management to align the strategic initiatives and objectives with the operational activities of the business, enabling them to set short term goals leading the organisation towards a broader direction. As a result of this, the employees are aligned with the strategic goals and can be driven towards the common vision (CGMA, 2013).

Being a top-down approach, it enables the management to identify the important aspects of the day-to-day functioning of the organisation and understand how small changes to the operational aspects can impact the overall business performance. Further, he helps in analysing the impact of new plans/goals on the existing operations.

    1. Disadvantages

One of the most significant disadvantages of the Strategy map is that it does not allow the organisation to evolve naturally. A Strategy map ties the progress of the organisation to the long term goals, which if not defined well early on, can lead the entire organisation to drift in a direction, opposite to their best interests. A Strategy map requires complete clarity from the top management regarding the strategic goal settings.

A Strategy map does not take into consideration disruptions in the industry, in the form of technology adoption, innovation, etc. which may change the industry dynamics altogether. Such changes are not immediately introduced in the strategic objectivesbeing based on predefined metrics, and old metrics may not yield the best results in a changing environment.

 

  1. Reflective Journal

Module 1

In my previous work experience, I was actively involved in performing accounts receivable, debt collection, and maintaining a large portfolio of up to 700 commercial clients. I did have some knowledge of how this course fits into the bigger picture viz. the balance sheet of a corporate organisation.

I think this course will offer me additional insights into:

  • Measurement of data
  • Identification of data
  • Communication and sharing of data with the management
  • Processing data to form information and utilise the same in decision-making process
  • Maintenance of financial records and preparing financial reports
  • Understand and evaluate financial data to assist management in taking key business decisions

In this week, I have understood many concepts in finance such as integrated reporting, accounting equations, corporate governance and its significance, accounting standards and reporting, and others. Though I have prior experience in the field of accounting, using this course I could better understand how the finance function operates and the significance of Income Statement, Balance Sheet and Cash Flow Statements in management decision-making process. I could also understand the roles and responsibilities of an Auditor and how vital their role is in the corporate governance process. Apart from this, I could also learn about the different types of company structures, the legal and regulatory environment and requirements surrounding them, and how integrated reporting is the way forward for all organisationsregarding business reporting and management.

Module 2

I could learn about Financial Statements, concepts of costs and values, different accounting standards, how intrinsic values are calculated and others. Further, I could learn the most important concepts involving the Income Statement, Balance Sheet and Cash Flows, and I can say for sure that it has been one of the most challenging areas I have dealt with recently. The financial ratios involved in assessing and understanding these statements such as current ratio, return on equity, asset turnover, etc. seem to be very important concepts which I feel would help in the long run, once I master them.

Some of the other sections of this course that I found challenging is the concept of Revenue and Expense recognition and application of different accounting standards and codes. With so many accounting sections and clauses, having a firm grip on the accounting standards is something which I feel I will have to put more efforts on to become better at it.

Module 3

I could learn avaluable lesson concerning financial statements, business accounting, costing, financial analysis and management. I have also understood how management undertakes financial statement analysis and reviews to arrive at taking business decisions. The concept of fair value assessment seems very enriching and helpful from decision making perspective. More importantly, I could learn about how integrated reporting is different from typical financial reporting and how a sustainable business can be built with the help of six Capitals. Apart from this, I could learn about the types of organisation, the regulatory requirement (especially for listed firms), roles of Board of Directors and auditors, and theimportance of Ethics in Business.

I think this course has provided me with all round knowledge of not just the financial aspects but business essentials for running a sustainable entity. I think these concepts will help me enormously while dealing with senior management professionals as well as auditors while evaluating the business and understanding the business. This would also help me in taking financial decisions while dealing with vendors and suppliers.

Module 4

Concerning the financial statements, I have learnt various accounting standards as well different accounting heads such as assets, inventories, current liabilities, disclosures, receivables, payables, etc.  I have also learnt about financial ratios (including balance sheet ratios) which are very important in determining the financial state of any organisation.

I think the knowledge of financial statements would help in proper classifying of accounting heads and give me a complete picture of the entire business. It will help me in understanding how the entire business works and help me in making asound judgment about the state of the organisation and identify problem areas.

Module 5

On completion of this assessment, I think I could learn about how organisations can link its long terms objectives with daily operational activities, using Balanced Scorecard and Strategy Mapping. It also made clear how short-term goals (Financial or Non-Financial) can be set as a means to achieve long term targets and how employees can be aligned with these targets, which I think would help me in managing people and goal-setting.

