There are many methods of business valuations available for various institutions in the world today and business analysis has become key element for any successive business. Business analysis methodologies have become of paramount importance to many business analysts. Business analysis methods have been also embraced in all manner of institutions including finance and banking sector. This means financial services providers needs to known proper business position so as to succeed in maximizing the goals of business and attaining the objectives. In this era of competition completion analysis and other business, related analysis is of paramount importance. Financial services providers regardless of whether they are in developing and developed world are finding it necessary to embrace the idea of business analysis.
This means today’s financial services provider organizations have decided to embrace business analysis methods to be able cope with their highly respected profession and industry. The mostly common used business analysis method is competitive analysis. However business analysis depends on the use of the end results of the analysis. To develop and choose acceptable business analysis method has become one of the greatest challenges to all financial services provider because most business analysis methods are product based.
Therefore, this thesis examines the relationship between business analysis and their application in the financial services provider to determine whether business analysis methods impact on company goals of profit maximization.
The main purpose of the thesis is to investigate and describe business analysis methodologies.
This thesis has five chapters. The thesis begins by defining the research problem and questions, and providing a justification for the research study. Chapter one also reviews the research background, and presents definitions of terms, significance and scope of the study. Chapter two examines the economic background and relevant literature. Chapter three discusses aspects of the research methodology including research design, data collection and data analysis methods, and hypothesis testing to support the model. Objectives of this chapter are: (1) to justify the research methodology of this study, (2) to explain research methodology used in the study, and (3) to demonstrate how research design, and data collection and analysis can be utilized in this study to answer the research questions outlined in the chapter 1.
Data analysis and findings are presented in chapter four. the aim of chapter fours chapter are (1) to systematically present the descriptive findings of the research study, (2) to interpret significance of these findings based on data analysis.
This thesis outlines the perceptions & opinions on how business analysis is carried and their methodologies. Their applicability in the financial services provider.
Business analysis is said to have a potential to improve the quality, efficiency, safety and effective of business activities. Inclusion of business analysis in financial services sector is particularly not taken up in most companies but there is survey that shows that most institutions is moving towards its adopting. There is a great potential in both private sector and public because of the effort they are making towards adoption business analysis methods.
Background of the study
Business analysis methods provide hope of great improvements improving performance. The idea, of using business analysis as a tool for comprehensive reform and increase corporate governance in institutions has become very vital. Financial services who have implemented business analysis agree that its use in firms is facing many challenges. Business analysis is described as timely as firms profitability problems. The unfortunate thing is that administrators have not accepted it fully. Some of the administrators concur with some business executives who describe business analysis methods as bad and unfit to use in the sector. These kinds of executives have made the implementation difficult.
There was need to study the value of business analysis methods in financial sector firms. Business analysis in sector. Most financial sector firms have been coupled with tremendous problems like raising cost of maintaining the firms, unable to differentiate finances, inefficient services, inconsistence quality, high job turnover and declining job satisfaction among the staff. The management of financial sector firms has tried to solve this problem without success however; those who have adopted business analysis have started realizing the benefits. In the US a developed one the use of business analysis methods has become one of the greatest challenges.
Business and health care executives have to realize organizational goals regardless of the challenges. Therefore, the need to seek for business analysis to address the complexity and inefficiency of operations especially performance. Many financial organizations have large clientele and a variety of services this means they also have large transactions thus analysis is necessary. Institutions like brokerage firms with members worldwide will not be able to operate without business analysis.
The purpose of the study
The main aim of this study is to find out the impact of business analysis method in the management of a financial services provider. The study aims at building and maintaining research documentation for a future use by other researchers, financial managers and other interested parties in the subject. The objective will also look at short term and long-term objectives of business analysis. For this research, the thesis must be built on the previous researchers. This will enable financial services providers to be able to answer a few questions relating to this study.
The scope of the study
To understand business analysis in a financial services provider, a comprehensive analysis is carried out to ascertain the various needs of business analysis methods.
