My Accounting paper

Pro-Forma Financial Statements (I/S, B/S and Statement of Cash Flows) with deltas out three years and analysis
Each year must have two columns: one with your strategy and one without your strategy.
Include Pro-Forma ratios for the first year out with deltas contrasting from the most current year’s ratios.
Net Present Value analysis of proposed strategy’s new cash flow and EPS/EBIT analysis
NOTE: To construct the first cash flow (cf1) at the very minimum, the new revenue from your strategy(s) must be discounted back to the present value by calculating EBIT and that figure will be your cfn for each year. cf0 (initial cost of your strategy), cf1 (discounted cash flow first year), r (opportunity cost of capital, the rate of the next best alternative use of cash/debt/equity resources).
NPV=-〖cf〗_0+ 〖cf〗_1/(1+r)^1 +〖cf〗_2/(1+r)^2 +〖cf〗_3/(1+r)^3 …〖cf〗_n/(1+r)^n 
Specific recommended strategy and long term objectives
Explain why you chose the strategy, and discuss how much the strategy will cost to implement and how much new revenue your strategy will create. Include your action timetable agenda for accomplishing your strategy.
Proposed new business model 

There are three classes of alternatives strategy:

1. Stability Strategy

2. Expansion Strategy

3. Retrenchment Strategy

Stability Strategy

Stability strategy means when a firm is not changing its current activities. Generally, firms who are operating in stable environment do not change strategy frequently. If a firm is not making any change in strategy and doing well that means they are using stability Strategy.

Prerequisite for stability strategy:

• Company will exist in the same market and will deal in the same product and services.

• The strategy focuses on incremental improvement of functional performance.

Stability strategy does not mean “Do nothing Strategy”. It involves the process of keeping track of new development to ensure that strategy continues to make sense by making the business stable. This strategy is typical for nature business organization.

The features of stable strategy are as follows:

• Safeguard of existing interest.

• Safeguard of existing strength.

• It focuses on self-objective.

• Return on resources.

Advantages of Stability Strategy:

• All decisions making through top management

• It provides clear directions to all employees

• It allows large organization to use economics of scale.

Disadvantages of Stability Strategy:

• This lead to poor communication between departments.

• Customers also affected due to lack of cooperation.

Expansion Strategy

Horizontal Diversification:

Type of diversification under which firm develops or acquires new products that are different from its core business or technology, but which may appeal to its current customers.

In an expansion strategy, the focus point is enhancement of current business. This action can be equated with dynamism, vigour, promise and success of current existing business. A corporation on the move is more dynamic and enterprising rather than a corporation on hold and stand. Because, if you stand on the right place, you will be run over by somebody else in case you do not move. Expansion focuses on reformation of goal and directions, it measures initiatives, and it measures investment, exploration and interest in new product.

The reasons for Expansion are:

• For acquiring better market share.

• Optimum utilization of available resources.

Ways of Expansion

• Expansion through diversifications.

• Expansion through acquisition of and merger with other companies.

Advantages of Expansion Strategy:

• Economics of scale

• New customers

Disadvantages of Expansion Strategy:

• Capital requirements

• Spread too thin

Expansion takes the company to new path where there are lots of promises and pitfalls.

Diversification:

It empowers the business to go into new products, new product line, new services and new market. It involves substantially different kinds of skills, different kinds of knowledge, and different kinds of technology.

Retrenchment Strategy:

A strategy used by corporations to reduce the diversity or the overall size of the operations of the company. This strategy is often used in order to cut expenses with the goal of becoming a more financial stable business. The strategy involves withdrawing from certain markets or the discontinuation of selling certain products or service in order to make a beneficial turnaround.

Types of retrenchment:

• Turnaround

• Divestment

• Liquidation

Advantages of retrenchment strategy:

• Poor performance of firm

• Better opportunities in the environment

Disadvantages of retrenchment strategy:

• High cost

• Competition from government subsidized industries.

Competitive Strategy:
In an industry, company does want to gain a competitive advantage that will work against rivalry and achieve profitability.

Porter’s suggests three generic strategies for creating defendable position in the long run and out forming competitors:

1. Cost Leadership

2. Differentiation

3. Focus or Niche Strategy

Cost Leadership

• In Cost Leadership Strategy, company has lowest per unit cost in the industry.

• Lowest per unit cost among rivals is highly competitive and return or profits will be low.

• Lowest cost among rivals where each firm enjoys pricing power and high profits.

• Cost leadership is independent of market structure.

Cost leadership is a defendable strategy because:

• It defends the firm against powerful buyers. Buyers can down the price.

• If defends the firm against powerful suppliers. It provides flexibility to increase in input costs.

• Cost leadership strategy also provides entry barriers.

Differentiation

• A firm is offering unique product.

• A firm is creating its own market.

• There are different approaches of differentiation which are as follows:

• Different design

• Brand image

• Number of features

• New Technology

Differentiation is a defendable strategy because:

• It reduces competitive rivalry by creating brand loyalty.

• Uniqueness creates barriers and reduces substitutes.

• Higher margins provide deal with powerful suppliers.

• Differentiation also mitigates buyer power.

Focus or Niche Strategy

• In this strategy, firms focus on a particular buyer group, product segment or geographical markets.

• When firms focus on low cost and differentiation at achieving their objectives industry wide, the focus or niche strategy is built.

• Focus strategy is to achieve either a low cost advantage or differentiation.