Company Analysis Framework

Company Analysis Framework

The Sections of a Framework Most Relevant to the Particular Situation

There have been numerous studies that emphasize the significance of conceptual frameworks in qualitative research and the critical role they play in the process of inquiry. The research's guide and ballast and integrating all study components into a unified process benefit from having a companion and ballast (Seyitoğlu & Ivanov, 2020). If one wants to improve quality management in the hotel industry, they will need a conceptual framework to guide their efforts. This framework will guide them through the entire procedure, from start to finish. There has been some debate about which part of a framework is more significant in the business community. Organizations seeking success must concentrate their efforts on gaining new customers and maintaining relationships with existing customers. The industrial sector is looking for approaches that will help them to better allocate their limited resources to the most vital tasks in response to these restrictions. Also, the industry's long-term business plan and objectives will help determine the solution.

As Pillai et al. (2021) point out, customers' expectations of the level of hospitality have received significantly less attention than they should have, despite the attention devoted by service marketers and academic researchers to customer expectations of the quality of hotel services. Compassion can be developed among hosts and their customers due to these factors and the climate produced in a hospitality environment (Pillai et al., 2021). The ultimate goal of the hotel industry is to achieve high levels of client happiness, expectation, and loyalty. According to Pillai et al. (2021), the requirement of providing guests with sensory-stimulating experiences should be prioritized in the hotel industry. Customers' expectations serve as a baseline against which actual performance can be compared, as Seyitoğlu & Ivanov (2020). Anyone working in the hotel marketing sector must understand their client's expectations and thoroughly comprehend the critical factors impacting those expectations. The importance of these criteria is that customers utilize them to evaluate the overall quality of their service.

Information Related to Demand, Situational Analysis, Differentiation, and Service-Delivery System and Alternatives for Developing Acquisition Criteria

Developing acquisition criteria is critical in any organization since it allows one to determine the worth of a company's assets and liabilities. This is true regardless of the business in which one works. There is no unique set of acquisition criteria that will work for every firm; instead, the success of every acquisition is determined by the efforts made to ensure that the strategic purpose of the investment is maintained (Richter & Sereseanu, 2015). Before beginning with a purchase, the hospitality business must first identify the criteria used in the selection process for the item being purchased. Suppose acquisition prospects develop unexpectedly in the future. In that case, analytical frameworks such as this one might assure that key decision-makers would apply the same rationale to make their decisions in the future. Among the many tools that may be utilized to make quick decisions in business are Situational Analysis, Differentiation/Positioning, and the Service Delivery System, to name a few. Acquisitional planning is a procedure that may be used to develop a strategy to deal with these difficulties and address them. During acquisitional planning, decision points that may involve business, management, and other critical aspects that influence the acquisition elements are identified. This allows for developing a strategy to address these issues, which is accomplished by placing decision points. Market research is likely to impact the acquisition process and the style and substance of the firm's description or statement of work if it is carried out.

The successful acquisition of another corporation requires that the acquiring firm regard the transaction as an investment and be prepared to defend itself against the risks associated with the purchase. According to Fitriani & Koesrindartoto (2021), acquiring a company is an excellent strategy for increasing a company's market share. According to Fitriani & Koesrindartoto, it is critical to evaluate a company's risk-return profile and its cash flow characteristics before considering an acquisition. For the production of linked diversification suggestions, it is recommended that a different strategy be used from that utilized for unrelated diversification, and a distinct focus and substance be developed. Following the authors' findings, distinguishing between bolt-ones and platform differentiation is critical because it establishes numerous criteria for evaluating possible transactions and transactions in progress. Acquisition criteria must be developed via diligent observation and reading to ensure that the purchase is more valuable and efficient than before. Attentive observation and reading are required to do this.

Financial Data and Measures Required to Create Acquisition Criteria

It is customary for a prospective acquirer to be obliged to provide specific financial information about the firm that it is interested in purchasing as part of the due diligence process before making a purchase. The criteria for financial data and measurement statements are two examples of acquisition requirements that must be met before a transaction can be completed successfully. To comply with SEC Rule 3-05, an acquirer must assess the significance of a business purchased before closing the transaction. Therefore, it is necessary to give three tests in a single session when S-X 3-05 and S-X 8-04 are used in conjunction. The following questions will be asked on the examination: According to the Asset Test, was it possible to determine what percentage of the purchased company's total assets belonged to the buyer? What portion of the buyer's total consolidated assets belonged to the parent company? When the overall acquisition price of a newly purchased business is compared to the GAP criterion, the Investment Test process.

Comparison of the acquirer's participation in the acquired business's pre-tax earnings from ongoing operations with the acquirer's involvement in the acquired business's pre-tax earnings from discontinued operations; and the pre-tax income test is essential. Depending on when the transaction is completed and how long the transaction has been in progress, a separate set of unaudited interim financial statements may be necessary for any period covered by the stub. When considering whether to make an offer to purchase a business, it is a good idea to check the financial documentation from the previous several years. Tax returns, balance sheets, debt declarations, and cash flow statements are examples of the types of documents under this category. Whenever a company is acquired, it is essential to consider if the acquisition will assume any of the firm's responsibilities or liabilities. If the purchase assumes such debts or liabilities, it is necessary to proceed with caution. To determine how liquid a firm's balance sheet is, the corporation should determine the critical decision it must make. Using this example, it will be possible to demonstrate a company's ability to make investment decisions without obtaining additional cash from other sources. A liquid asset's ability to be converted into cash in a short period without depreciating the market value of the asset's acquiring firm is defined in financial terms as the power of an asset to be converted into cash in a short period without depreciating the market value of the asset's acquiring firm. When determining a company's ability to pay its short-term debts and present obligations in a financial crisis, it is vital to consider its liquidity. Different ratios and computations can be employed to select a company's liquidity.

