Background of Bellamy’s Organic

All the organizations depend on different capital forms for success of their business. These capitals are used for storing the value in any form that eventually becomes the input to the business model of the organization. Further, these are also transformed, increased or decreased through organizational activities where they are consumed, modified, enhanced or affected otherwise by the activities (Singh & Rose, 2018).  Various capitals that will create long-term value for the company and their interrelationship are as follows –

Financial capital – financial capital is broadly understood as pool of the funds that is available to the organization. It includes both equity finance and debt finance. Financial capital description is focussed on sources of the funds and not on application (Tan, Zhang & Khodaverdi, 2017). Interrelation of the financial capital with other capital include –

• Financial capital is the medium for exchange that discharges its value through converting into other capital forms
• While all the capitals cannot be purchased most of the literature on other capitals takes into consideration the method in which the things were regarded previously as the non-monetary variables. In business aspect, increasing monetization and commoditization under which significant portion of financial capital is related to the derivatives basically based on the other capital forms (Baños-Caballero, García-Teruel & Martínez-Solano, 2014).

Intellectual capital – It is the key element for future earning potential of an organization. It has significant contingency and link among innovation, investment in R&D, external relationship and human resources that can be used to determine the competitive advantage of the organization. It is the key statement that assists in providing clarity regarding the way in which the organization generates competitive advantage through delivering the narrative. It explains issues like business model and value chain positioning for creation of value. Interrelation of the intellectual capital with other capital include –

• Concept of the ICA is developed from the earlier conceptions of financial reporting for intangible accounting and goodwill accounting where the concepts are related closely (Fooladvand, Yarmohammadian & Shahtalebi, 2015).
• The debate is there regarding the relationship among human capital, intellectual capital, relationship capital and social capital.

Human capital – It includes individual’s capabilities and skill, experience and knowledge of the entity’s managers and employees. These are relevant to tasks available on hand and the capacity for adding adding this to reservoir of experience, knowledge and skill through the individual learning. Interrelation of the intellectual capital with other capital include –

• Intangible asset rarely affect the financial performance directly rather it works through the complex chains of the effect and cause. It is further dependent on other forms of the capital to be realized fully.
• It is regarded as complementary with the other intangible capitals like relationship and social capital and intellectual capital
• As each individual Own their human capital, there shall be desire by individual or certain relationship shall be there among the organization and individual for investing the human capital in the company and for the company to realize benefit (González-González et al., 2015).

Social and relationship capital – Social capital generates from relations between the persons that facilitates the action. Important form of the social capital is potential of the information that inheres the social relations. Unlike the other capital forms, the social capital inheres in structure of relations among actors and between actors. Interrelation of the social and relationship capital with other capital include –

• Relationship and social capital is considered to complement the other intangible capitals that include intellectual capital as well as human capital and sometimes it is called as knowledge, information and organizational capitals. For avoiding the confusion among capitals, care shall be taken for drawing the explicit boundaries.
• Frequently the other intangible capitals depend on social and relationship capital that is to be capitals (González-González et al., 2015).

                                           

                                                     Figure 1: Inter-relationship of capital

                                                               (Source: Created by author)

Capital Forms for Success

In the above figure it is shown that the major capital on which Bellamy’s Organic will report on is financial capital. However, other capitals those will also be considered by Bellamy’s Organic are intellectual capital, human capital and social and relationship capital.

Balanced score card is the strategic management and planning system used by the organization to communicate what they are planning to achieve, aligning day-to-day work that is done by everyone with the strategies. it further prioritize the service, products and projects and monitor and measure the progress towards the strategic target. Perspective of balanced score card is as follows –

                                     

Financials – financial outlook of Bellamy’s organic is to succeed financially and improve the returns for the shareholders. Two measures those will be used for measuring the financial aspect are – (i) return on equity and (ii) increasing profitability (Boscia & McAfee, 2014).