Apart from this, I could learn about the different types of costs involved in the business (fixed, variable, opportunity, avoidable, unavoidable, breakeven, and others). This learning has offered a fresh perspective to me regarding managing finances, and I think it would help me not only in my professional life but also in personal financial management.

Module 6

A well-integrated report consists of all round information of the business ranging from finance, operations, HR, environment, stakeholders and customers. The current financial reporting is based on financial statements and ratios, which provide anincomplete picture of the business. An integrated reporting providescomplete information about the business helping the management to take well-informed decisions.

This course has introduced me to integrated reporting and its significance, and I think this will help me a lot in future considering that this is the future of business reporting. I will start assessing organisationby multiple parameters, as against a traditional financial heavy approach, which I think will help in making sound judgements about the company. I think understanding the nuances of running a successful business is something I would continue to learn with corporate experience and application of concepts.

 

 

 

 

 

 

  1. References

Executive Summary

Bellamy’s Organic is one of Australia’s leading firms in the organic baby food industry, catering to toddlers to children. The company has seen fast growth across its product line in Australia, and as a result, the company has expanded to the global market, mainly to Asian countries like China and Malaysia, and to New Zealand. The company has also started focusing on the digital marketing front recently and has been highly successful in the markets.

The business has been evaluated from new age reporting style like Integrated Reporting against a Traditional Financial reporting, considering the multifaceted challenges that the company faces amidst global competition. The focus of this approach is to encourage the company to build a sustainable business which can reach its strategic long term objectives while focusing on its operational goals.

The current strengths of the company have been analysed by identifying the 4 Capitals or Pillars on which the company is highly reliant on, these being

  • Natural Capital involving utilisation of natural resources, social outlook and environment considerations
  • Social and Relationship Capital, regarding relationship with existing stakeholders and society at large
  • Human Capital, which involves the employees, the diversity practice followed, and growth
  • Financial Capital, which has allowed the company almost to double their revenues

A Balanced Scorecard with Strategy mapping is also considered here to evaluate the broader, long term goals and align them with their operational activities-based target, thereby allowing for growth direction. Aspects like Finance, Customer, Internal Processes and Learning & Growth have been considered here for evaluating the short term goals and linked with the strategic business objective of improving Shareholder Value. A Strategy map here has helped in the visual representation of the Organizations long term strategy and understand how each goal are linked with one other to achieve the final objective.

On the whole, the course has helped greatly in understanding Strategy and Finance and how the two are taken into consideration by the management in evaluating business strategies and decision-making.

 

 

 

 

Table of Contents

Executive Summary. 1

1.    About Integrated Reporting. 3

2.    About Bellamy’s Organic. 3

3.    Capitals of Bellamy’s Organic. 3

3.1.     Natural Capital 4

3.2.     Social and Relationship Capital 4

3.3.     Human Capital 5

3.4.     Financial Capital 5

4.    Balanced Scorecard and Bellamy’s Organic. 6

4.1.     Financial Perspective – Price to Earnings ratio growth. 8

4.2.     Customer Perspective – Increase repeat customer ordering base. 8

4.3.     Internal Business Process Perspective – Reduce Manufacturing Lead Time. 8

4.4.     Learning & Growth – Increasing number of employees. 9

5.    Strategy Map. 9

5.1.     Advantages. 10

5.2.     Disadvantages. 10

6.    Reflective Journal 12

Module 1. 12

Module 2. 12

Module 3. 13

Module 4. 13

Module 5. 13

Module 6. 14

7.    References. 15

 

 

 

 

  1. About Integrated Reporting

Traditionally, financial metrics have been considered to be the key factors in understanding the success of any business. As a result of it, business performance reporting mainly consisted of the financial statements and the financial performance of the business. However, more organisations now realise that financial performance is one of the success measures of the business and not the only one.

Integrated Reporting is based on the philosophy that business performances are influenced by multiple factors ranging from environment, knowledge, people, society, and others, which helps in creating long term value for the business as well as the society at large. As a result of this holistic view of the business, Integrated Reporting is considered to be the future of Business reporting (Ernst & Young, 2014).

  1. About Bellamy’s Organic

Bellamy’s Organic is one of Australia’s leading producers and suppliers of organic baby food suitable for babies and toddlers. The company was founded in 2003 and has grown from an Australian organisation to a global one with an international presence. The company currently distributes its product range to countries in Australia, Asia, and New Zealand through the physical as well as online channels.

