Toshoret Ltd case study 1

Title: Strategic and Financial Positions of the Company Toshoret

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 Toshoret Ltd case study 2

Executive summary

In this section, a comprehensive examination has been conducted to assess the

selective strategies employed by TOSHORET Ltd. The project employs both NPV and
WACC methods to facilitate strategic planning and implementation. These methods
encompass various interrelated elements that require careful consideration. To streamline the
presentation, tables and graphical representations have been included, allowing for the
formulation of a more refined set of selective strategies. This marks a shift towards novel
methodologies and the measurement of innovative concepts.
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Contents
Introduction..............................................................................................................................2

Background...............................................................................................................................3

Aims and objectives..............................................................................................................4

Discussions.............................................................................................................................4

Liquidity and solvency Ratios..........................................................................................4

Solvency ratios...................................................................................................................5

Viability division of two businesses.....................................................................................7

BSC Industries..................................................................................................................7

Toshoret Ltd......................................................................................................................7

WACC of Toshoret...............................................................................................................8

NPV methods of business.....................................................................................................9

Recommendation....................................................................................................................11

Conclusion...............................................................................................................................11

Reference.................................................................................................................................12

Introduction
The pursuit of market differentiation is a strategic imperative for businesses seeking
to expand their foothold in today's competitive landscape. Toshoret, a well-established player
in the printing services industry, recognized the need to set themselves apart in order to
enhance their market share. To this end, the company made a bold move at the onset of 2022
 Toshoret Ltd case study 4

by diversifying their service portfolio. Not content with offering printing services alone, they
ventured into the domain of campaign design services, a decision that set them on a
distinctive trajectory. Toshoret's ambition was to become the sole entity in the market capable
of delivering a comprehensive package, encompassing both campaign design and print
services.

This strategic pivot came at a cost, one that is clearly reflected on the company's
balance sheet. To finance the establishment of their campaign design division, Toshoret
undertook substantial investment, relying heavily on debt financing. This move underscored
the company's commitment to this transformative initiative.

However, as with any significant change, it is crucial to assess its impact and
reception. Recent branding surveys conducted by Toshoret's marketing team unveiled a
complex challenge. Despite their best intentions to offer a holistic service, customers
appeared to be perplexed about the scope of services Toshoret actually provides. There was a
prevailing sentiment that clients, when faced with a choice, were more likely to opt for their
competitors who were recognized as specialists in the realm of printing. This report delves
into the intricacies of Toshoret's strategic decision and its subsequent ramifications, shedding
light on the critical factors influencing their market position and customer perceptions.

Background
This study expounds on the comprehensive strategic and operational approaches
employed by Toshoret Ltd, a privately held company. The organization has undergone a
transformative shift, embracing novel and discerning methodologies to propel itself to new
heights within the market landscape. This shift has precipitated a fundamental change in the
backdrop against which this study unfolds. The company's pursuit of heightened market
performance necessitated the adoption of a range of innovative measures aimed at
scrutinizing overarching objectives. This analytical process is predicated on the imperative to
implement and fine-tune these selective strategies, as outlined in Karg et al. (2022).

In recent years, Toshoret has navigated numerous pivotal objectives, which cause
them to perfume poorly within their industry. In response, they have proposed a
contemporary strategic plan, wherein various facets of their operations and strategies are
subject to meticulous evaluation. These recent strategic initiatives have unveiled some
setbacks, resulting in a need for the company to recalibrate its business approach and explore
innovative modes of operation.
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Higher quality

WACC
Business division

Figure 1: Business methods analytics

Aims and objectives

Toshoret Limited has clear goals: they aim to offer top-notch, cost-effective services
to their clients, all while promoting environmentally friendly and ethical business practices.
They're committed to providing a safe and healthy workplace for their employees, with a
strong focus on delivering excellent customer service, making it a top priority. This approach
not only ensures customer satisfaction but also creates a competitive and fulfilling work
environment for all team members (Omar et al., 2020). By following these principles,
Toshoret aims to boost its reputation in the industry, establish strong relationships with
suppliers and stakeholders, and continuously improve every aspect of the organization.

In pursuit of these objectives, Toshoret's strategy involves:

 Managing their presence in selective markets effectively.

 Evaluating the importance of their current strategic plan.
 Identifying where strategic planning is necessary.
 Efficiently handling capital expenditure within solvency and liquidity ratios.

