Homework QuestionsAssume that you are a strategy consultant hi.docx
- 1. Homework Questions Assume that you are a strategy consultant hired by a firm to conduct a strategic analysis for the firm. You can choose any firm (business level) that you prefer. Make sure that you pick one that has enough data for your analysis. Financial data are as important as other qualitative data. Summarize the information into one or two page description of the firm. Please answer the questions as precise as possible and be sure to identify the theories or frameworks that guide your analysis in each of the questions. The homework requires that you answer the questions analytically and systematically. Each question asks a specific aspect of the firm. The questions are built on top of each other. You need to develop your answers in the same way: built your answer by taking into consideration your previous questions’ answers. Please answer the following questions. Please submit to me the summary and answer in electronic files. I might run your work with plagiarism software. Do not forget to put the references. There is an example posted in the Blackboard. Please encourage yourself to do better (more systematic and detail) than the sample provided. Hints in the question could be very helpful. Your innovation will be rewarded. 1. Please use the Balanced scorecard framework to assess the overall performance of the firm. For the financial performance component, just focus on ROCE, EVA, FCF of the firm. Assess and explain if the financial indicators are good, bad, or neutral. Hint:Chapter 12 Figure 12.5 page 381 and handouts. 2. Identify the threats and opportunities associated with the 7 segments of the general environment. Describe the industry five forces (industry structure) and their impact on the industry attractiveness (profitability)? Which of the Porter’s five forces is the strongest? Conclude your analysis by stating the
- 2. attractiveness of the industry. What are the key success factors of the industry? Hint:Chapter 2 Figure 2.1 (page 37), Table 2.1 page 38 and Figure 2.2 (pg 51). 3. Disaggregate the firm’s and its competitor’s ROCE. Better disaggregated ratios are defined as the competitive advantages. To what extent is the firm’s performance attributable to industry attractiveness and to what extent to competitive advantage? See ROCE-KSF-Balanced Scorecard handout 4. Draw the firm’s value chain. Identify the firm’s core competencies. Core competencies are the value chain activities that create the better ratios that you identified in question 3. Propose a hypothesis of the relationship between or among the firm’s core competencies and their competitive advantages. Hint: Chapter 3 Table 3.3 pg. 82 and Figure 3.3, 3.4, 3.5 on pg. 88 and 89 5. What is the firm’s business strategy? Can the firm’s core competencies sustainably create competitive advantages for the firm? Draw a table that shows the total alignment of the firm’s goal, strategy, resources and capabilities, and its environment. Hint: Chapter 3 Table 3.4 and 3.5 pg. 82 and 87; and Chapter 4 Figure 4.2 pg. 109 Optional (Extra Credit): Choose any question from the following questions 6. What is the outlook for the industry and firm profitability during the next five years? Please use the concept of driving force, five forces, and key success factors. Will the firm’s resources and capabilities be able to match with the future key success factors? See ROCE-KSF-Balanced Scorecard handout. You might need to read Chapter 1 page 6 -14. 7. Looking ahead, what measures does the firm need to take to improve its performance and defend against competitive and other threats? Make your recommendation to the firm (SWOT in
- 3. operational and strategic). Is the recommendation viable? Hint: you might need Chapter 4 Figure 4.3 pg. 113 and Figure 4.4 pg. 116 8. Now position yourself as the strategist for the firm’s competitor, how will be your strategy look like i.e. how can you neutralize or outcompete it (the recommendation mentioned in question 7)? Hint: Use Chapter 2 Figure 2.3 page 61 and Chapter 5 Figure 5.2 page 134 9. According to DCF (discounted cash flows) paradigm, value drivers of a firm are such as sales growth, operating profit margin, cash tax rate, proportion of net working capital to sales, proportion of fixed assets to sales, and proportion of other long term assets to sales. These value drivers can be used to estimate a firm’s future free cash flows. Based on your analysis above propose a strategic plan for the firm to increase its future free cash flows. Read file FCF drivers.doc in your vista. Identify which value drivers that can be improved and why. 10. Bonus question: calculate the potential value creation of your proposed strategic plan (in Q9). Assume that the firm’s competitive advantage period (t) is 4 years and the residual value is the firm’s book value. Competitive advantage period of 4 year suggests that there won’t be any economic profit created after year four. Thus, the residual value is the perpetuity value of the firm’s book value at year four and discounted at t = 4 .This question is required for those who want his assignment to be considered in the best two in the class. Hint: Question # 1 requires us to understand several important indicators of firm financial performance (EVA, ROCE, and FCF). It also asks about the Balanced scorecard. Question # 2 requires us to understand several actors in a business ecosystem. First perform threat and opportunity analysis for