Objectives of the Study
Considering these matters in view, my thesis paper broadly aims to provide a synopsis of the key developments, to reflect on emerging trends, and to address some frequently asked questions about this literature. I attempt to keep the technical aspects of business analysis in check, and focus instead on the key implications of this literature for business analysis methods in financial services provider setting. To facilitate achieving the broad objectives as cited above, this study aims to attain following specific operational objectives:
- Clarifying the role of business analysis methods for financial services providers management in smoothing out variations in operation performances.
- avoiding business failures.
- Identify how business analysis methods of firms that can be treated as a safeguard against the disadvantages associated with those without.
- To convey how business analysis methods for financial services providers facilitates advantageous, quality and efficient service delivery to clients.
- Ensuring data integrity, and a more efficient method of running the organizations.
- To provide a full range of reports that will satisfy stakeholders’ requirements.
- To find out proper business analysis method that will be used by financial services provider in keeping a smooth running.
The focus is on the business analysis method which has been used extensively by both empirical and theoretical researchers. The aim is to explain the driving forces for using business analysis method for financial service provider organization management. The thesis has discussed the major developments with respect to business analysis. Reviews some decision business analysis method, and compares traditional analysis methods to modern one. Summarizes the results of the study, and provides an outlook on further research.
While carrying out this research, some research questions that are empirical to this study have to be reviewed. This includes:
- How does business analysis method for financial service provider administration help in smoothening out variations in operations and strengthen financial discipline?
- What type of information is required in a particular business analysis method ?
- How business analysis method for can be used in safeguarding against loss of revenues and profits?
- How business analysis methods facilitate quality service delivery?
- What is the value of business analysis in the financial services provider?
- What is the value of business analysis methods to organizations?
- Is there a way can the business analysis methods help in mitigating risk, improve outcomes and enhance performance?
- What is the performance of a firm with the business analyst as compared to this other?
The success of a business analysis method will depend on the administration of organization and the attitude of the business analyst and regular staff members.
This research has many hypotheses among them
- The implementation of business analysis method will depend on the perceptions of the executives, which will be positive or negative. This in turn depends on the experience and exposure of the executive.
- On average, the executive’s actual experience will be powerful predictor of attitude towards business analysis methodology.
- All business analysts have uniform information as relates to the methods of business analysis.
Financial services providers are key firms in the economy of any country their performance becomes of great importance to all stakeholders. Significant progress made by management executives in adopting various business analysis methods are important in prevention and deterring un expected financial stress.
Hypothesis assumes that financial services provider are expensive to start, operate and manage and all of them have similar perceptions.
Limitation of the study
- Few financials service providers executives will be willing to be interviewed by the researcher for the purpose of this study.
- The researcher will use his own resources in doing this research since the aim of the research is for the purposes of partial completion of a course.
- Time, constrain will be experienced as the researcher will not have time to go out since he has ongoing classes and the subject requires extensive research.
- Most of business executives come from different cultural backgrounds with different motives in managing organizations; therefore, they will view the researcher as an investigator leading to fear of being investigated.
Delimitation of the Study
- The researcher is a student and he will be carrying out the research with the trust that people will cooperate.
- The researcher will be able to access to information technology departments since he is starting information technology it is easier to convince the colleagues (birds of the same feathers).
- The researcher has all the time in the world to carry out his research since the period given by the attached professor is adequate.
Definition of terms
- SWOT : Strength, weakness, opportunities and threat
- PESTLE :- Political, environment, social, technological, legal and
The thesis will have five chapters written and each chapter will contain the following.
The final report will begin with an abstract that will summarize the topic, the findings and the importance.
- Executive summary
This will summarize all the chapters and the conclusion reached.
- Chapter I
The chapter will have introduction, which will explain issues surrounding the topic and the importance of the study. Then there will be background information that will cover topic and the area of study, it will also provide with an overview of the study, purpose of the study, research question, research hypothesis, limitation and delimitation, Significant of the study and definition of the terms used.
- Chapters 2
This chapter covers literature relating to the topic under study and in my case, this will cover an introduction and relevant literature on the subject.