Discussions
Liquidity and solvency Ratios
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Liquidity ratios
Year 2022 2021
current ratio 0.464882 0.999778
Quick ratio 0.259345 0.495012

The table above clearly indicates that both the current ratio and the quick ratio have
decreased. This drop is due to some challenges Toshoret has encountered in their marketing
strategy, which has exacerbated the issue. When the current ratio falls, it means the company
has fewer current assets compared to its current liabilities. This can pose a financial risk,
making it difficult to meet short-term obligations to creditors. Toshoret should take a closer
look at their core business operations and enhance their strategy presentation to address this
issue effectively. A decline in this ratio can lead to increased short-term debt and a decrease
in valuable assets. To tackle this, the company needs to prioritize ethical business practices to
generate more cash from their operations (Tihanyi et al., 2019). All these methods must be
well-implemented to improve the overall situation.

The quick ratio has also declined, which generally suggests that the company has
taken on excessive loans and debt. As a result, the company's market performance has
suffered, leading to losses. Despite having a 30% market share, Toshoret's competitors have
expanded their market presence. To remain competitive and thrive in the market, Toshoret
needs to enhance its overall performance.
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0.99977831966304
Liquidity Rati os
current ratio Quick ratio

0.49501219241853
0.46488164532402

0.25934549217436

3
3

2022 2021

Solvency ratios

solvency ratios

Year 202 202

2 1
debt to equity ratio 5.19 1.61
debt to asset ratio 0.84 0.62

The table above clearly illustrates a decrease in the debt-to-equity ratio between 2021
and 2022, signifying a shift in the company's financial position. This change prompts the
need for a more thorough analysis of the methods in place. These assessed processes
represent an opportunity for introducing new and selective measures. Conversely, when the
table indicates an increase in the debt-to-equity ratio, it implies that the company has taken on
a considerable amount of debt from the market. In such cases, a careful review of these
methods is necessary to maintain control. Essentially, a lower debt-to-equity ratio signifies
that the company relies more on its own assets and less on external borrowing.
 Toshoret Ltd case study 8

Similarly, when the table shows an increase in the debt-to-asset ratio, it raises
concerns about the company's financial health. Toshoret should closely examine its
marketing strategy and assess the entire marketing system. A higher debt-to-total-assets ratio
indicates higher leverage, which comes with an increased risk of struggling to meet debt
payments. This can lead to declining revenues and the need for systematic payment
management to prevent problems. To address these challenges, Toshoret must adopt a more
conservative approach and maintain certain features within the division processes to enhance
executive decision-making. It's important to explore new approaches for these selective
components and methods to ensure the overall process is well-managed.

Solvency Ratio chart

0.62
2021
1.61

0.84
2022
5.19

0.00 1.00 2.00 3.00 4.00 5.00 6.00

debt to asset ratio debt to equity ratio

Viability division of two businesses

BSC Industries
BSC Industries is a company that specializes in manufacturing industrial
components. They've been in the industry for a while, which has allowed them to fine-tune
their business operations and build a strong reputation. While their market share is smaller
than Toshoret's, they are known for being strong competitors (Agyabeng-Mensah et al.,
2020). They offer a wide range of products and services and have experienced consistent
growth. Their financial position is robust, with a solid annual turnover, and they have a loyal
customer base known for receiving high-quality products and services. They're now
exploring new approaches to enhance their business.
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Toshoret Ltd
Toshoret, on the other hand, is a relatively new player in the industrial components
market. They've used innovative methods to establish themselves in the industry. Although
they have a 30% market share compared to BSC Industries' 19%, they are still a smaller
company with a limited product range and no unique services. Consequently, they've
struggled to build a substantial customer base and face tough competition from established
players like BSC Industries (Dhar et al., 2019). Toshoret needs a strategic plan to improve
their business structure and overall performance.

Overall, BSC Industries seems to have a stronger position compared to Toshoret.

Despite having a smaller market share, Toshoret needs to work on their strategies to recover
from recent losses. BSC Industries has a long history of success, a strong customer base, a
higher turnover, and a more diverse product range, all of which give them a competitive edge.
Toshoret, being relatively new, has room for growth in terms of building its customer base
and product offerings.

WACC of Toshoret

Proportion Debt-to- Cost of Effective Cost of WACC

of Debt Equity Equity Cost of Financial
Debt Distress
0% 0 9% 4.60% 9.00%
10% 0.11 10% 4.60% 9.47%
20% 0.25 11% 4.60% 9.72%
30% 0.43 12% 4.60% 9.77%
40% 0.67 13% 4.60% 9.62%
50% 1 14% 4.60% 9.30%
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60% 1.5 15% 4.60% 8.76%

70% 2.3 16% 4.80% 1% 9.21%
80% 4 17% 5.20% 3% 10.56%
90% 9 18% 6.10% 9% 16.29%
100% 0 0 7.00% 14% 21.00%
Figure 2 WACC

WACC= weight of equity (EV)*Cost of equity (Re) + weight of debt (DV)*Cost of debt (Rd)
+ Cost of financial distress (c)

WACC= EV*Re + DV*Rd + C

The Weighted Average Cost of Capital (WACC) is a crucial financial metric used to
determine the cost of capital for a business. It's calculated by taking the weighted average of
the cost of each component of the capital structure, which typically includes debt and equity.
These methods play a pivotal role in the WACC calculation.

