Nobody downloaded yet

Financial Management - WHSmith PLC - Essay Example

Comments (0) Cite this document
WHSmith PLC is one of the United Kingdom's leading retail groups made up of two core businesses - WHSmith Retail and WHSmith News. After a disappointing year, it adopted a simplified structure with the sale of WHSmith USA, WHSmith ASPAC, and Hodder Headline (WHSmith Group, PLC, 2005).
Download full paperFile format: .doc, available for editing
GRAB THE BEST PAPER96.3% of users find it useful
Financial Management - WHSmith PLC
Read TextPreview

Extract of sample "Financial Management - WHSmith PLC"

Download file to see previous pages However, WHSmith Retail sales fell by 1% to 1,453m from last year's 1,463m, driven mainly by a 2% loss in its High Street Retail business. This loss in high street retail was only mildly offset by the excellent performance in travel retail characterized by an 11% increase in profits to 21m from 19m in the previous year, and a 3% increase in sales. Reasons for the overall profit loss of the group were attributed to a significant decrease in sales due to unsuccessful marketing and promotions and the continued sale of products with decreasing demand; and an unsuccessful investment in technology, which contributed to the company's increased costs.
Another aspect of the retail business is WHSmith Online. Launched in 2000, the retail website,, has not been utilized by the company to its potential and is not integrated with the rest of the retail business. It experienced a loss of 2m in profit, similar to the previous year and sales of 7m. In order to turn the company around and increase retail sales, the company will focus on developing a multi-channel retail strategy, taking advantage of WHSmith Online's full potential to increase online sales, as well as sales in high street and travel stores.
Shank and Govindarajan (1991) defines strategic cost management as "the process through which a sophisticated understanding of an organization's cost structure is developed and used in the search for sustainable competitive advantage." They argue that blending the three themes of value chain analysis, cost driver analysis, and competitive advantage analysis represents the most powerful way to determine which strategic direction will be most beneficial for an organization (Shank and Govindarajan, 1992). By applying Shank and Govindarajan's framework, one can understand why implementing a multi-channel strategy will benefit WHSmith's retail business in the long run.
WHSmith Value Chain Analysis
A value chain is "linked set of value-creating activities" (Shank and Govindarajan, 1992). Based on WHSmith's value chain, one can see that a multi-channel retail strategy is most profitable for the company.
First, by analyzing WHSmith's internal value chain, one can infer that WHSmith Online has developed as a separated business division that is not integrated into the WHSmith Retail since its launch in 2000. WHSmith Online does not support any of the value chain activities of the group and its potential was not fully explored. Thus, it remains to be a traditional retail business.
In the purchasing stage, products are purchased from its distributors based on the demand forecasted by the company. These products are then shipped to warehouses, which deliver them to the respective high street retail stores in the distribution and merchandising stages. High street retail stores then arrange these products, utilizing the available spaces and conduct marketing activities as directed by the central office in the store operations and marketing stages. At this stage, the point of sale is situated at cash registers in each store and mails received by the company from its loyal customers.
Figure 2.
WHSmith Internal Value Chain Analysis

Based on the existing internal value chain and the performance during the previous year, the following improvements need to be employed (WHSmith, 2004):
Purchasing: Discontinue purchase ...Download file to see next pagesRead More
Cite this document
  • APA
  • MLA
(“Financial Management - WHSmith PLC Essay Example | Topics and Well Written Essays - 2500 words”, n.d.)
Retrieved from
(Financial Management - WHSmith PLC Essay Example | Topics and Well Written Essays - 2500 Words)
“Financial Management - WHSmith PLC Essay Example | Topics and Well Written Essays - 2500 Words”, n.d.
  • Cited: 0 times
Comments (0)
Click to create a comment or rate a document

CHECK THESE SAMPLES OF Financial Management - WHSmith PLC

Tesco Plc Financial Analysis

...? Tesco Plc Financial analysis Question one The first question requires an identification of Tesco’s capital structure. Other than that, it requires the type of finance raised by the company from one of Tesco's balance sheet and comment on the balance sheet using the financial ratio based on Tesco’s capital structure. Tesco is well known of being the most successful operator in retail groceries and merchandise in the UK. It is rated as the third largest retailer in the world. Tesco also owns fourteen stores with a wide variety. The main reason for the success of Tesco is the various products they deal in, popular products and the brand preferences. Furthermore, Tesco operate online sales of product which has seen them expand... ...
8 Pages(2000 words)Coursework

Financial Management : Koolson plc

...?During the current financial year, Koolson plc has decided to introduce a new plant for the purpose of introducing a new product in the market. For the purpose of appraising the investment, NPV and payback period technique was used. Following is the investment appraisal calculation (a) Years Particulars 0 1 2 3 4 Sales (in units)   50,000 60,000 55,000 40,000 Sales Revenue - 2,500,000 3,300,000 3,327,500 1,600,000 Direct Material - (500,000) (600,000) (550,000) (400,000) Direct Labor - (600,000) (720,000) (660,000) (480,000) Marketing expense - (100,000) (100,000) (200,000) (200,000) Working Capital (200,000) - - - - Machine (3,500,000) - - - - Sale proceed on scrap - - - - 250,000 Net Cash Flow...
3 Pages(750 words)Essay