  1. Capitals of Bellamy’s Organic

Integratedreporting.org (2017)

An organisation can create value in the system using utilisation of different types of capitals including financial, human, social, natural, manufactured and intellectual. All these capitals help the firm is building a sustainable business based on a core strategy and developing a unique selling proposition.

The Capitals act as an input for the business which is acted upon by multiple inter-related activities, thus forming sustainable outputs for the customers, organisation, and society wherein the resources are regenerated, thus ensuring sustainability. The focus here is to ensure that the dependencies on unsustainable Capitals are reduced so that the value creation process is sustained.

    1. Natural Capital

As Bellamy’s Organic is in the business of offering natural, nutrition to children, the company’s focuses on building a natural farming ecosystem which can be ecologically as well as financially sustainable. The firm has been encouraging organic farming practices to farmers in Australia and Tanzania, in its bid to provide natural nutrition to all its customers (babies and parents) as well as protect the soil and crop from damage due to excessive use of pesticides, fertilisers and artificial additives.

Being certified by NASAA, the company maintains a high level of sustainability standards regarding ingredients, packaging and storage, thereby ensuring minimum wastage and natural products (Bellamy’s Organic, 2017).

The company also firmly believes in giving it back to the society and thus has an association with Clown Doctors, Australia. Clown Doctors provide healing through humour for children in hospitals, and means of fund donations involve Bellamy's, resources provision and volunteering services (Bellamy’s Organic, 2017).

    1. Social and Relationship Capital

Bellamy’s business has seen phenomenal growth on the back of strong relationship with its suppliers, manufacturers and its marketing channel partners. The company has put in place long term contracts with suppliers and manufacturers ranging from 5 years to 8 years for production of high-quality products as per specification (Bellamy’s Annual Report, 2016).

The firm has been working closely with dairies and cooperatives in improving access and quality of milk. The company is also working closely with farmers in encouraging them to take up organic farming and also organic milk.

The company is also looking atin-house facilities expansion through infrastructure building, skill development and new recruitments.

    1. Human Capital

Bellamy’s has managed to build a lean and efficient team, comprising of experienced professionals, who appreciate the culture and values of the company.

Growth

The company has been able to increase its human capital base by 50% in the FY 2016 and has added senior management professionals in its team. The company intends to grow its team organically with thepace of the business in the coming years.

Diversity

With 67% of the female workforce, Bellamy’s is a highly diverse setup with 50% of the Directors being women. Further, 33% of the Board members are women (Bellamy’s Annual Report, 2016).

The company also encourages thepromotion of people within the organisation to senior positions thereby promoting employee motivation and engagement.

    1. Financial Capital

The company has been attempting to build a sustainable business by ensuring costs are reduced, and profitability is improved by managing employment, distribution and marketing costs viz-a-viz revenue growth. The profits are ploughed back into people, infrastructure and marketing thereby building a sustainable chain of growth.

Strategies

  1. Product Innovation
  2. Improving Distribution network across Australia and Asia
  3. Improving market penetration and reach in Australia
  4. Leveraging partnerships, communications and supply chain-related knowledge for growth and sustenance

Bellamy’s has managed to grow revenue by 95% and Earnings Before Interest and Tax (EBIT) by 342% over the previous year. The company’s focus on growth and sustainability has been rewarded with a 133% growth in stock price in a year (Bellamy’s Annual Report, 2016).

  1. Balanced Scorecard and Bellamy’s Organic

A Balanced Scorecard is a Strategy tool which enables the organisation to breakdown its strategic objectives into performance measures, facilitating them to make improvements in their finances, customers, processes, and growth and development (Kaplan and Norton, 1993). This is a balanced approach towards performance goal setting and measurement as it enables the organisation to consider all round aspects of the business while decision making, rather than the traditional financial ratios and profitability measures.

 

Perspective

Measure

Type of Measure Financial/Non-Financial

Type of Measure—

Leading/Lagging

Financial

 

 

 

 

 

 

Revenue growth of 50% in the current FY

Financial

Lagging

Reduce operation expenses to 50% of sales in the current FY

Financial

Lagging

Improve Price to Earnings (PE) by 20% by June 17

Financial

Lagging

Customer

 

 

 

 

 

 

Improve market share by 20% in 18 months

Non-financial

Lagging

Reduce complaints by 30%

Non-Financial

Leading

Increase repeat ordering  customer base by 50%

Financial

Lagging

Internal Business Processes

 

 

 

 

 

 

Develop a network of 200 organic milk farmers in 2017

Non-Financial

Leading

Reduce manufacturing lead time 10% in 2017

Non-Financial

Leading

Optimize online order-delivery time by 20% in 8 months

Non-Financial

Leading

Learning & Growth

 

