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3. Strategic Framework - the Compass: 4Gs
3.1 Goal - Consistent Growth
2011-12 and 2012-13 had steadied the boat but Q1-Q3 2013-14 is rocking it.
The maximum Growth Rating Earnings [i.e. P&L and B/S, E in CREAM] has reached is 3.
From 3 a linear advancement to 4 was called for but never reached. Consistent Growth is not seen in the period under review.
The business segments in the running have reached a point of diminishing returns.
Strategic Framework on Consistent Growth needs recalibration.
The ratings beg to be optimised.
3.2 Goal - Competitive Growth
CREAM™ Report in case of HUL is made up of 189 process blocks, each owned by 5 categories of people, common throughout - 4 of Fiscal Responsibility and 1 from Ethical Responsibility.
CREAM Ratings as above warrant optimising to 5.
Each process block is independent yet yoked together by the 5 categories of people. The 189 process blocks cover every activity of a Company, qualitative as well as quantitative.
Corporate tries to rule its conduct by means internal to itself that process block owners compete with each other to reach the optimum level of performance for each block.
Optimised CREAM™ Report Ratings are a veritable gallery of competitive advantage a Company can show case to outside market.
CREAM™ Report analysis of HUL identifies several lacunae detrimental to this process block - Strategic Framework - Competitive Growth.
3.3 Goal - Profitability Growth
CREAM™ Report looks at Sustainable profits as a factor of Sustainable Value System and Sustainable Efficiency.
Accounting Quality and Management Quality represent the value system whereas Corporate Governance and Risk Management efficiency, each reflected in a Balance Sheet and Profit & Loss Statement respectively.
The profits ratings are lower in Q1-Q3 2013-14 compared to previous year.
One of the main reasons is shifting of focus to investments in the year 2007 at the expense of Trade Payables assuming thereby that there is surplus cash.
Market Investment as an SBU is welcome but it was not done so that focus needed for the five business segments has been lacking. With the result five segments are shrunk to become four.
3.4 Goal - Responsible Growth
CREAM™ Report as above comprises of measuring 189 process blocks, qualitative and quantitative assessment of corporate management, under the principle of return on Intangible which is action or inaction as the numerator and human energy the denominator.
CREAM™ Report advances the measurement to a daily basis as Governance is a dynamic function.
Each process block is owned by 5 categories of people with one necessarily being of Ethical Responsibility.
Aligning Fiscal Responsibility to Ethical Responsibility ensures Responsible Growth, a prerequisite for this process block.