Apendix 2

Financial Audit
Measures used to analyze Elephant House PLCs present stand in the market.

Financial measures.
1. Gross Margin %
2. Sales Total
3. Gross Profit

5. Return on Investment
6. Net Profit
7. Earnings before Interest &
Tax

4. Annual Growth

Customer driven measures.

1. Average Sale per Day
3. Return on Marketing
Invested

2. Customer Satisfaction

Internal measures.
1. Customer Complaints on
products
2. Sales returns

Dealer
Complaints

Financial performance based on the above criterias

Measure
s
consider
ed
by
Elephant
House
PLC

Gross
Profit

LKR

Current
Year

Method
s of
Control

Previous
Year

Industry
Standard

6,600,000,0
00

Budgetin
g

6,910,000,0
00

8,571,428,5
71

Varian
ce

This is the Profit after deducting costs spent directly on Production & Sales
where it is used mainly to identify the variable costs at Elephant House PLC

Sales
Total

LKR

22,000,000,
000

Budgetin
g

20,000,000,
000

28,571,428,
571

This is the Actual amount of Sales achieved during the period by the sales
team

3%

Annual
Growth

Budgetin
g

4.01%

3%

The amount of development gained by the Brands of EHL PLC are captured
through carrying out the Annual Growth analysis where it is considered as a
performance measure where actual revenue in cash terms is lower than what
is expected

30%

Gross
Margin
%

Budgetin
g

30%

30%

This is the percentage of Gross Profit achieved by the company on

Sales. This is used to benchmark the performance of the company
against the competitors & the Industry Standards

Earning
s before
Interest
& Tax

LKR

2,000,000,0
00

Budgetin
g

1,800,000,0
00

2,571,428,5
71

This is the Net amount of earnings achieved by Elephant House PLC

before interest & Tax

Net
Profit

LKR

1,400,000,0 Budgetin 1,200,000,0 1,714,285,7

00
g
00
14
The Net Return for the Shareholders is identified through this measure
& the final output of the business is compared with the Competitors &
Industry Standard
7%

Return
on
Investm
ent

Maximizi
ng
Profits

6%

8%

This is considered in order to calculate the returns gained by the

company on the Marketing Investments done on the Brands of its
operations.

Avg.
Sales
Per day

LKR

75,000,000

Budgetin
g

80,000,000

114,285,71
4

This is identified to analyze any seasonal variations in the SKUs

maintained at Elephant House PLC

Custom

Average

Average

Medium

er
Satisfac
tion
The customer Satisfaction Levels are analyzed through sales reps
feedbacks to the dealer. The issues facing the customers are identified
& necessary action is been taken by the marketing Department to
ensure high level of customer satisfaction is maintained
3%

Return
on
marketi
ng
investe
d

Budgetin
g

4%

3%

At Elephant House PLC Most of the returns are reinvested on brands.

This is considered as a critical measure to identify the amount of return
gained by the investments made

Custom
er
complai
nts
onprodu
cts

Per
Annu
m

30

35

25

This is identified as an input to identify whether the company is

delivering the exact requirements of the customers & if not to change
products & correct the mistakes which are currently followed.

Dealer
complai
nts

Per
Annu
m

10

12

10

This identifies the satisfaction levels of the distribution process of

elephant House PLCs distributors as to whether EHL PLC is providing
the correct returns to the dealers & it is analyzed against the past years
to monitor performance.

Sales
returns

Per
Annu
m

60

55

30

Appendix 3
Resource Audit of Elephant House PLC
Resources at the possession of Elephant house PLC can be segregated into 3. They
are,

1. Tangible Resources
2. Intangible Resources
3. Human Resources
The following assessment form was used in assessing employee
capability at Elephant House PLC.

Capabilities

Questions

Taient

Do employees have the competencies and the

commitment required to deliver a business Strategy which
is on offer?
Can we move quickly to make Important things happen
fast?
Do we have a culture or identity that reflects what we
stand for and how we work? Is it shared by both customers
and employees?
Does high performance matter to the extent that we can
ensure execution of strategy?
How well do we collaborate to gain both efficiency and
leverage?
Are we good at generating new ideas with impact and
generalizing those ideas across boundaries?
Do we have a leadership brand that directs managers on
which results to deliver and how to deliver them?
Do we form enduring relationships of trust with targeted
customers?
Doour employees share an intellectual, behavioral, and
procedural agenda for our strategy?
How well do we innovate in product, strategy, channel,
service, and administration?
Do we reduce costs by closely managing processes,
people, and projects?

Speed
Shared mind-set.

Accountability
Collaboration
Learning
Leadership
Customer connectivity
Strategic unity
Innovation
Efficiency

Assessment
s

Rankings

The following results were obtained by each committee of the organization.

Respondents
Executive
department
Operations
department
Marketing
department
Finance deaprtment
IT department

AVERAGE
SCORE

World class
achivemets

Talent
Scores

4.0
3.4
4.1
4.6
3.67
3.98

1
2
3
The average score obtained by each department is 3.98/= this shows that the firm
needs to re-focus on its employee engagement in order to reach optimum
performance levels. Therefore a benchmark was performed in order to compare
Elephant House PLCs capabilities with industry performance capabilities. The
results obtained are as follows.

5
Industry
Supiriority
Industry Parity

4
3

Collaboration

Speed

Need Significant Investment

capabilities

1
0
Desired Level

Acrual Level

World class
achivemets
Industry
Supiriority
Industry Parity

5
4.5
4
3.5
3
2.5
2
1.5
1
0.5
0

Needs moderate Investment

Desired Level
Actual Level

World class
achivemets

Should Focus on Efficiency and Cost

Reduction

Industry
Supiriority
Industry Parity

6
5
4
Actual Level

Desired Level

2
1
0
Shared Mindset

Accountability

As a result of the above findings it is evident that Elephant House PLC needs to Get
focused in their efforts of capability management. With regard to EHL PLC we could
come to a conclusion that its better for the firm to excel at a few targeted
capabilities than to diffuse leadership energy over many. Bottom-line is that EHL
PLC should choose no more than three on which to spend their time and attention;

they should aim to make at least two of them world-class. This means identifying
which capabilities will have the most impact and will be easiest to implement, and
prioritizing accordingly.