- 4. each segment of the general environment. The five forces suggest the degree of competition in an industry competition and its potential profitability. Question # 3 forces us to conduct a deeper analysis of the components of firm profitability. We use the concept of ROCE and its breakdown to analyze a firm’s competitive advantage. Question # 4 basically asks what capabilities that drive a firm competitive advantage (better ratios in Q#3). Given the core capabilities of a firm and its power to contribute to a firm’s competitive advantage and performance, we need to know if the capabilities can sustainably contribute to the firm. We use Barney’s criteria to check sustainability of the capabilities. Question # 6 basically forces us to analyze if the capabilities in Q4 and Q5 will not be obsolete in the coming near future. We need to know future KSFs or driving forces that might alter the five forces. Given the information and analysis in Q1 to Q6, Q7 asks what a firm can/ should do and Q#8 asks what the firm’s competitor can/ might/ should do. HOMEWORK RUBRIC 1. Please use the Balanced scorecard framework to assess the overall performance of the firm. For the financial performance component, just focus on ROCE, EVA, FCF of the firm. Assess and explain if the financial indicators are good, bad, or neutral. (10 points). Hint: Chapter 12 Figure 12.5 page 381 and handouts. Unacceptable (0) Unacceptable (12) Needs Improvement (18) Acceptable (24) Good (30) · No or almost no components of the question are addressed · No or almost no use of relevant course material
- 5. · Responses unrelated to company in question · Many spelling and grammatical errors · Response is unintelligible. · Some of the question’s components are addressed · Some use of relevant course material · Response is at times concrete and usually related to the company in question · Response is not analytical or coherent · Response is unorganized and difficult to follow · All major components of the question addressed · All relevant course material is properly and appropriately applied · Response is concrete and related to the company in question · Response is analytical and coherent · Response is well-organized 2. Identify the threats and opportunities associated with the 7 segments of the general environment. Describe the industry five forces (industry structure) and their impact on the industry attractiveness (profitability)? Which of the Porter’s five forces is the strongest? Conclude your analysis by stating the attractiveness of the industry. What are the key success factors of the industry? Hint: Chapter 2 Figure 2.1 (page 37), Table 2.1 page 38 and Figure 2.2 (pg 51). Unacceptable (0)
- 6. Unacceptable (12) Needs Improvement (18) Acceptable (24) Good (30) · No or almost no components of the question are addressed · No or almost no use of relevant course material · Responses unrelated to company in question · Many spelling and grammatical errors · Response is unintelligible. · Some of the question’s components are addressed · Some use of relevant course material · Response is at times concrete and usually related to the company in question · Response is not analytical or systematic · Response is unorganized and difficult to follow · All major components of the question addressed · All relevant course material is properly and appropriately applied · Response is concrete and related to the company in question · Response is analytical, systematic, and coherent · Response is well-organized 3. Disaggregate the firm’s and its competitor’s ROCE. Better
- 7. disaggregated ratios are defined as the competitive advantages. To what extent is the firm’s performance attributable to industry attractiveness and to what extent to competitive advantage? See ROCE-KSF-Balanced Scorecard handout Unacceptable (0) Unacceptable (12) Needs Improvement (18) Acceptable (24) Good (30) · No or almost no components of the question are addressed · No or almost no use of relevant course material · Responses unrelated to company in question · Many spelling and grammatical errors · Response is unintelligible. · Some of the question’s components are addressed · Some use of relevant course material · Response is at times concrete and usually related to the company in question · Response is not complete · Response is unorganized and difficult to follow · All major components of the question addressed · All relevant course material is properly and appropriately applied · Response is concrete and related to the company in question
- 8. · Response is complete and coherent · Response is well-organized 4. Draw the firm’s value chain. Identify the firm’s core competencies. Core competencies are the value chain activities that create the better ratios that you identified in question 3. Propose a hypothesis of the relationship between or among the firm’s core competencies and their competitive advantages. Hint: Chapter 3 Table 3.3 pg. 82 and Figure 3.3, 3.4, 3.5 on pg. 88 and 89 Unacceptable (0) Unacceptable (12) Needs Improvement (18) Acceptable (24) Good (30) · No or almost no components of the question are addressed · No or almost no use of relevant course material · Responses unrelated to company in question · Many spelling and grammatical errors · Response is unintelligible. · Some of the question’s components are addressed · Some use of relevant course material · Response is at times concrete and usually related to the company in question · Response is not coherent or consistent with previous answers · Response is unorganized and difficult to follow
- 9. · All major components of the question addressed · All relevant course material is properly and appropriately applied · Response is concrete and related to the company in question · Response is well-written and coherent (consistent with previous answers) · Response is well-organized 5. What is the firm’s business strategy? Can the firm’s core competencies sustainably create competitive advantages for the firm? Draw a table that shows the total alignment of the firm’s goal, strategy, resources and capabilities, and its environment. Hint: Chapter 3 Table 3.4 and 3.5 pg. 82 and 87; and Chapter 4 Figure 4.2 pg. 109 Unacceptable (0) Unacceptable (12) Needs Improvement (18) Acceptable (24) Good (30) · No or almost no components of the question are addressed · No or almost no use of relevant course material · Responses unrelated to company in question · Many spelling and grammatical errors · Response is unintelligible. · Some of the question’s components are addressed · Some use of relevant course material