 

 

 

 

 

 

Improve employee retention by 95% in 2 years

Financial

Lagging

Increase number of employees by 30% in 2017

Non-Financial

Leading

Customer Service training to all (100%) front-end employees

Non-Financial

Lagging

 

    1. Financial Perspective – Price to Earnings ratio growth

The company has been growing profitably over the past few years with revenue growth of 95% year-on-year. Similarly, the stock price has also grown considerably over the past two years. As the company grows on account of Distribution expansion and marketing spend contributing to higher revenues, it becomes imperative for the organisation to increase the investor awareness about the company’s progress and future. This would allow the company to seek higher valuations for the business and generate additional capital which can then be used for business growth and expansion. This is a lagging financial indicator as the results of Price to Earnings is an outcome of other processes.

    1. Customer Perspective – Increase repeated customer ordering base

As the company is growing rapidly across the globe on the back of sustained social marketing presence, the regional offices as well as a strong supplier and manufacturing network of the company should ensure the customer acquisition. Though the new customer acquisition is important for growth and expansion, retaining existing buyers is equally important as that would mean recurring business for the company (Meola, 2016). From a company’s perspective, it is cheaper to retain existing clients as compared to acquiring new ones. Also, a higher repeat customer base indicates that the company has been successful in maintaining high-quality standards while producing products as baby nutrition quality is not comprisedof parents. As it involves new order revenues, it a lagging financial indicator dependent on the manufacturing output and customer service.

    1. Internal Business Process Perspective – Reduce Manufacturing Lead Time

As Bellamy’s has contracted manufacturers working for them for the production of its most important product lines, viz., Infant milk and baby milk formula, the company is ensuring that the production is achieved within a shorter period become very crucial for them. Shortage of inventories at the outlet level or the warehouse may cause consumers to switch to a competition brand, leading to loss of revenues (Tersine and Hummingbird, 1980). Further, it becomes extremely challenging to regain a lost client as the customer will always vary of the future availability and consistency of the products.

Having a reduced manufacturing lead time also ensures freshness of the products in the market, which would lead to better market reviews. As a result, this is considered as leading non-financial indicator results of which may be arrived at through process optimisation.

    1. Learning & Growth – Increasing number of employees

The company has grown its employee base by 50% in Australia & Asia in the previous year (Bellamy’s Annual Report, 2016). However, as the company seems to get aggressive in the international markets and with the increased focus on organic milk farming, the company will require more employees to thesource, educate, and sell its product offerings in the market. Also, increased revenues would lead to higher level of customer satisfaction and faster complaint resolution.

Similarly, the company will have to catch up with the increased demand in maintaining and improving operational efficiencies in the business. Identification and sourcing of right candidates and training them to align with the company’s values and systems would require consistent efforts and has to be in sync with the company’s expansion plans. This is a leading non-financial indicator as its implementation makes way for anincrease in sales and customer service.

  1. Strategy Map

A Strategy map is a strategy tool referred in conjunction with the Balanced Scorecard for assessing the long term strategies and inter-linking them with the day-to-day activities of the business, thereby ensuring advancement towards the strategic objectives (Kaplan and Norton, 2001).

Source: www.valuebasedmanagement.net

           

In a strategy map, all the organisational objectives concerning Finance, Customer, Process and Learning & Growth are stated in a chart, and their interdependent relationships are linked with arrows such that all are in sync with the long term strategic objectives of the organisation. Thus, it allows the management to align the organisation with the overall strategic goals, ensuring sustainability, clear direction and motivation.

    1. Advantages

One of the most important benefits of Strategy mapping is that it allows the management to align the strategic initiatives and objectives with the operational activities of the business, enabling them to set short term goals leading the organisation towards a broader direction. As a result of this, the employees are aligned with the strategic goals and can be driven towards the common vision (CGMA, 2013).

Being a top-down approach, it enables the management to identify the important aspects of the day-to-day functioning of the organisation and understand how small changes to the operational aspects can impact the overall business performance. Further, he helps in analysing the impact of new plans/goals on the existing operations.

    1. Disadvantages

One of the most significant disadvantages of the Strategy map is that it does not allow the organisation to evolve naturally. A Strategy map ties the progress of the organisation to the long term goals, which if not defined well early on, can lead the entire organisation to drift in a direction, opposite to their best interests. A Strategy map requires complete clarity from the top management regarding the strategic goal settings.