Measure	Formula	2016	2015
Return on equity	Profit / shareholder’s equity	46.06%	18.55%
Gross profit margin	Gross profit / sales	45.68%	32.89%
Net profit margin	Net profit / sales	15.67%	7.24%

Return on equity is the profitability measure used to measure the amount of profit in terms of dollar generated by the company with each dollar of stakeholder’s equity. Increasing and sustainable ROE over the time indicates that the company is efficient in generating value for the shareholders. On the other hand, the gross profit shows the profit made on product sales whereas the net profit shows the profitability position of the company after paying all the expenses. From the above table it can be recognised that the both ROE and profitability ratios of the company are in increasing trend that indicates that the company is able to generate sufficient income to the shareholders (Investors.bellamysorganic.com.au, 2018).

Customer – main objective of the entity regarding the customer aspect is to increase the satisfaction level of the customer. Customer satisfaction level will be measured through the market share, increase in the sales revenue and customer satisfaction measures like number of products released during the year. In Australia the company distributes its product to more than 4,400 outlets all over the major retailers like Woolworths, Big W, Coles, Costco, Target, Amcal and Terry White. It is the market leader in providing infant foods and holds more than 50% of the market share. Further, the company is concentrated in launching new products and in next year that in 2017 the company planned for concentrating on innovation (Integratedreporting.org, 2018).

Internal business process – the company is focussed in maintaining the product quality. It has strict control system for quality that enables it to assure that it maintains the organic certification. Further, the suppliers for the ingredients are carefully managed and selected through the dedicated quality team and supply team (Braun, Latham & Porschitz, 2016). Further, the development of new product will concentrate on innovation. Sales revenue of the company also increased from $ 125,302,000 to $ 244,583,000.

Benefits of Strategy Map

Learning and growth – The Company has the required procedures and policies those are affective to motivate, retain and attract the skilled employees to meet the company’s needs. These policies are consistent with the human resources objectives and strategic goals of the company.  Over the FY16 the employee number of the company has been grown by 50% over Asian as well as Australian locations and in other facets of business.

• Financials – ROE of the company is improved as compared to previous year. This measure is included in BSC as it shows the ability of the company to generate return for the shareholders (Robinson, 2015).
• Customer – Market share of the company is more than 50%. This measure is included in BSC as it shows the level of customer satisfaction.
• Internal business process – product quality is selected in BSC as it reveals the company’s product development process
• Learning and growth – procedures and policies for the employees is included as the measure as it reveals the employees satisfaction level (Bryson, Ackermann & Eden, 2016).

Various strategies that will be helpful for Bellamy’s organic are as follows –

• Suitability – Through delivering the innovative range of product through strengthening of relationships Bellamy can capitalise the opportunities and further can neutralise the threats faced by it in the baby food market.
• Feasibility – through persuasion of strategies Bellamy will be able to continue providing reputable baby formula that will be certified organically in addition to improvement of existing and introducing new products that will match with the reputable quality (Robison & Ritchie, 2016).
• Acceptability – Through expansion of product range customers will get more products lines of their choices. Further, the suppliers will get more order for sales that will eventually increase their revenues. It will further strengthen the shareholder’s value and will create higher return for them

One major limitation of strategy map is it requires organizations to predict future environment that is not easy. If the future does not open out as it is predicted it may invalidate the strategy mapped. Further, it is costly as hiring external consultant in developing the strategies is expensive (Baluku, Kikooma & Kibanja, 2016). Moreover, the strategies shall be consistent with the requirement of the organization and the cost benefit shall be analysed before implementing the strategies.

• Previous experience of work increased my confidence level, motivated me and helped me to gather diversified knowledge for this course.
• I hope to learn the balance scorecard and strategic planning map in broader way that will help me to analyse the performance of the company in financial aspect. It will further help me to evaluate any company from various other aspects like customer prospective, product development process and leaning and growth aspects.
• Apart from balance scorecard and strategic planning map I have learnt types of capital forms for success of business and interrelations among the capitals.

• The most challenging part was to analyse the appropriate capital for each company as there are 6 types of capital and all the capitals are not required by all the companies.
• This learning is applied through details analysis of company’s business and its requirement. After gathering thorough knowledge of company’s business it was somewhat possible to understand which all capitals are required by the particular company.