The cost of debt represents the after-tax cost of borrowing funds. It's usually
determined by taking the interest rate on the debt, subtracting the applicable tax rate, and then
multiplying the result by the entire tax rate. The computed figures for WACC, such as 9.00%
and 21.00%, indicate the results of these methods, which involve various collective
approaches and selective measures.

The cost of equity, on the other hand, is typically calculated by taking the required
rate of return on equity and subtracting the dividend yield.

The ideal WACC for a business depends on the company's goals and risk profile. A
lower WACC generally suggests a higher return on invested capital, while a higher WACC
implies a lower return. As such, the lowest value of the WACC is 8.76% which is at 60% of
the debt. The company should adopt these figure as it is optimum for the company by
ensuring higher returns, while a wide field of financial leverage. However, it's important to
note that a lower WACC can also signify greater risk. Therefore, when determining the
optimal WACC, it's crucial to consider the business's specific risk profile (Zhang et al.,
2022). Ultimately, the chosen WACC should align with the company's objectives and risk
tolerance.
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The WACC calculation takes into account the blend of debt and equity that minimizes
the weighted average cost of capital. When the cost of capital is lower than the present value
of future cash flows discounted by the WACC, it becomes a valuable tool for evaluating
investments and business decisions.

NPV methods of business

Period inflow Discount rate Cash flow

0 -50 10% 337
1 72 10% 72.28
2 87 10% 88.47
3 106 10% 107.38
4 122 10% 123.29
5 140 10% 140

In this section, a comprehensive analysis of Toshoret's NPV methods has been

undertaken to identify specific strategic approaches. This evaluation involves the application
of a 10% discount rate and corresponding adjustments to values. These carefully chosen
measures are essential to enhance the NPV outcomes. Notably, while BSC Industries, despite
being an early entrant into the market, holds a smaller market share, Toshoret, as a relatively
new entrant in the industry, has seen a growth in its market presence. Consequently, there is a
pressing need for Toshoret to implement these strategies and measures to further strengthen
its competitive position and optimize its NPV.

Period Inflow Discount rate Cash flow

0 -63 10% 40.58
1 18 10% 18.69
2 28 10% 29.56
3 29 10% 30.05
4 31 10% 32.09
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5 34 10% 34.00

The table above illustrates the NPV methodologies employed by BSC Industries. It
encompasses a variety of techniques aimed at optimizing their overall business approach,
with a focus on novel and strategic methods. Additionally, the table features the provision of
discount rates, which has led to the utilization of the 5-year NPV method. In order to
effectively implement these strategies, a thorough analysis of all these methods is imperative,
ensuring that selective measures are not only applicable but also result in enhanced outcomes.

A comprehensive analysis of two NPV projects has yielded insightful results. Notably,
Toshoret's NPV surpasses that of BSC Industries. This outcome underscores the importance
of conducting further in-depth scrutiny and validation of these methods as a basis for
informed decision-making. With these findings, the entire process is set to gain increased
clarity and significance, paving the way for more informed and effective actions.

Recommendation
This analysis covers two companies and their strategic aspects, namely Toshoret and
BSC Industries. Toshoret is a newcomer in the market, having secured a 30% market share.
In contrast, BSC Industries, an established player, holds a 20% market share and poses strong
competition to all. Toshoret, despite its initial success, has encountered recent losses,
necessitating a review and improvement of its marketing strategy. Consequently, they must
carefully consider and implement selective business measures to address these challenges and
ensure future success.

Conclusion
An organization's strategic and financial aspects hold significant importance. They
contribute to sustainability, environmental impact, growth, and other vital areas.
Consequently, it becomes crucial for organizations to prioritize financial development.
Strategic finance plays a pivotal role in shaping the long-term vision of a company and
improving its profitability. It aids in cost reduction, efficient cash management, revenue
growth, market share expansion, and financial progress. Thus, it's evident that strategic
finance is a cornerstone of any organization.
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Toshoret is keen on advancing its financial and strategic standing, which necessitates
identifying and addressing hindrances. By harnessing strategic financial marketing, Toshoret
can further expand its business and enhance its market value. Therefore, this analysis is
essential for understanding the market position of this company and its future growth
potential.
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