- 10. · Response is at times concrete and usually related to the company in question · Response is not analytical or coherent · Response is unorganized and difficult to follow · All major components of the question addressed · All relevant course material is properly and appropriately applied · Response is concrete and related to the company in question · Response is analytical and coherent · Response is well-organized, complete, and systematic 6. What is the outlook for the industry and firm profitability during the next five years? Please use the concept of driving force, five forces, and key success factors. Will the firm’s resources and capabilities be able to match with the future key success factors? See ROCE-KSF-Balanced Scorecard handout. You might need to read Chapter 1 page 6 -14. Unacceptable (0) Unacceptable (6) Needs Improvement (9) Acceptable (12) Good (15) · No or almost no components of the question are addressed · No or almost no use of relevant course material · Responses unrelated to company in question · Many spelling and grammatical errors
- 11. · Response is unintelligible. · Some of the question’s components are addressed · Some use of relevant course material · Response is at times concrete and usually related to the company in question · Response is not coherent, interesting, or lack of critical thinking · Response is unorganized and difficult to follow · All major components of the question addressed · All relevant course material is properly and appropriately applied · Response is concrete and related to the company in question · Response is interesting and coherent · Response is well-organized and shows critical thinking 7. Looking ahead, what measures does the firm need to take to improve its performance and defend against competitive and other threats? Make your recommendation to the firm (SWOT in operational and strategic). Is the recommendation viable? Hint: you might need Chapter 4 Figure 4.3 pg. 113 and Figure 4.4 pg. 116 Unacceptable (0) Unacceptable (6) Needs Improvement (9) Acceptable (12) Good (15)
- 12. · No or almost no components of the question are addressed · No or almost no use of relevant course material · Responses unrelated to company in question · Many spelling and grammatical errors · Response is unintelligible. · Some of the question’s components are addressed · Some use of relevant course material · Response is at times concrete and usually related to the company in question · Response is not systematic or coherent · Response is unorganized and difficult to follow · All major components of the question addressed · All relevant course material is properly and appropriately applied · Response is concrete and related to the company in question · Response is systematic and coherent · Response is well-organized and creative 8. Now position yourself as the strategist for the firm’s competitor, how will be your strategy look like i.e. how can you neutralize or outcompete it (the recommendation mentioned in question 7)? Hint: Use Chapter 2 Figure 2.3 page 61 and Chapter 5 Figure 5.2 page 134
- 13. Unacceptable (0) Unacceptable (6) Needs Improvement (9) Acceptable (12) Good (15) · No or almost no components of the question are addressed · No or almost no use of relevant course material · Responses unrelated to company in question · Many spelling and grammatical errors · Response is unintelligible. · Some of the question’s components are addressed · Some use of relevant course material · Response is at times concrete and usually related to the company in question · Response is not analytical or lack of critical thinking · Response is unorganized and difficult to follow · All major components of the question addressed · All relevant course material is properly and appropriately applied · Response is concrete and related to the company in question · Response shows analytical and critical thinking qualities · Response is well-organized and creative
- 14. 9. According to DCF (discounted cash flows) paradigm, value drivers of a firm include sales growth, operating profit margin, cash tax rate, proportion of net working capital to sales, proportion of fixed assets to sales, and proportion of other long term assets to sales. These value drivers can be used to estimate a firm’s future free cash flows. Based on your analysis above propose a strategic plan for the firm to increase its future free cash flows. Read file FCF drivers.doc in your vista. Identify which value drivers that can be improved and why. Unacceptable (0) Unacceptable (6) Needs Improvement (9) Acceptable (12) Good (15) · No or almost no components of the question are addressed · No or almost no use of relevant course material · Responses unrelated to company in question · Many spelling and grammatical errors · Response is unintelligible. · Some of the question’s components are addressed · Some use of relevant course material · Response is at times concrete and usually related to the company in question · Response is not convincing · Response is unorganized and difficult to follow · All major components of the question addressed
- 15. · All relevant course material is properly and appropriately applied · Response is concrete and related to the company in question · Response is well-written and coherent · Response convincingly conclude and propose your thought and reasoning 10. Bonus question: calculate the potential value creation of your proposed strategic plan (in Q9). Assume that the firm’s competitive advantage period (t) is 4 years and the residual value is the firm’s book value. Competitive advantage period of 4 year suggests that there won’t be any economic profit created after year four. Thus, the residual value is the perpetuity value of the firm’s book value at year four and discounted at t = 4. This question is required for those who want his assignment to be considered in the best two in the class. Unacceptable (0) Unacceptable (6) Needs Improvement (9) Acceptable (12) Good (15) · No or almost no components of the question are addressed · No or almost no use of relevant course material · Responses unrelated to company in question · Many spelling and grammatical errors · Response is unintelligible. · Some of the question’s components are addressed
- 16. · Some use of relevant course material · Response is at times concrete and usually related to the company in question · Response is not complete or analytical · Response is unorganized and difficult to follow · All major components of the question addressed · All relevant course material is properly and appropriately applied · Response is concrete and related to the company in question · Response is analytical and complete · Response is well-organized