- Chapters 3
In this chapter the researcher will explain the methodology used that is The Research Approach, The Research Design, The Target Population, Sample Size, Sampling Procedure, Instruments for data and continuous prose collection and data analysis technique
- Chapters 4
This chapter contains presentation data, analysis of data and discussion
- Chapters 5
This will be the last chapter. It will contain summary of the findings recommendations and conclusion
Porter’s Five Forces
Porter, the Father of Competitive strategies identified five forces that drive competition within an industry (Porter M, 1986),. He listed them and explained how they are applied in the industry. These strategies include:
- The threat of entry by new competitors into the industry: this is main problem of the competition. A new competitors comes in there chances that he will go with some of the buyers. Another related problem is entering new market either through geographical or vertical expansion.
- The intensity of rivalry among existing competitors that the change of strategies: the current competitors and the task of staying competitive in current market was identified by Porter as another problem that needed strategies.
- Pressure from substitute products.
- The bargaining power of buyers.
- The bargaining power of suppliers.
No matter which competitive force is to used the most important thing to keep in mind is the relationship between profit margins or returns and the intensity of competition. The higher the intensity of competition, the low is profits.
The main objective of this thesis is to identify how the chosen research methodology will match the main objective of the thesis question and how it will be achieved. Essentially, there are two types of research methodology; they are qualitative and quantitative research. While the quantitative research is carried out through obtaining primary data such as questionnaire, qualitative research is a research that is conducted through interviews, laboratory tests and observations. Therefore, the method enables a researcher to explore the details of individual perceptions over phenomena.
The research approach that develops the methodology explained below is based on descriptive research theory and inductive reasoning. This is important to develop the foundation by which the research will be designed, conducted and consequently analyzed.
Firstly, it is important to establish the research approach in order to create a significant qualitative methodology. The research approach undertakes a specific design that is “the overall strategy chosen to obtain the information required answering the research question” (Ghauri and Gronhaug 2002). The research approach will review the types of research design and data collection methods. The research approach is built on logical relations and not just beliefs.
Descriptive research is used when the research question is understood (Ghauri and Gronhaug 2002). In the research approach, the data measurements are dependent on the obtainment of required information and the quality of the information. The outcome of the research, therefore, is dependent on the measurement procedures used in the collection of the data, and this in turn is dependent on the types of data collection (Ghauri and Gronhaug 2002).
This is an important concept of qualitative research, where the description is either inductive or deductive. Inductive research begins with a question and seeks to describe it, and deductive research begins with the problem by working backwards to the answers. Therefore, this research uses the inductive approach to build the theory from the data gathered to explore possible conclusions towards business analysis methods.
The firms should be able to develop business analysis method for their company that enables the providing the correct information for decision making. For this purpose, this thesis will discuss various parts of the subject.
A qualitative research method has been adopted where data has been collected. Qualitative research involves a number of disciplines, which consist of interpretive practices. This research strategy uses data collection and analysis and does not have theories ( Denzin & Lincoln, 1998). Various methods were used in this case study. Among them case studies data collection, data collection networks which includes feedback groups, focus group observation, diary method, interviewing and archive data.
This study has been carried out in an financial service provider in the United kingdom. This is because the thesis writer works in this. This firm is one of a well-known services providers in the financial sector.
The collection of data was conducted through the search of documents, archives, internet interviews, website browsing, checking web diaries, discussing with peer groups, relying on feedback loops and focus groups.
- Search of documents. Thesis has used document search as one way of collecting information. This has been done through the website, library services, journals, and other archive related information. Without forgetting, the importance played by annual reports and the internet Wikendia.
- Interview –this technique did not have great value in this thesis although the researcher attempted to interview a few friends relating to this thesis.
- Diaries- This method uses connections among individuals and organizations. Diary for time management is checked. This is similar to where when somebody enters to work place signs a diary and when he lives he signs a diary. Diary contains the time one enters in the work place, the activity carried out and where it was carried out, the names of the people he worked with and the comments about the work. In this thesis, these are not widely used since it based on literature from different sources.
- Observation: – this involves gathering of data through impressions of a person. This method is actually natural and the outcome will depend on the perception of the observer. The researcher observes and interacts with organizations while he is carrying out the observation. This may also involve interviewing. This thesis does not involve this method. However, it is the best if actual field was taken.
