Case Study Solution Statement:
Company X is a mid-sized organization operating in the technology industry. To achieve peak performance and maximum value, Company X needs to have fully-developed and balanced functional categories across eight primary areas: marketing, sales, operations, finance, human resources, information technology, legal, and research and development.
Diagnosis:
After analyzing Company X's functional categories, it has been identified that the company has significant strengths in sales, operations, and information technology. However, there are weaknesses in marketing, finance, human resources, legal, and research and development. The overall quality profile of the company is good, but the risk profile is high due to the weaknesses in these functional areas.
Cost of Capital Calculation:
Using the quality and risk profiles, the cost of capital for Company X is calculated to be higher than the industry average due to the identified weaknesses. The intrinsic value of the company is lower than what it could be if these functional areas were improved.
Prescription:
To improve the intrinsic value of Company X, a program of continuous improvement needs to be implemented. This program should focus on improving marketing, finance, human resources, legal, and research and development. By improving these areas, the risk profile of the company will decrease, and the cost of capital will decrease, leading to an increase in the intrinsic value of the company.
Facilitation:
A strategic planning program needs to be facilitated for the management team of Company X. This program will build the management team's strategic planning competency while developing a short-term and long-term strategic and tactical plan. The plan should focus on improving the identified weaknesses while leveraging the strengths of the company. This plan will ensure that the company moves towards peak performance and maximum value.