A Strategy map does not take into consideration disruptions in the industry, in the form of technology adoption, innovation, etc. which may change the industry dynamics altogether. Such changes are not immediately introduced in the strategic objectivesbeing based on predefined metrics, and old metrics may not yield the best results in a changing environment.

 

 

  1. Reflective Journal

Module 1

In my previous work experience, I was actively involved in performing accounts receivable, debt collection, and maintaining a large portfolio of up to 700 commercial clients. I did have some knowledge of how this course fits into the bigger picture viz. the balance sheet of a corporate organisation.

I think this course will offer me additional insights into:

  • Measurement of data
  • Identification of data
  • Communication and sharing of data with the management
  • Processing data to form information and utilise the same in decision-making process
  • Maintenance of financial records and preparing financial reports
  • Understand and evaluate financial data to assist management in taking key business decisions

In this week, I have understood many concepts in finance such as integrated reporting, accounting equations, corporate governance and its significance, accounting standards and reporting, and others. Though I have prior experience in the field of accounting, using this course I could better understand how the finance function operates and the significance of Income Statement, Balance Sheet and Cash Flow Statements in management decision-making process. I could also understand the roles and responsibilities of an Auditor and how vital their role is in the corporate governance process. Apart from this, I could also learn about the different types of company structures, the legal and regulatory environment and requirements surrounding them, and how integrated reporting is the way forward for all organisationsregarding business reporting and management.

Module 2

I could learn about Financial Statements, concepts of costs and values, different accounting standards, how intrinsic values are calculated and others. Further, I could learn the most important concepts involving the Income Statement, Balance Sheet and Cash Flows, and I can say for sure that it has been one of the most challenging areas I have dealt with recently. The financial ratios involved in assessing and understanding these statements such as current ratio, return on equity, asset turnover, etc. seem to be very important concepts which I feel would help in the long run, once I master them.

Some of the other sections of this course that I found challenging is the concept of Revenue and Expense recognition and application of different accounting standards and codes. With so many accounting sections and clauses, having a firm grip on the accounting standards is something which I feel I will have to put more efforts on to become better at it.

Module 3

I could learn avaluable lesson concerning financial statements, business accounting, costing, financial analysis and management. I have also understood how management undertakes financial statement analysis and reviews to arrive at taking business decisions. The concept of fair value assessment seems very enriching and helpful from decision making perspective. More importantly, I could learn about how integrated reporting is different from typical financial reporting and how a sustainable business can be built with the help of six Capitals. Apart from this, I could learn about the types of organisation, the regulatory requirement (especially for listed firms), roles of Board of Directors and auditors, and theimportance of Ethics in Business.

I think this course has provided me with all round knowledge of not just the financial aspects but business essentials for running a sustainable entity. I think these concepts will help me enormously while dealing with senior management professionals as well as auditors while evaluating the business and understanding the business. This would also help me in taking financial decisions while dealing with vendors and suppliers.

Module 4

Concerning the financial statements, I have learnt various accounting standards as well different accounting heads such as assets, inventories, current liabilities, disclosures, receivables, payables, etc.  I have also learnt about financial ratios (including balance sheet ratios) which are very important in determining the financial state of any organisation.

I think the knowledge of financial statements would help in proper classifying of accounting heads and give me a complete picture of the entire business. It will help me in understanding how the entire business works and help me in making asound judgment about the state of the organisation and identify problem areas.

Module 5

On completion of this assessment, I think I could learn about how organisations can link its long terms objectives with daily operational activities, using Balanced Scorecard and Strategy Mapping. It also made clear how short-term goals (Financial or Non-Financial) can be set as a means to achieve long term targets and how employees can be aligned with these targets, which I think would help me in managing people and goal-setting.

Apart from this, I could learn about the different types of costs involved in the business (fixed, variable, opportunity, avoidable, unavoidable, breakeven, and others). This learning has offered a fresh perspective to me regarding managing finances, and I think it would help me not only in my professional life but also in personal financial management.

Module 6

A well-integrated report consists of all round information of the business ranging from finance, operations, HR, environment, stakeholders and customers. The current financial reporting is based on financial statements and ratios, which provide anincomplete picture of the business. An integrated reporting providescomplete information about the business helping the management to take well-informed decisions.

This course has introduced me to integrated reporting and its significance, and I think this will help me a lot in future considering that this is the future of business reporting. I will start assessing organisationby multiple parameters, as against a traditional financial heavy approach, which I think will help in making sound judgements about the company. I think understanding the nuances of running a successful business is something I would continue to learn with corporate experience and application of concepts.

 

 

 

 

 

 

 

  1. References

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