Patrick’s Post
An Annual Operating Review (AOR) evaluates a business’s financial performance at the end of the fiscal year against the plan developed prior to the start of the year (Hayes, 2022). An AOR is a summary of previous quarters and allows an organization to assess how it has utilized its assets and adjust to improve future performance. They are an important management tool to ensure the company is meeting its strategic goals and growing the business.
Through the Grow Your Business simulation I have learned a lot about key concepts in guiding a business, and one of the key concepts I will take away is that a single decision can ripple throughout an organization. An example of this was my utilization of research and development (R&D). Sean Ross wrote that ” R&D can help a company follow or stay ahead of market trends and keep the company relevant” (Ross, 2022). Neglecting to invest in R&D early in the planning stages impacted sales and production later in the simulation. Ultimately it is necessary for a company to manage costs but must understand the opportunity costs of delaying a decision and the impact it will have on other areas of the business.
Works Cited Hayes, A. (2022, Mar 30). Annual Report Explained: How to Read and Write Them. Retrieved from Investopedia : https://www.investopedia.com/terms/a/annualreport.asp#:~:text=Annual%20reports%20became%20a%20regulatory%20requirement%20for%20public,operating%20and%20financial%20activities%20over%20the%20past%20year.
Ross, S. (2022, Dec 13). Why You Should Invest in Research and Development (R&D). Retrieved from Investopedia: https://www.investopedia.com/ask/answers/043015/what-are-benefits-research-and-development-company.asp
The annual operating review of the simulation of running Hisco was revealing of how the strategy affected the business decisions along the way. The AOR is a great way to get an idea of how the business operated over the last year and what management feels are the SWOTs of the company. Although th simulation directives constantly warn you to keep your eye on your strategy, I found it was easy to quickly focus on the issue that
demanded attention and attempt to resolve cash shortfalls at the expense of the long term strategy.
The executive summary was difficult to write as I wanted to overshare what was taking place during the year and it was hard to consolidate. The key performance indicators also should vary based on the industry that is being looked at. In this case a key indicator I would look for in a growing technology company would be the annual investment in research and development. The stage of the company life cycle is also important to consider along with revenue size. The Risk Management Association can provide financial ratios to compare a company’s performance against companies of like size and NAISC code classification (Risk Management Association, n.d).
My SWOT analysis was helpful in determining the strategy I used while managing the company as it helped to focus the dollars spent on the strengths outlined and identify where money should be invested in weaknesses. It was hard to consistently allocate spending in areas of strengths when there was a shortfall in capital.
In addition, it was difficult to determine the demand in the marketplace quarter to quarter and as a result, it was hard to know what an appropriate raw material order was. Throughout the simulation I assumed demand would increase but after no until later in the year did demand grow exponentially.
The uncertainty of the marketplace and limited capital available for the company resulted in what felt like managing the company in the dark. It seemed as though I was always seeking for more information and had to make guesses on what my actions might be due to demand.
In my own work environment, I gained a greater appreciation of the value of the business owners I work with in the financial field. Business owners must make decisions without a clear picture of what demand is going to be. COVID destroyed the profitability of companies and they were unsure of their workforce and what to do. I speak often with customers about the importance of adjusting their workforce to meet demand but after completing the simulation it added additional insight into why a company may want to hold onto employees due to additional costs related to onboarding new employee when demand returns.
References
Risk Management Association. (n.d.). About Us. Retrieved from https://www.rmahq.org/about-us
Brent’s Post
The annual operating review of the simulation of running Hisco was revealing of how the strategy affected the business decisions along the way. The AOR is a great way to get an idea of how the business operated over the last year and what management feels are the SWOTs of the company. Although th simulation directives constantly warn you to keep your eye on your strategy, I found it was easy to quickly focus on the issue that demanded attention and attempt to resolve cash shortfalls at the expense of the long term strategy.
The executive summary was difficult to write as I wanted to overshare what was taking place during the year and it was hard to consolidate. The key performance indicators also should vary based on the industry that is being looked at. In this case a key indicator I would look for in a growing technology company would be the annual investment in research and development. The stage of the company life cycle is also important to consider along with revenue size. The Risk Management Association can provide financial ratios to compare a company’s performance against companies of like size and NAISC code classification (Risk Management Association, n.d).
My SWOT analysis was helpful in determining the strategy I used while managing the company as it helped to focus the dollars spent on the strengths outlined and identify where money should be invested in weaknesses. It was hard to consistently allocate spending in areas of strengths when there was a shortfall in capital.
In addition, it was difficult to determine the demand in the marketplace quarter to quarter and as a result, it was hard to know what an appropriate raw material order was. Throughout the simulation I assumed demand would increase but after no until later in the year did demand grow exponentially.
The uncertainty of the marketplace and limited capital available for the company resulted in what felt like managing the company in the dark. It seemed as though I was always seeking for more information and had to make guesses on what my actions might be due to demand.
In my own work environment, I gained a greater appreciation of the value of the business owners I work with in the financial field. Business owners must make decisions without a clear picture of what demand is going to be. COVID destroyed the profitability of companies and they were unsure of their workforce and what to do. I speak often with customers about the importance of adjusting their workforce to meet demand but after completing the simulation it added additional insight into why a company may want to hold onto employees due to additional costs related to onboarding new employee when demand returns.
References
Risk Management Association. (n.d.). About Us. Retrieved from https://www.rmahq.org/about-us
- Works Cited