How the Financial Liquidity Requirements Identified by Wieczorek-Kosmala (2021) Could Be Integrated into Acquisition Criteria

The following is a suggestion for anything that may be done to assist with continuing acquisition requirements. Because financial ratios are critical in monitoring changes in a company's borrowing capacity and profitability, the information provided by Wieczorek-Kosmala (2021) can be pretty valuable in the finance industry. Generally speaking, organizations with these characteristics, such as solid cash levels and low debt-to-asset ratios, are considered great acquisition possibilities. According to Wieczorek-Kosmala (2021), it is critical to understand the various motivations for acquiring a company and the most crucial purchase criteria before proceeding with the acquisition. For anyone considering purchasing a new company, it is essential to develop an acquisition criteria checklist that reaffirms the acquirer's objectives, analyzes its strengths and weaknesses, and evaluates its long-term strategic direction. Given its solid financial base, this acquisition represents a good investment opportunity to adopt a successful risk management strategy in the future.

It has been shown by Wieczorek-Kosmala (2021) that hotels are particularly vulnerable to the COVID-19 pandemic's effects. Therefore, there is some concern about the industry's ability to recover. For those worried about how well the organization is preparing for the COVID-19 danger, Wieczorek-Kosmala's (2021) exploratory study can shed some insight into the company's financial slack holdings and lifespan. With minimal financial wiggle room, most assessed hospitality businesses had recently depleted their resources.

Appropriate Acquisition Criteria to Evaluate a Potential Investment

In performing the research for items to acquire, the company should look for things such as, but not limited to, the following: To gain greater exposure, the firm can be interested in increasing the geographical scope of their organization. Second, legal considerations must be made, such as how the acquisition may affect the company's liability insurance and environmental and safety standards, which must be considered (Pivnk, 2021). For example, before making a purchasing decision, it is critical to assess the organization's reputation, history, and present image in question. There should be a superb reputation for providing high-quality service before this company is established. The culture and brand of a new firm have a significant impact on the growth rate and the organization's financial health in question. Finally, as previously said, it is critical to design a criterion to make rapid and accurate purchasing selections.

Evaluation

As soon as the similarities and differences between the acquired and acquiring firms are identified, it is customary for the strategic decision-making process to go forward quite swiftly from that point on. According to Clark & Maggitti's (2012) perspective, this is accurate. In contrast, while the strategic decision-making framework in acquisition criteria is a phenomenon that cannot be easily observed via the lenses of various utilities, values, and applications, the consequences of the decision may be evaluated. In situations where the number of interruptions caused by political conflicts would hurt the value and effectiveness of the decision, strategic decision-making is more likely to be completed more quickly due to the concentration of decision-making authority and the small number of people involved. However, according to Clark & Maggitti (2012), decision-makers will have difficulties since they will no longer be able to use typical optimization processes, such as those primarily concerned with anticipating future values and advantages and the applications of alternative actions in the future.

Purpose

As a result of the newfound understanding, one can better grasp how additions can increase supply chain capabilities in a timely and cost-effective manner while providing more excellent value to consumers and the broader public. It is vital to disassemble the acquisition process of hospitality service providers to understand better why enterprises choose to unite or buy one another. This procedure can be scattered with the use of a conceptual framework. As a result of the acquisition, the company will be able to get a more valuable market share, regardless of whether it intends to diversify its portfolio within or outside of the hotel industry. As people get to know, the purchase of another firm is a growth strategy that must be carried out by the rules and regulations governing acquiring another business. Developing a conceptual framework is widely recognized as a valuable tool for clarifying any research objectives and identifying the most critical components of the results. To better grasp the conceptual framework and company, it is essential to develop a checklist of acquisition search criteria that validates an acquirer's aims and vision before beginning the acquisition search process.

References

Clark, K. D., & Maggitti, P. G. (2012). TMT potency and strategic decision-making in high technology firms. Journal of Management Studies, 49(7), 1168-1193. https://doi.org/10.1111/j.1467-6486.2012.01060.x

Fitriani, N., & Koesrindartoto, D. P. (2021). Proposed business strategy for XYZ consultant company to financial improvement through acquisition strategy. European Journal of Business and Management Research, 6(2), 1-7. https://doi.org/10.24018/ejbmr.2021.6.2.559

Pillai, S. G., Haldorai, K., Seo, W. S., & Kim, W. G. (2021). COVID-19 and hospitality 5.0: Redefining hospitality operations. International Journal of Hospitality Management, 94, 102869. https://doi.org/10.1016/j.ijhm.2021.102869

Pivnk, K. E. (2021). Significant financial ratios to assess the company's financial policy effectiveness. Financial Analytics: Science and Experience, 14(3), 347-360. https://doi.org/10.24891/fa.14.3.347

Richter, S., & Sereseanu, A. (2015). Developing effective risk assessment criteria in regulated environments. 2015 IEEE 8th International Conference on Intelligent Data Acquisition and Advanced Computing Systems: Technology and Applications (IDAACS). https://doi.org/10.1109/idaacs.2015.7341369

Seyitoğlu, F., & Ivanov, S. (2020). A conceptual framework of the service delivery system design for hospitality firms in the (post-)viral world: The role of service robots. International Journal of Hospitality Management, 91, 102661. https://doi.org/10.1016/j.ijhm.2020.102661

Wieczorek-Kosmala, M. (2021). COVID-19 impact on the hospitality industry: Exploratory study of financial-slack-driven risk preparedness. International Journal of Hospitality Management, 94, 102799. https://doi.org/10.1016/j.ijhm.2020.102799