Management (Business Policy and Strategy)
STRATEGY AUDIT QUESTIONS AND INSTRUCTIONS
The strategy audit provides you with the opportunity to use the conceptual, analytic, and technical skills that you acquired in this class in an analysis of a publicly listed MID-CAP company of your choice (generally, a mid-cap company is a company with a market capitalization between $2 billion and $10 billion). In answering the questions below, you are asked to adopt the role of a consultant who has been asked to provide an in-depth strategy audit.
Format requirements:
The paper is limited to 30 double-spaced pages in total, one-inch margin all around, and typed in Times New Roman 12. Make sure that you add a reference page to your paper. Supplemental exhibits and figures are to be included as appendices.
Please make sure that you answer all questions. In your analysis, please start each answer by stating the question number (e.g., 2.1.; 2.2., 2.3., etc.). Please do not retype the questions!
Grading:
Though grading will focus primarily on the depth and strength of analysis and strategic recommendations, writing form, grammar, punctuation, and professional written presentation will also be evaluated.
Relevant data and information about your chosen firm can be freely obtained using web services such as Edgar (www.sec.gov/edgar.shtml). Annual reports may be available from the firms own website (look for about us or investor relations tabs). Company and industry profiles can be retrieved from sources such as www.finance.yahoo.com or www.morningstar.com. You might also find the Bloomberg services helpful. Also, you can access company profiles and company data via the Online Databases provided by SIMS Library. You will find Business Source Complete, Lexis-Nexis Academic Universe, and Mergent Online to be helpful sources in your research. Those resources can be accessed via http://www.southeastern.edu/library/databases/business/index.html Research and analyze trends in your firms general environment and industry on: https://www.google.com/trends/
1. Does your firm have a good strategy?
1.1. Is your firm OE?
1.2. Does your firms strategy pass the five tests?
2. Can you say what your firms strategy is?
2.1. What is your firms mission?
2.2. What are your firms values?
2.3. What is your firms vision?
2.4. What is your firms strategy statement? What is it? Does it communicate all the necessary elements (objective, scope, advantage)? If it does not have a strategy statement, develop one that summarizes your firms strategy in 35 words or less.
3. Use the Strategy Diamond framework to describe your firms strategy. Does your firm have a coherent strategy, with all five elements reinforcing each other?
4. Describe and analyze your firms Business Model.
Please complete Osterwalders Business Model Canvas for your firm and add the model to this section of the paper. You might find the url below helpful to create the business model:
https://canvanizer.com/new/business-model-canvas
4.1. Comment on the degree of internal fit of your firms business model. Are the nine components consistent and supportive of each other?
4.2. Assess the business model in terms of its feasibility, desirability, viability, and adaptability.
5. Is your firm an ambidextrous organization? How well does it balance exploitation and exploration activities in the face of current challenges?
6. Analyze your firms corporate governance structure.
6.1. Top Management and Board: Do the executives have potential to contribute to the firms strategy in terms of their knowledge, skills, background, and social connections. What stakeholder interests do they represent? Describe the boards leadership structure. Are you satisfied with the executive compensation arrangements? Are you satisfied with the firms structural corporate governance arrangements in the context of the firms strategy and external circumstances?
6.2. Who are the largest stockholders? What do you think are their strategic goals with respect to their equity holdings in the firm? Do you see any potential for conflicts between different types of stockholders, conflicts between stockholders and other stakeholders of the firm?
6.3. In reviewing the press releases and news articles about your firm over the past year, can you find examples of any actions taken that, though legal, may be ethically questionable?
7. What are the opportunities and threats that your firm faces in its macro-environment (i.e. the P.E.S.T.E.L. dimensions of the firms general environment)? Use https://trends.google.com/ or OpenAI to identify at least one relevant trend in your firms macro-environment.
8. Analyze your firms industry environment
8.1. Use Porters five forces framework and analyze your firms competitive environment. What are they key drivers of profitability in your firms industry? What environmental factors have recently influenced the strength of each of these forces?
8.2. Identify strategic groups within your firms industry. Draw a strategic group map. Interpret your strategic group map. What strategically relevant insights can you draw from the strategic group map? Explain the potential existence of intra-industry performance differences.
8.3. Given your industry and intra-industry analysis, what do you think the future holds for the industry? What do you predict will be future trends that impact industry performance? Are significant opportunities in the market untapped? What might the current competitors in the industry do to improve their competitive position?
9. Analyze your firms internal resources and capabilities
Use the value chain framework, the VRIN/O framework, and the core competence framework. What internal resources does your firm possess that may give it a competitive advantage over others in its industry? Where is your firm strong? Where is your firm weak? What are your firms core competences? Assess the internal consistency among the different elements of your firms strategy (i.e. do the different elements of your firms value chain show internal consistency)? Is your firms culture a source for sustainable competitive advantage? Do you see the potential for the firms core competence to turn into a core rigidity?
10. Based upon your previous analyses, please create a table for your firm that outlines the key success factors (with respect to resources and capabilities) in your firms industry and that shows your assessment of the relative strengths of your firms resources and capabilities (please follow the example provided on slide 27 chapter: internal analysis). Additionally, please follow the example provided on slide 28 chapter: internal analysis to display your assessment in an easy to read and interpretable format. Do not forget to use this work as a basis to formulate suggestions and recommendations in the conclusion section of this paper.
11. Business-level strategy analysis.
11.1. Describe your firms business level strategy. Is your firms business level strategy consistent with and supportive of your firms internal resources and capabilities (question 4)?
11.2. How does the firms business level strategy position the firm in its competitive environment (vis-a-vis the five competitive forces)?
12. Corporate-level strategy analysis.
12.1. Describe your firms corporate level strategy (the dimensions: product, vertical, and international scope). Is your firms corporate strategy appropriate, given your analysis in question 4 and question 5?
12.2. If your firm competes in different industries, choose the dominant industry or the one that you find most strategically relevant for the firm and use only that one to answer the following question: Are any of the vertical value chain operations outsourced (contracted out)? If so, discuss some of the pros and cons of having parts of the value chain outsourced and/or outside your firms home country. If your firm does not outsource/offshore any of its value chain activities, would you recommend that your firm should engage in such a strategy?
13. Calculate and explain financial ratios to answer the following questions:
(a) How profitable is your firm? (b) How efficient are the operations of the firm? (c) How effectively is the firm financed in terms of debt and equity? (d) How capable is the firm of meeting its short-term/long-term obligations? Please select ratios that appropriately reflect your firms strategic strengths and weaknesses.
As you have learned in FIN 653, financial ratios in isolation are not particularly interesting, therefore, please show how the ratios compare (1.) over time, (2.) with industry benchmarks, (3.) with key competitors (in your firms strategic group), and (4.) discuss how your firms ratios have been affected by/are reflective of your firms recent strategic changes and initiatives.
14. How well is your firm positioned for future success?
What are the major issues that need to be addressed in your firms business model and at the different levels of strategy (i.e. business-, corporate-, and/or international)? What would you recommend? Please ensure that your recommendations offer a reasonable prospect of success. Be cautious when you propose high-risk recommendations. State how your recommendations will solve the problems that you identified and how your recommendations will impact the internal fit of your firms business model. Be sure that your firm is financially able to carry out what you are recommending. Please make sure that your recommendations are workable in terms of the organizations competence to implement them and prevailing industry and environmental constraints and opportunities. Avoid unhelpful statements such as the firm should do more planning or the firm should be more aggressive in marketing its products. For instance, if you determine that the firm should improve its competitive industry position, then you need to set forth exactly how you think this should be done.
