BusiAna_6e_Part 4_Case Analyzing performance in the fashion industry - TN_Case Solutions.docx Part 4 Analyzing Financial and Non-Financial Performance in the Fashion Industry Teaching Note Version: May 2022 Introduction This case fits well with Chapter 5 Financial analysis. Depending on the desired focus, the case can help instructors discuss (1) the basics of financial analysis, (2) how the analysis of non-financial performance measures can support the financial analysis, (3) a useful approach in defining or selecting relevant financial and non-financial performance metrics, or (4) limitations of non-financial information. Questions for students Identify the (common) critical success factors that help the five international fashion retailers create value for their shareholders and other stakeholders. Define financial and non-financial metrics for each of the identified critical success dimensions. Using Exhibit 1, analyze and compare the five retailers’ financial and non-financial performance. Which retailers can be considered “leaders” or “laggards” in the areas identified above? Case analysis The instructor could start the class discussion by briefly explaining how the above questions describe a valuable framework for analyzing financial and non-financial performance. Following such a framework helps create focus in the analysis: The starting point of any analysis should be to develop a good understanding of what drives a firm’s value. These value drivers determine the firm’s critical success factors. (Note that, depending on the objective of the analysis, the ‘value concept’ that the analyst focuses on can be shareholder value, shared value, or stakeholder value.) Knowing the critical success factors helps the analyst define key performance metrics that are informative about how well the firm performs in its critical success areas. Such performance metrics can be financial or non-financial. The final step is to analyze and compare key performance metrics to evaluate firms relative to their peers. Question 1 – Critical success factors Critical success factors in the fashion industry include the following: Fast fashion. Retailers who respond quickly to changing consumer trends by frequently adjusting their assortment are more likely to succeed in creating customer loyalty, drawing customers to their stores, and optimizing store productivity. Successful fast-fashion retailers can also shield
All Cases For Business Analysis and Valuation IFRS, 6th Edition Krishna G. PalepuPaul M. HealyErik P
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