Active learning ideas
This topic focuses on the rigorous assessment of a business's current health using both quantitative and qualitative data. Students move beyond simple profit figures to use financial ratios, including liquidity, gearing, and profitability, to diagnose a firm's strategic position. They also explore non-financial metrics like employee engagement and brand loyalty, alongside Prahalad and Hamel's concept of core competencies. This internal audit is essential for students to understand what a firm is actually capable of achieving before it attempts to expand.
Activity 01
Set up stations with different data sets: one for liquidity, one for gearing, and one for non-financial data. Groups move between stations to calculate ratios and note down the 'symptoms' of the business at each stop.
How can financial ratio analysis inform strategic decisions?
Activity 02
Students create posters identifying the core competencies of famous UK brands like Dyson or Rolls-Royce. The class walks around, adding sticky notes with suggestions on how these competencies could be used in new markets.
What are core competencies?
Activity 03
One student is given a set of ratios; the other is given the business context. They must work together to explain why the ratios look the way they do, such as high gearing during a period of expansion.
How do we evaluate non-financial performance?
A few notes on teaching this unit
Watch Out for These Misconceptions
A high profit margin always means a business is doing well.
Profit is only one metric. A firm could be profitable but have a liquidity crisis or high labour turnover. Active data analysis helps students see the 'blind spots' in relying on a single financial figure.
Core competencies are just things a business is good at.
A core competency must be difficult for competitors to imitate and provide significant value to customers. Peer-critiquing examples helps students distinguish between a standard strength and a true core competency.
Methods used in this brief
Mission, Corporate Objectives and Strategy
Students explore how corporate objectives are developed from the mission statement and how they shape strategic decision-making.
8 methodologies
Analysing the External Environment
Students utilise analytical frameworks to evaluate the macro-environment and industry competition.
8 methodologies