WPP PLC Financial Report

...(EPS) show that the number of dollars earned for each ordinary share issued is $1.43 and dividend yield I-e; the return (dividend) received by the investor (ordinary shareholder) per share is 2.03%. 7- SOLUTION Reuters should invest more in liquid assets as the current position of the company indicates that it doesn't have much capability to pay off its short-term liabilities out of the quick assets. 8- CONCLUSION Thus, Reuters has a sound position but the company's current financial condition shows weak short-term liquidity and inefficient management of current assets, which needs to be improved to generate more sales. INCISIVE MEDIA PLC Introduction Incisive Media is a fast growing...
12 Pages(3000 words)Essay

Whitbread PLC Financial Summary

...08 December 2008 Whitbread PLC Financial Summary Financial ratio analysis is a very popular technique in the evaluation of the financial health of a business organization. This strategy is currently utilized by business managers, investors, creditors, suppliers, and other decision makers in order to determine the financial viability and performance of a business organization (Horngren 2000). This report aims to yield a closer look at the financial performance of UK's leading hospitality company Whitbread Plc with the aim of conducting a financial SWOT analysis....
6 Pages(1500 words)Essay

Boots-PLC Financial Report compare with the main competitors: Alliance UniChem had the same net profit margin of 0.022 over two years (Alliance UniChem Key Financial Data, 2005); and J Sainsbury has decreased its net profit margin from 0.031 in 2004 to 0.020 in 2005 (J Sainsbury Financials, 2005). More detailed comparison is available in Appendix 1. To measure the liquidity of the company one should evaluate the company's ability to meet its short-term obligations. Current ratio=current assets/current liabilities Current assets of Boots PLC in 2005 were 1575.8 m, while the current liabilities were 1074.1 m (Boots Group PLC Annual Report 2005, p. 47). Therefore current liquidity ratio for 2005...
8 Pages(2000 words)Case Study

Financial assesment - Aviva PLC

... Management. 2nd ed. London: Financial Times Pitman Publishing. Financial Times. 2009. marketsdata. Retrieved on April 15, 2009 from Yahoo Finance 1. 2009. Aviva Technical Analysis. Retrieved on April 15, 2009 from Yahoo Finance 2. 2009. FTSE 100 Historical Share Prices. Retrieved on April 15, 2009 from Aviva plc. 2009. Retail Shareholders/ Aviva plc Dividends/ History. Retrieved on April 15, 2009 from Corporate Finance Assignment Aviva plc April 2009 Contents Sl No Page No 0 Introduction ..... 3 2.0 Weighted Average Cost of Capital...
16 Pages(4000 words)Research Paper

Carpetright plc financial comparison

...Investment analysis of Mohawk Industry, Inc. and Carpetright Profitability ratios are analytical tools used by analysts in determining profitability of a company in relation to sales and investments. In determining investments to a company, key ratios should be examined and compared with the industry to know how the company you want to invest in stands as against its competition. The key ratios of Mohawk Industry, Inc. and Carpetright will be compared with each other to arrive at an appropriate investor’s decision. Key ratios of both companies will be analyzed on the basis of the following: growth rates, price ratios, profit margins, financial condition, investment returns, management efficiency and a...
10 Pages(2500 words)Coursework

Financial Forecasting TESCO Plc

...Financial Forecasting – TESCO Plc Table of Contents Introduction 3 Income ment Projection 3 Computation of Additional funds needed 5 Forecast of financial position 5 Ratio Analysis 7 Conclusion 8 Reference 10 Bibliography 11 Tesco Plc. 2005. Annual report and financial statements 2005. 11 Annexure- 12 Introduction The financial statements reflect the performance of a company for the year. With the help of the information presented in the financial statements, the ratios are computed which can be compared with the past figures to highlight any improvement or deterioration. A fall in the profitability ratio indicates...
6 Pages(1500 words)Essay

Financial Analysis Wonderful Home Plc

... Financial Analysis Wonderful Home plc Table of Contents Introduction 2 Background of the study 2 Task 1: NPV and IRR 3 Task 2: Breakeven analysis 4 Task 3: Financial Performance Analysis using ratio analysis 6 Profitability Ratios 6 Liquidity or Solvency Ratios 8 Efficiency Ratios 10 Leverage Ratios 12 Asset Management Ratios 13 Task 4 15 Conclusion 16 References 18 Appendices 19 Introduction The leading organizations in the global market are trying to capitalize on the opportunities that have been created due to globalization. Several global economic distress like the financial crisis, the global recession has affected several potential industries...
10 Pages(2500 words)Essay

Orange plc Financial Statement

...Orange Plc Financial ment By + Financial Ratios Workings: Gross profit margin = (Gross profit / Sales) * 100% In 2014: (450 / 900) * 100% = 50% 2015: (300 / 600) * 100% = 50% Net Profit margin = (Net profit / sales) * 100% In 2014: (110 / 900) * 100% = 12.22% 2015: (45 / 600) * 100% = 7.5% Return on assets = (Net profit / Total assets) * 100% In 2014: (110 / 1050) * 100% = 10.48% 2015: (45 / 1400) * 100% = 3.21% Return on Capital employed = (Net profit / Equity) * 100% In 2014: (110 / 440) * 100% = 25% 2015: (45 / 515) * 100% = 8.74% Return on capital employed = (net profit before tax / shareholder funds) * 100% In 2014: (210 / 440) * 100% = 47.73% 2015: (100 / 515) * 100% = 19.42% Mark...
8 Pages(2000 words)Coursework
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.

Let us find you another Essay on topic Financial Management - WHSmith PLC for FREE!

Contact Us