- Feedback loops:-Feedback loops allow the preparation reports after evaluating data collection for purpose of feedback. A number of reports can be prepared. In the thesis case, seminars, workshops are ideal for this kind of feedback.
The thesis does not have any specific means or theory that governs how materials collected should be analyzed. The executives of organizations, messages have been interpreted into various functions such as expected benefits and risks of Business analysis, the functions of the Business analysis, administration and the omission statement and objectives of the service provider. The thesis has also analyzed the work into main activities using work procedures. The thesis has identified various categories to be compared while carrying out the analysis.
Results And Analysis
Data collection and analysis
Data was collected based on qualitative technique of research strategy, the researcher used case study for collecting data from various organizations.
Representation of information
Results are presented into categories. At first the results looks at the requirements of organizations for business analysis. The other category entails interpretation organizational and work processes in relation to the business analysis. The category focuses on the designing a management information system model for process oriented healthcare.
Porter’s Five Forces Analysis for the Sector
The company faces the threat of buyers shifting their loyalty to other rival companies. This phenomenon according to porter is referred to as backward integration. To curb this threat, the company has come up with three generic strategies to counter this threat.
- Cost leadership: – It has reduced the price of some its services including the cost of offering services such as custody of share certificates.
- Differentiation strategy: – The Company has come up with alternative services that are differentiated from the rival firms. These services should be economical and are environmentally friendly in terms of pollution.
Among the customers of the industry all sectors of the economy and individuals
2. Supplier Power the company is faced with the threat of the suppliers being able to control the price of some of the services they supply. This is applicable to big corporate firms. The labor laws are also stringent and the workers are so unionized that treating of employees in a fair and equitable manner is inevitable. To counter this force, the company extends its supplier chain making the prices.
The generic strategies adopted by the company against supplier power are by increasing the price of their services. Another strategy to insulate itself from this force is that of focus. Because of the higher supply service price is higher, the company has taken on the differentiation-focused strategy. In this strategy, the methodology has been improving the quality of their services. By so doing, the charges can be increased without harm being made to the customers.
3. Barriers to Entry
The other force challenging the industry is entry of new companies with similar services. This would pose the threat of neutralizing the company’s profits as well as its market share. The generic position that the company has taken has been cost leadership. Through lowering its production costs and increasing operational efficiencies, the company has been able to lower its charges while maintaining its profitability. This has deterred potential investors/ entrants into the industry.
The company has also special services with special rates that are fit for special customers. This kind of focus strategy that also encompasses the differentiation strategy makes entry difficult.
Lastly, the company is faced with the threat of rival companies accessing its premises and imitating their business methods. However, the company has made its headquarters, inaccessible to foreigners in order to safeguard its patents and copyrights. In addition, their employees are well compensated therefore; they do not have thoughts of leaving for rival companies.
This force emanates from other companies within the same industry. The threat here is that these companies capturing the market. However, the company’s framework/ strategy have been reducing prices whenever faced with such a threat. Prices are then reverted to normal after the exit of that company the specific market segment.
5. Threat of Substitutes
From the economist point of view, threat of substitutes arises when the demand of that good is likely to be affected when the price of the substitute changes. This elasticity of price has formed a real force that the company has to fight if it has to be sustained in the near future. This bars the company from effectively increasing the price of its services whenever need arises.
To reduce the strength and danger of this force, the company has strengthened its differentiation generic strategy as its framework. Customers would then be loyal to the uniqueness of their services even if they increase the price.
Pestle analysis of the industry
- Socio-Political Trends. The war on terrorism whether perceived or real is affecting the industry at large.
- Technological Trends. Nearly half of the world’s populations have access television and Internet connections in their homes. In the USA nearly half of the populations have access to internet in their homes, according to the annual survey by the Pew Internet & American Life Project in July 2007. The number of home broadband users nationwide now equals the total number of Americans with any type of Internet connection in 2000, the first year the survey was conducted. Four out of 10 African-American adults have broadband access at home, compared to 15% two years ago. Nearly one-third of rural Americans have home broadband connections, compared to about half of Americans living in urban areas and the suburbs. According to Pew, income and race are becoming less important differentiators in US broadband adoption. In Far East things have taken a new dimension majority of the parents have resorted for internet for academic purposes this has led to increase in the needs of broadband connections in homes.
