When writing this assignment, each student should adopt the role of an outside analyst from a consulting firm that is evaluating the current and future potential of the strategies being pursued by the firm being researched

March 26, 2019

Individual Company Analysis: Outline

Each student is asked to write a thorough company analysis. This means 10 double-spaced pages PLUS exhibits and references. When writing this assignment, each student should adopt the role of an outside analyst from a consulting firm that is evaluating the current and future potential of the strategies being pursued by the firm being researched. See below the list of companies you can select from. Please note that extensive outside research will be required to complete the assignment.

A complete analysis contains five main parts:

1. A financial analysis to assess the company’s health
2. An external analysis of the firm
3. An internal analysis of the firm
4. Identification of the strategic problems that the firm is facing
5. A set of strategic recommendations for the firm based on your analysis

Begin with a short executive summary—about four sentences—that explains which firm you are analyzing, what you looked at, and (in one short paragraph or less) what you recommend. This will help your readers grasp the essence of your company analysis without reading the entire written project.

1. Financial Analysis

The financial analysis should demonstrate two things:

1. Is the firm itself financially healthy? Look at its performance over time, both in terms of being profitable or solvent, and how the market has rewarded it. In general, this portion of the assignment should be an in-depth analysis of the financial status of the firm(s) being considered.

2. How strong is it relative to its competition? Are its competitors more or less profitable over time? How has the market valued them?

You don’t need to be a finance major to complete this portion of the assignment. However, you should include appropriate figures and ratios to illustrate your points. Whatever you find from outside research put it into useful charts or tables and place it in the Appendix of your project. State your conclusions in the report itself, and reference the specific table or figure from the Appendix to support your conclusion. Everything you include in the report must lead to a point, otherwise do not include it. The tables below should serve as a template for your analysis.

Sample Tables for the Financial Analysis Over time

Case Firm Current Year Prior Year % Change
Income Statement
…
Balance Sheet
…

Table 1. Change in Financials and comparison with the closest competitor

Case Firm % Closest Competitor(s) %
Income Statement
Sales 100% 100%
…
Balance Sheet
Total Assets 100% 100%
…

Table 2. Financial health of the firm and comparison with the closest competitor for 20__

Ratio Case Firm Closest Competitor(s)
Current Ratio
Quick Ratio
Debt-to-equity Ratio
Debt-to-total Assets Ratio
Inventory Turnover
Total Asset Turnover
Gross Profit Margin
Net Profit Margin
Return on Assets
Return on Equity
Table 3. Financial Ratios for Case firm and closest competitor for 20__

2. External Analyses

The external analysis of the firm describes the context in which the firm must compete. First, look at the industry dynamics and competitive market using Porter’s 5-forces model. Second, identify the opportunities and threats that are faced by using SWOT analysis.

3. Internal analysis of the firm
The internal analysis of the firm includes the value chain analysis as well as identifying strengths and weaknesses using SWOT analysis.

A value chain analysis allows the firm to understand the parts of its operations that create value and those that do not. It is a template that firms use to: (1) understand their cost position, and (2) identify multiple means that might be used to facilitate implementation of a chosen business-level strategy.

A complete value chain analysis broadly contains two main parts:

6. Primary activities involved with: (1) a product’s physical creation, (2) a product’s sale and distribution to buyers, and (3) the product’s service after the sale;
7. Support activities that provide the support necessary for the primary activities to take place.

As illustrated below, the value chainshows how a product moves from raw-material stage to the final customer. To be a source of competitive advantage, a resource or capability must allow the firm: (1) to perform an activity in a manner that is superior to the way competitors perform it, or (2) to perform a value-creating activity that competitors cannot complete.

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