VRIO analysis and Chemilate's blance sheet - Essay Example

Financial Accounting More than often, internal analysis deals with the investigation of strength and weaknesses. VRIO framework is a component of internal analysis that stands for valuable, inimitable, rare, and organized. As a resource based theory, the framework measures how valuable electronic pillbox logger is towards its diverse market. The device is considered to be pocket sized, as it has compartments made from medication container that are designed to remind patients at particular preset to take their medication.

VRIO involves valuable recognition of capabilities a system possess that generates more revenue through reduction of costs related to neutralizing threats (Brennan 10). The use of electronic pillbox logger as a means of reminding patients to take their medication is more efficient and valuable. More so, the device is associated with low cost as it presents a user-friendly interface. Rare is another feature found in the VRIO framework. It involves a system capability to be exclusively be possessed by one or a few other firms in the industry (Brennan 8).

The electronic pillbox logger is a rare device because it is designed to remind patients to take their medications on time. In addition, the device serves, as a reminder at scheduled intervals because it records the actual dosage times. Inimitable are those capabilities that are solely held by a given system. More significantly, these capabilities cannot be duplicated by other competing organizations in a given industry (Brennan 6). The electronic pillbox logger has a unique feature found in its design that allows it to track the daily pill intake.

Therefore, the log acts, as a reminder that eventually assists clinicians to easily monitor response to therapy, as the attendants make alterations when required. This is possible because it has the ability to indicate where there exists treatment failure. Organized for usage involves suitable systems arrangement especially those that support a valuable, rare and is difficult to imitate. Consequently, the system ensures there is maximum benefit utilization of such resource. More significantly, electronic pillbox logger keeps an electronic record that detects the presence and absence of pills based on the of dosage consumption by the subject (Brennan 8).

As a result, available information will lead to modifications of the medications with time depending on the subject’s actual response to treatment. In conclusion, the use of electronic pillbox logger is valuable because it has more strength as compared to the weaknesses (Brennan 9). The measures of value, rare, inimitable and organization of the pillbox system is more efficient because it gives positive results. Therefore, the use of the electronic pillbox logger as means of reminding patients remains relevant for use in hospitals.

Chemalite Ltd. Trading and Profit and Loss Account For the year ended 31st December, 2003 Income From Sales: $ $ $ Sales 178,350 Cost of Goods Sold: Purchases 75000 Add: Additional Purchases 175,000 Cost of goods available for sale 250,000 Less Closing stock on 31st December (55,000) Less Manufacturing overheads/ Labor (350,000) (155,000) GROSS PROFIT Incorporation Expenses 7,500 Advertising Expenses 22,500 Consultation expenses 23,750 Interest expense 750 Loan repayment 50,000 Depreciation expenses 12,500 Amortization 31,250 Corporate Salaries and Expenses 80,000 Total expenses 228,250 Net Loss (23,350) Chemalite Industries (Spurga 13) Balance Sheet As at 31 December 2003 Cost Depreciation Net Book Value $ $ $ Non Current Assets: Plant and Machinery 212,500 12,500 200,000 Patent 125,000 31,250 93,750 Current Assets: Inventory 55,000 Trade Debtors 90,000 Bank 113,000 Total Current Assets 258,000 Less Current Liabilities Trade Creditors (75,000) Working Capital 183,000 476,750 Financed by: Owners Equity Capital 500,000 Net Loss (23,350) Equity 476,750 Plant and Machinery Initial 62,500 Additional 150,000 212500 Depreciation 150,000 * ½ = 12500 6 Amortization of Patent 125,000/20*5 = 31,250 Work cited Brennan, Linda.

McGraw-Hill 36-hour course, Operations management. New York: McGraw- Hill, 2011. Print. Spurga, Ronald. Balance sheet basics : financial management for non-financial managers. New York: Portfolio, 2004. Print.