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ACCA Strategic Professional · Strategic Business Leader · Financial analysis and decision-making techniques

Brightwater Retail is deciding whether to acquire a smaller online competitor. The finance team has produced a discounted cash flow valuation. A director argues that a balanced scorecard-style review of non-financial factors should also be done. Which non-financial factor would be most relevant to testing whether the acquisition is strategically feasible rather than merely attractive?

The most relevant factor is whether Brightwater has the management skills and systems integration capability to absorb the competitor's technology and staff. Feasibility concerns whether the organisation can actually implement the strategy with its resources and competences, which is a non-financial question, unlike the financial metrics listed.

  1. AThe expected increase in earnings per share in year one
  2. BWhether Brightwater has the management skills and systems integration capability to absorb the competitor's technology and staffCorrect
  3. CThe competitor's historic revenue growth rate
  4. DThe coupon rate on the debt that would fund the deal

Explanation

Feasibility asks whether the organisation has the resources and competences to implement the strategy. Integration skill and systems capability are non-financial and directly test this. The other options are financial measures, which relate to attractiveness or funding rather than ability to execute.

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