- Economic Trends. The US sub prime crisis has already had a global impact on global financial markets and could affect consumer spending worldwide. At first sight, this would seem a disproportionate reaction but banks all over the world are exposed to US debt. Sub-prime lending was lending at higher interest rates as a means of helping American consumers of lower incomes and poorer credit records obtain mortgages. These loans were then sold on, in complex ways, to other institutions including hedge (higher risk higher return) funds. The treatment of sub prime loans by the banks is likely to have far-reaching effects including, possibly, a slowdown in the US economy and a confidence linked decline in US consumer spending. Fact is that US retail sales rose only 0.3% in August 2007 suggesting increasing caution of the crisis ahead. US retail sales are a major driver of economic growth and may be viewed as an early response to a housing slump and financial market turmoil. Over the past 12 months, retail sales rose by 3.9% excluding autos. However, the level of spending did not indicate recession tendencies though analysts expect growth to decline in the near future. There were modest increases in sales for furniture (0.5%), electronics (0.4%), sporting goods (0.3%), and health care (0.3%) compared with the same month a year ago. Thus, this national economic problem might have a small effect on the health food sector because organic foods are usually priced higher than regular food (Xinhua News Agency, 14 September 2007). This trends affecting world economy is contributing to the fall in demand for goods and services.
- Environmental. The company is very competitive; it is balancing its commitment to communities they operate in through its corporate responsibility.
- Legal constrains. The company is operating all over the world. Each country have the own laws to complied with. The head finds it difficult to for example convert financial statements prepared in different accounting standards and procedures. These is one of legal constrain facing this company, although accounting standards board are solving this problem though convergence of accounting standards.
- Unique service Offerings; the company is offering Unique service with strong brand name.
- They have strong presence in Africa market, strategic position in US and Europe and a commandeering share in the U.K. market.
- Owning the technological know how that is, they are able to operate and monitor all financial services in various parts of the world.
- Large number of working staff equipped with technology and based in and outside the UK
- Strong financial base.
- Too Many competitors.
- Most consumers had now access to variety services from different companies.
- Fluctuating financial performance: this is shown from the financial statements.
- there is increase in demand of financial services
- Enlarging of the Target Market
- Increasing Awareness of People About investments in financial services sector.
- Entry of companies from china, Africa and Asia
- The threat of terrorism.
The company market will focus on customers who are based in development and developing world especially the USA and Africa. It is expected that youths are the perennial marketing targets of investment companies from their inception, since wealth is sifting to the youths. In fact, the market for securities has not changed much but with change of wealth to young generation the demand will increase in the below 40-age range. Therefore, as old people are the historical security purchasers and holders they will continue to have significant impact on demand for these services therefore forming a key target audience for the investment companies. In general, these youth oriented decisions focus on speed – quick to make, quick to use. However, youths are a growing market sector fast.
Situational and internal analysis
a) Gross profit
= Gross profit
|b) Net Profit |
= Net Profit
|c) Return on Owner’s Equity |
= Net Profit
|d) Return on Total Assets |
= Net Profit after tax
|e) Debt Ratio |
= Total Liabilities
|Debt /equity |
= Total Liabilities
On profitability/ performance, it can be noted that the profitability of the BP is fluctuating from time over time. This is shown by the Gross profit margin, Return on Assets (ROA), Return on Equity (ROE) and the operating profit margin. In 2000, the ROE increased to 12.6% from 11% in 1999 before declining further to 1.1% in 2001 again it went up to 8.2% in 2002 and year 2003 it settled at 17.8%. The net profit margin also increased to 8.2% in 2000 from 6% in 1999. In 2001, it declined to -0.8% and then went up to 5.9% in 2002 before settling at 12.8% in year 2003. In 2000, the ROA inclined to 10% from 8.1% in 1999 before declining further to 0.8% in 2001 before going down to 6% in 2002 and settled at 13.4% in year 2003.
