For: ATHE Level 7 Diploma in Strategic Management

ATHE Level 7 Extended Diploma in Strategic Management

Unit 2 Finance for Strategic Managers Assignment

Assignment Scenario

Pietro Yon, a local businessman, owns and manages several retail stores that sell a range of
electronic goods.

Pietro is a member of the local business Chamber of Commerce and has been asked to
chair a committee to research and study the success of Samsung Electronics Co. Ltd. The
Chamber believes that there may be some useful learning from this study which members of
the Chamber could use. You have been asked to provide specialist support to the
committee, including producing a range of materials for members of the committee to use.

You have been provided with the following link to view Samsung Electronics Co. Ltd annual
reports and investor information.

https://www.samsung.com/global/ir/financial-information/audited-financial-statements/

Task 1

You must produce a presentation for Pietro Yon to use at the next committee meeting. The
presentation should be based on your research of Samsung Electronics Co. Ltd. and other
relevant information. It must be accompanied by supporting notes.

Your presentation must include the following:

• An evaluation of the sources of financial data which can be used to inform business
strategy
• An assessment of the importance of financial data and information in the formulation
of business strategy
• An analysis of the risks related to financially based business decisions.
• A review of techniques that can be used to appraise strategic capital expenditure
projects

Learning outcomes and assessment criteria

LO1 AC 1.1, 1.2, 1.3

LO3 AC 3.1

Task 2

A meeting has been arranged with Pietro Yon and other members of the committee and you
have been asked to produce a discussion paper which provides:

• An interpretation of the financial statements of Samsung Electronics Co. Ltd. to

assess the current viability of the organisation

Unit 2 Finance for Strategic Managers Assignment v1.0 13/02/23

 • A comparative analysis of financial data using ratio analysis for Samsung Electronics
Co. Ltd. You are advised to download consecutive year’s accounts from the
Samsung Electronics Co. Ltd. website

Extension activities

To achieve a Merit, you must:

• Add further sections to your discussion paper that makes recommendations to

Samsung Electronics Co. Ltd. based on your analysis and interpretation of the
financial position

• Produce an information leaflet for the Chamber of Commerce to distribute to the

members. The leaflet should assess the following:

o The limitations of ratio analysis as a tool for strategic decision making.

o The importance of cash flow management when evaluating proposals for capital
expenditure

To achieve a Distinction, you must prepare an additional section for the leaflet that
recommends methods and tools that allow businesses to analyse financial data for strategic
decision-making.

Learning outcomes and assessment criteria

LO2 AC 2.1, 2.2, 2M1, 2M2, 2D1

LO3 3M1

Task 3

Pietro Yon has been supplied with information from a component manufacturer who has
asked for advice on the best project to accept for the purchase / replacement of a piece of
machinery.

The company is considering selling its old machine that has a capital cost of £260 000 and
replacing it with an up-to-date model costing £220 000. For immediate purchase, the
company will receive £120 000 part exchange allowance.

Both the current and new machines can meet the expected company demand, estimated at:

Year Units
1 90 000
2 50 000
3 30 000

After three years, it is predicted that demand will be zero due to the technological
developments in the industry.

Unit 2 Finance for Strategic Managers Assignment v1.0 13/02/23

The following data has been provided for the existing and new machine:

Current Machine New Machine

£ per unit £ per unit
Direct Materials 1.80 1.80
Direct Labour 0.75 0.60
Variable Overheads 0.45 0.30
Depreciation 0.35 0.55

Additional information

(1) The selling price for each component is £5.00 and this will remain constant for the
next three years.
(2) The company expect the cost of direct materials and direct labour to increase by 5%
each year.
(3) The company predicts that repair and maintenance costs for the current machine will
be £7000 per annum.
(4) The current machine is expected to have a zero-residual value at the end of year 3.
(5) The company predicts that repair and maintenance costs for the new machine will be
£1000 per annum.
(6) The new machine is expected to have a £75 000 residual value at the end of year 3.

