Exam 13: Malignancy Disorders and Testing

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A strategic audit is a review of an organization's business plan and strategies to identify weaknesses and shortcomings. It evaluates how appropriate an organization's business strategy is and how well it is positioned for strategy implementation and therefore, is useful in helping students in the process of case study analysis. A strategic audit enables successful development of the organization and helps managers assess whether internal processes are heading toward their strategic goals. Based on audit results, managers can adjust operations to maximize progress toward goals, and minimize the risks and threats arising from inefficient operations. The strategic audit can be used by any organization facing challenges to profitable growth. It is considered to be an ideal tool for slow-growing organizations searching for new growth opportunities while making sure that strategic risks are managed and controlled. Strategic auditing is also ideally suited for new ventures wanting to take advantage of opportunities as an economy rebounds.
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The advantages of using the strategic audit are presented clearly in the chapter. Its limitations are, however, not so obvious. Like everything else in the world, a technique's strengths can also serve as its weaknesses. For example, Chapter 1 states that the strategic audit provides a checklist of questions, by area or issue, that enables a systematic analysis of various corporate activities to be made. The problem with any checklist is that the user may tend to use it almost automatically. Even though all the questions in the audit may not be relevant to a specific situation, a person may unthinkingly use them without considering that there may be other, perhaps more important questions that need to be raised but are not on the list of questions.
The value of asking this question is to get students to realize that the strategic audit is only a tool to help them organize their analysis. Use this question as an opportunity to remind them that it is up to them to develop whatever questions are most appropriate to the case under consideration and not to do their analysis on "automatic pilot."x

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For a student, the role and use of financial information is an important aspect of analyzing a case study. After all, financial data represents the factual results of a company's strategy and structure. Although analyzing financial statements can be quite complex, a general idea of a company's financial position can be determined through the use of ratio analysis. These ratios can be compared with the industry average, aggregate economy and the company's past performance. There are important ratios such as debt to equity and receivables turnover days or payables days. In their simplest form, these ratios are used to find out how to utilize assets, capital and liabilities effectively. However, it should be noted that deviation from the average is not necessarily bad-sometimes it simply warrants further investigation.