Analysis of the external environment


Assignment:

Guidelines for individual case reports

1. Executive Summary (no word limit)

This is a one page summary. It should be self-contained, i.e., it should provide a busy reader with the mostimportant information from the report, even if he/she never reads the body of the report. This is NOT apreface that merely introduces the report. Write this section after completing the rest of your report, eventhough it is placed at the beginning of the report.

2. Introduction (300 words)

Strategies and Performance: Identify or infer the organization's current mission, major business objectives,and strategies (especially corporate-level and competitive strategies). Evaluate the effectiveness orappropriateness of these strategies, including the organization's portfolio of businesses (for diversifiedFirms) and competitive strategy - don't just describe them. Evaluate its performance (refer to its ROIC, growth rate, profits margins, etc.). Briefly summarize how well the organization has been performing againsttheir objectives and in general.

3. Analysis of the External Environment (300 words)

Scan and analyze important factors, trends, and probable future conditions to identify key opportunitiesand threats for the organization.

• General Environment: What is the most important general and significant trend in the environment ofthe Firm? use the PESTEL framework). Pick only ONE. How will it affect the Firm?

• Business Environment: Industry structure and competitive environment (use Porter's 5-force model,the extended version if appropriate, and the industry opportunities framework). Include industrygrowth trends and key success factors.

• Is the industry attractive?
• What is the most important threat in the Firm's industry? Pick only ONE.
• What is the most important opportunity in the Firm's industry? Pick only ONE.

4. Internal Analysis (300 words)

Scan and analyze each of the major functional areas, particularly to identify the organization's strengthsand weaknesses. What is the most important resource and/or capability that the Firm has? Pick only ONE.Is it valuable/relevant, rare/scarce, inimitable/durable/transferable/non-substitutable/costly to imitate?

Add value beyond mere description to ask and evaluate, how well is this working? Look for distinctivecompetencies, sources of competitive advantage, and major ways the organization creates value through itsoperations. The following Five areas are one convenient breakdown. Listed under each are some topics that could be important, but don't consider the following as a mandatory checklist.

• Marketing: product mix, customer segments, pricing strategy, distribution, promotion (noteconnections between this and the business environment analysis in the External Analysis section).

• Financial: draw conclusions about their financial condition from analysis of profitability, liquidity,leverage, activity, and investment community relations. You need to use comparative financial information (industry averages or Figures for key competitors) to make sense of the organization's financial data and trends. It is vital that you present conclusions, including an assessment of theiroverall Financial condition - not just numbers and graphs.

• Production/Operations: locations and capacities of facilities relative to demand, output allocation(what is done where, when, in what cycles), labor/capital intensity, efficiency, aging & obsolescence,inventory levels, quality objectives and results.

• Technology: technology strategy, technological position, how this position was obtained and ismaintained, extent and thrust of R&D, industry trends and competitor strategies (note connections withthe External Analysis, which deals with technology developments outside the company).

• Organizational: everything else worthy of note, including top management and key staff resources,board of directors, employee/labor relations, organization structure, reward systems, culture.

Your report must include an analysis of the most important resource/capability. One good way to handlethis is to put it in an appendix, then refer to it in the sections on Internal Analysis, External Analysis, andIntegration of Major Strategic Issues.

5. Major Strategic Issue (300 words)

In this section, integrate the major Finding's from your analysis in the previous sections. State clearly themost important (ONE) critical issue that you have identified, and summarize the reasons that led you tochoose it as the major critical issue. What is the issue? And why is this issue the most critical? A criticalissue may include problems, threats, weaknesses, and opportunities, but will more likely involve theinteraction of several of these (e.g., a Firm's current strong market position being challenged by aninnovative competitor). Consider both short- and long-range issues.

6. Available Alternative Strategies (300 words)

Present TWO strategic alternatives available to the organization that can be considered reasonable in thecontext of your analysis/diagnosis. This does not mean listing every textbook strategy, but does requireidentifying a range of alternatives for this particular business situation, showing understanding of thecurrent strategies. Consider corporate level strategy, competitive strategy, and (possibly) other functionalstrategies. In addition to identifying an alternative, provide a balanced critique of the alternative, as itrelates to the situation, for example: issues and problems addressed by the alternative, problems created,and how the alternative relates to the strengths, weaknesses, opportunities, and threats of this businesssituation. Be sure to consider implementation implications.

7. Recommendations (300 words)

Present a specific strategy recommendation. Choose your recommendation from the two alternatives youhave presented and evaluated in the previous section. Make recommendations for corporate level strategy,competitive strategy, and (if not already covered in the previous two subsections) other strategies toaddress the critical issues you identified (with a subsection for each of these three). Be sure to include therationale for your choices and that you have considered the availability of resources to carry out yourproposed strategies. Your decisions and rationale can reaffirms, replace, or change the Firm's currentobjectives and strategy. Ensure that your recommendations have addressed all the critical issues youidentified.

A. Corporate Strategy Recommendations
B. Competitive Strategy Recommendations

7. Appendices

Include copies of key research material you used, including industry Financial data (with sources cited);details on Financial analysis; and anything else that would clutter the main text (e.g., you can put yourPorter 5-force details here). Be sure that you reference any appendices that you used in the main body of
your report.

IMPORTANT NOTES

Things you should keep in mind as you prepare your report:

• Assume the reader (your top management client) is at least as familiar as you are with the company(therefore, don't waste time describing the case details without adding value).

• Avoid the common trap of exhausting yourself with too much analysis, and consequently shortchangingthe conclusions and recommendations. Instead, keep in mind the whole report and balanceyour effort among the sections.

• Use the quantitative data in the case to full advantage (if there are Financial data, you must includeanalysis and conclusions from it). Support your analysis with numbers whenever possible. (Forexample, if you believe that the Firm has a competitive advantage, include in your analysis at least someof the following: What are the Firm's net margins over the last several years? What are Returns onEquity, Returns on Assets, Return on Invested Capital? Compare with the competitors' ratios.)

• Distinguish among facts, opinions, and assumptions.

• Check your work for completeness (are all issues identified and addressed?), justification (do you backup what you say with evidence?), logical Flow (is it clear how you moved from analysis to critical issuesto alternatives to recommendations?).

• Organization is important. Think of the reader as you write and edit; make your report easy for thereader to follow and understand. Use headings and paragraphs. Check spelling and grammar.Carefully edit and proofread your report.

• Use lists, tables, and Figures as appropriate to communicate.

• Write this as a business report and don't turn in anything youwould not be willing to deliver to thepresident of your most important client company.

• The length of the report should be about 1800 words (excluding Appendices

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