The company’s cost of capital is 15%

Extract from the present value table for £1 at 15%

Year Units
1 0.870
2 0.756
3 0.658
4 0.572

Pietro would like you to produce a business report that can be given to the company offering
advice on the best course of action for the purchase / replacement machine. You must:

• Prepare a report that evaluates the capital expenditure proposals using approp riate
financial techniques

Extension activities

To achieve a Distinction, you must include an assessment of the impact of the capital
expenditure proposal on the strategic direction of the organisation in your business report.

Learning outcomes and assessment criteria

LO3 AC 3.2, 3D1

Note: When citing sources of information that you have used, provide a reference using an
appropriate format, e.g., Harvard.

Unit 2 Finance for Strategic Managers Assignment v1.0 13/02/23

Guidelines for assessors

The assignments submitted by learners must achieve the learning outcomes and meet the standards specified by the assessment criteria for
the unit. To achieve a merit or distinction grade, the learners must demonstrate that they have achieved all the criteria set for these grades.
Where work for the pass standard is marginal, assessors can take account of any extension work completed by the learners. The suggested
evidence listed below is how learners can demonstrate that they have met the required standards. The command verbs contained within the
AC are highlighted in bold in the suggested evidence boxes.

Task LOs and AC Suggested evidence Suggested additional Suggested additional

number PASS evidence MERIT evidence DISTINCTION
1. LO1 AC1.1 The learner will provide an evaluation
AC 1.1, 1.2, of the sources of financial data which can be
1.3 used to inform business strategy.

LO3 AC1.2 The learner should provide an

AC 3.1 assessment of the need for financial data and
information in relation to business strategy.

The assessment and evaluation should be

balanced leading to conclusions. The learner
should use appropriate examples to illustrate
the points which are made, and this will help to
demonstrate their understanding.

AC1.3 The learner will continue with an

analysis of the risks related to financial
business decisions. The analysis should be
detailed and comprehensive.

AC3.1 The learner should review techniques

that can be used to appraise strategic capital
expenditure projects giving examples of how
these can work in practice.

Unit 2 Finance f or Strategic Managers Assignment v1.0 13/02/23

2. LO2 AC2.1 The learner is required to download 2 or 2D1 The learner must
AC 2.1, 2.2 3 consecutive years’ accounts for Samsung 2M1 The learner will make recommend methods and
2M1, 2M2, appropriate financial
Electronics Co. Ltd. using the link provided in tools that allow businesses to
2D1 the assignment. The learner will carefully recommendations. The analyse financial data for
interpret the financial statements. recommendations must be strategic decision-making.
LO3 3M1 directly linked to the detailed They must assess and justify
AC2.2 The learner must make an assessment analysis and must be each of the methods and tools
and judgements on current viability of the relevant to the organisation. recommended. Appropriate
business and prepare a comparative analysis The learner should use examples of the methods and
of financial data using ratio analysis. appropriate examples to tools used by public and private
demonstrate their sector organisations should
understanding of the illustrate the answer.
importance of accurate
financial data in formulating
and delivering business
strategy.

2M2 The learner will assess

the limitations of ratio
analysis as a tool for
strategic decision making
leading to balanced
judgements.

3M1 There must be full and

clear assessment of the
importance of cash flow
management when
evaluating proposals for
capital expenditure.
Appropriate examples will
aid the learner in
demonstrating the points
which are made.

Unit 2 Finance f or Strategic Managers Assignment v1.0 13/02/23

3. LO3 AC3.2 Using the data provided in the case 3D1 The learner is required to
AC 3.2, 3D1 study, the learner is required to evaluate the provide an assessment, with
business proposals for capital expenditure appropriate justifications of the
identifying benefits and issues and reaching impact of a capital expenditure
conclusions. The learner must use appropriate proposal on the strategic
financial techniques including payback, direction of a business
accounting rate of return, net present value and organisation. The learner
internal rate of return. should use the information in
the case study and any other
appropriate theory and
research.

Unit 2 Finance f or Strategic Managers Assignment v1.0 13/02/23