The Strategic Plan for GrainCorp Limited - Free Example for You

A strategic plan is a business document designed to communicate important information that relates to corporation goals; the actions needed to achieve the set goals and other objectives set during the corporations planning exercise (Brinckmann and Kim 2015). The strategic plans are important tools for ensuring that the scope of companies' activities is prepared and defined. The strategic plan also helps the company to conduct a SWOT analysis aimed at reviewing the company's strong points, weak points, and opportunity and risks. Once the goal is set, the strategic plan will assist to formulate and implement the necessary strategies. The strategic plan is then distributed to all employees to ensure that a consensus is built and that key players are working to achieve the same goals. If properly implemented, the business plan will assist the company to increase productivity and track the progress. The strategic plan can, therefore, act as a motivational tool.

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Reasons for business failure include lack of proper planning for both short-term and long-term goals. The inability of the leadership and management to make the right decisions for the company can also result in business failure especially where the leadership fails to manage employees and its finances (Abdallah and Langley2014). Poor business management results in poor communication within the company and hence poor working standards. Macroeconomic factors can also result in business failure. Examples of macroeconomic factors include inflation, government debt and other economic factors that result in business cycles such as a recession. Other important factors that can result to business failure include poor business location, low profitability, poor inventory and financial management skills, lack of clients' satisfaction, lack of focus by management and company employees, personal use of business funds and cut throat competition subjected to the company.

A legal business structure can either be a sole proprietorship, partnership, (S) corporation, and limited liability companies. A sole proprietorship is the simplest forms of business structure and is in most cases owned by a single individual. Taxation is done on personal incomes of the owners. A general partnership is composed of two or more persons who are equally liable for partnership debts. A limited partnership is comprised of two or more general partners with limited liabilities to the company. Corporations are artificial persons with certain rights, privileges, and liabilities. Limited liability companies can be created by one or more persons through an extraordinary written contract.

The strategic plan for GrainCorp Limited indicated an achievement on delivering the growth initiatives, maintaining a disciplined approach to capital management and growth portfolio optimization. Notable achievement includes expansion of malt plant in Pocatello which increases malting capacity by 120,000 mt. The net gearing levels obtained were at 37% below the planned 45% while the core gearing debt stood at 20%. The company is committed to increasing the shareholder's returns through an increase in returns on capital employed. Cryer malt was also acquired for $13.8 million during the financial year ended September 2017. As a result of the achievements, the revenue figures for the current year increased from $4158 million to $4575 million. The total equities increased from $1742 million to $1860.4 while the total liabilities reduced from 1833 to 1738 million. The basic earnings per share greatly increase from 13.5 to 54.7. The cash flows for the year improved from $307 to $389 million.

The financial performance and position of GrainCorp limited can be analyzed using the following ratios:

The data and information were obtained from audited financial statements for GrainCorp limited for the year ended September 2017.

working capital ratio current assets 1518 1.87

current liabilities 810.2 debt to equity ratio total liabilities 1738 0.93

total equities 1860 The rate of return on assets net income 125.2 3%

average total assets 3587.1 times interest earned ratio income before interest and taxes (EBIT) 143 3.43

Interest expense 41.7 receivables turnover ratio net credit sales 357 0.77

average accounts receivable 461.95 inventory turnover ratio cost of goods sold 2466.1 4.57

average inventory 539.2 A lower debt to equity ratio is an indication of a more stable company hence less risky (Weygandt, Paul, and Kieso 2015). The working capital of 1.87, therefore, implies that the company is liquid enough to cover its current short-term obligations. The company attained a debt to equity ratio of 0.93 which is slightly lower than 1. The aforementioned implies that the company's' liabilities are properly covered by the shareholder's equity. Times interest earned ratios indicate the number of times the company can cover the interest expense using income before taxes (Wahlen, Baginski, and Bradshaw 2014), the higher the number of times (ration), the better the performance of the company. The receivables and inventory turnover ratios indicate that the company is efficiently utilizing its current assets to produce revenues.

References

Abdallah, Chahrazad, and Ann Langley. "The double edge of ambiguity in strategic planning." Journal of Management Studies 51, no. 2 (2014): 235-264.

Brinckmann, Jan, and Sung Min Kim. "Why we plan: the impact of nascent entrepreneurs' cognitive characteristics and human capital on business planning." Strategic entrepreneurship journal 9, no. 2 (2015): 153-166.

Wahlen, James, Stephen Baginski, and Mark Bradshaw. Financial reporting, financial statement analysis, and valuation. Nelson Education, 2014.

Weygandt, Jerry J., Paul D. Kimmel, and Donald E. Kieso. Financial & managerial accounting. John Wiley & Sons, 2015.