• Financial statement is combination of three major reports of the business. It includes cash flow statement, balance sheet and income statement. It allows computing various ratios of the company that helps in analysing the financial performance of the company.
• Financial statement and its interpretation help in analysing the financial aspect included in balanced scorecard. Other information included in financial statement like profitability, revenue helps in analysing other aspects of BSC like Customer’s perspective, internal business process and Learning and growth perspective.

• Major critical factors in creating good integrated report are as follows –
• Economic, social and environmental information those have impact on the company’s sustainability shall be collected before preparing integrated report.
• Analyse the adequacy of the shareholder’s engagement procedures. Materiality processing and shareholder’s engagement for the purpose of sustainability of the company is important for preparing the integrated report.
• Value creation story shall be developed and shall be expressed in terms of all the six capital that is financial, intellectual, manufacturing, human, societal and natural.
• Strategies shall be articulated and shall be communicated in such a way that it connects with the value creation story.
• It is critical to move from  basic financial reporting towards integrated reporting as the financial reporting includes only valuation and  inclusion of liabilities, assets, incomes, expenses and cash flows whereas integrated reporting incorporates everything started from strategy to the risk management and from the financial reporting to inclusion of the other capitals. It enables the analyst to have clear analysis of the company.
• Most important things learned in the course is that only financial data are not sufficient to analyse the company, it also requires other information like risk management process and customer satisfaction.
• The continued learning shall be approached through more practice and in-depth knowledge gathering while analysing any company.

References:

Baluku, M. M., Kikooma, J. F., & Kibanja, G. M. (2016). Does personality of owners of micro enterprises matter for the relationship between startup capital and entrepreneurial success?. African Journal of Business Management, 10(1), 13-23.

Baños-Caballero, S., García-Teruel, P. J., & Martínez-Solano, P. (2014). Working capital management, corporate performance, and financial constraints. Journal of Business Research, 67 (3), 332-338. doi:10.1016/j.jbusres.2013.01.016

Boscia, M. W., & McAfee, R. B. (2014, January). Using the balance scorecard approach: A group exercise. In Developments in Business Simulation and Experiential Learning: Proceedings of the Annual ABSEL conference (Vol. 35).

Braun, M., Latham, S., & Porschitz, E. (2016). All together now: strategy mapping for family businesses. Journal of Business Strategy, 37(1), 3-10.

Bryson, J. M., Ackermann, F., & Eden, C. (2016). Discovering collaborative advantage: the contributions of goal categories and visual strategy mapping. Public Administration Review, 76(6), 912-925.

Fooladvand, M., Yarmohammadian, M. H., & Shahtalebi, S. (2015). The application strategic planning and balance scorecard modelling in enhance of higher education. Procedia-Social and Behavioral Sciences, 186, 950-954.

González-González, A. I., Mediavilla-Herrera, I., Bartolomé-Benito, E., Cura-González, I., Quintela-González, Z., & Miquel-Gómez, A. (2015). Impact indicators in chronicity to meet the Triple Aim: a balance scorecard. International Journal of Integrated Care, 15(5).

Integratedreporting.org. (2018). Retrieved 4 December 2018, from https://integratedreporting.org/wp-content/uploads/2013/03/IR-Background-Paper-Capitals.pdf

Investors.bellamysorganic.com.au. (2018). Retrieved 4 December 2018, from https://investors.bellamysorganic.com.au/FormBuilder/_Resource/_module/hwGxZyb3NkyBtC5tw1kqzQ/docs/reports/Bellamy’s_Annual_Report_2016.pdf

Robinson, T. R. (2015). International financial statement analysis (Third;Third; ed.). Hoboken, N.J: John Wiley & Sons.

Robison, L. J., & Ritchie, B. K. (2016). Relationship economics: The social capital paradigm and its application to business, politics and other transactions. Routledge.

Singh, G., & Rose, A. (2018). Forthcoming principles and recommendations focus on corporate culture. Governance Directions, 70(7), 432-435.

Tan, Y., Zhang, Y., & Khodaverdi, R. (2017). Service performance evaluation using data envelopment analysis and balance scorecard approach: an application to automotive industry. Annals of Operations Research, 248(1-2), 449-470.