The Gross profit margin also inclined to 49.9% in 2000 from 48.4% in 2004. In 2001, it declined to 49.7% and before going up to 52.8% in 2002 and settling on 56.8% in 2003. Even though profitability of the company has been fluctuating, it is still positive results but if the management does not take care, the operating costs will affect the company’s profitability. this because although there are fluctuations they are associated with operating costs as the gross profit seems to be stable.
There is no change of the debt/assets ratio it fairly stable with slight fluctuations that is 26.2% , 22.3%, 24.7%, 26.7% and 24.2% in years 1999 to 2003 respectively. From this, I deduce that on average for every 24 cent of debtors there is $1 from the assets.
There is constant fluctuation of the debt/equity percentage although it stable that is 35.6%, 28.7%, 32.9%, 36.4% and 32% in years 1999 to 2003 respectively. These percentages are indicators of the how many times the shareholders funds can pay total liabilities expressed in percentages. From this, I deduce that on average for every 35.6 cent of debtors they will get $1 from the shareholders funds in year 1999. in year 2000 on average for every 28.7 cents of debtors they will get $1 from the shareholders funds. In year, 2001 on average for every 32.9 cent of debtors they will get $1 from the shareholders funds. in year 2002 on average for every 36.4 cent of debtors they will get $1 from the shareholders funds and in year 2003 on average for every 32 cent of debtors they will get $1 from the shareholders funds.
- Positioning – the company would like to create a niche in offering a wider array of energy services in the world market.
- Promotion – use of internet, television adverts, promoting social activities, fliers, sponsoring sports and much other promotional activity. Since we are involved in providing wider financial services, the is inclined for service differentiation, which is essential in positioning. The products should be positioned so it can stand apart from competitive services. Their unique combinations that differentiate their services from other competitive offerings will enable customers to define the important attributes of the business.
- Place – the company is situated in various parts of the world with head office in UK.
- Pricing – the company will make all the prices of their goods to match the prices of their competitors but will have an hedge because they are unique.
The company products and services
The company services are a health and of a wide array of services to the growing market of wealth youths in the world. It should also plan to venture in to trading other services
The goals and objectives of the company are as follows:
- To be a market leader in the industry.
- To provide affordable and high quality services in the world;
- To constantly guide and inform wellness consumers about their services they offer;
- To continuously strive to make service fast, accommodating and excellent towards all consumers in all parts of the world..
There are more established competitors seen for the company and are offering similar services, also with international presence. They already knows the company strengths and weakness, the company should make themselves an inspiration to strive harder in satisfying the customers needs.
The company has adopted a value chain that has resulted into the maximization of value while maintaining the costs to their minimal levels.
Activities where value has been created and costs reduced include Human Resource Management and Technology development. Other areas include Research & Development, Sales, and Marketing.
In procurement, the Management has ensured that the supplies are close to their proximity.
The aim of this thesis was to develop and study a business analysis for survives company that allows for the measurements of organizational inputs and outcomes. as a result, it is important to identify the multiple roles that business analysis plays organization currently takes advantage of, such as re-engineering and quality management include process has seldom been analyzed. Several recent organizational methods, such as balanced scorecard (Kaplan & Norton, 1996) address the problem of relating costs to resources. Furthermore, such co-ordination relies on business analysis and is about the utilization of material resources.
In order to achieve better future results, better or higher to industrial average, the company needs to cut down its operating expenses, enter to new markets through vertical integration, geographical expansion and product differentiation. This would considerably improve the profitability, which is declining recently. They also have to review their policy on capital management and keep optimal levels of various items of current assets. This would improve the firm’s liquidity position. In order to improve the return on owner’s equity ratio, the management should invest in viable projects that would yield positive NPV’s .This has the effect of maximizing their wealth.
This thesis points out that financial services sectors managers at different levels in an organizational all need the same primary data. The differences among the various management levels all concern about the value of the information provided by the analysis.
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