4.2. PART I: External Environmental Analysis Page limit: 10‐15 pages total, excluding figures or tables, which should be included in the Appendix section. A. General Environmental (PESTEL) Analysis (2‐4 pages): This section needs to include a complete analysis of the general external environment. Please refer to Table 3.1 and figure 3.1 on page 39 of your textbook (4th Ed.). You should explicitly analyze how any trend you identify in each of the segments in the external environment may affect the industry. You need to explicitly state the implications. For example, if the industry you are analyzing is personal computers and you see an expanding economy in some emerging economies, but a recession and declining disposable incomes in other economies, your analysis should include how these trends are likely to influence the personal computer industry. Do not discuss specific companies in this section. At the end of this section, you need to identify the industry top two driving forces (DFs). A driving force is an external environment change (e.g. change in a governmental policy or emergence of a new breakthrough technology) which may significantly change the rule of the game in the industry competition. Please refer to Table 3.3 and pages 55‐57 of your textbook (4th Ed.). B. Industry Dominant Economic Features (2‐3 pages): This section needs to include a complete analysis of Market Size, Market Growth Rate, etc. Please refer to Table 3.2 and pages 41‐42 of your textbook (4th Ed.). C. Five Forces Analysis & Industry Attractiveness (3‐5 pages): You need to employ the 5 forces framework to examine the competitive environment of the company. This section also includes an analysis of the industry profitability based on the collective strength of the five forces. Your analysis should clearly address profitability of the industry for an “average” firm. You are required to provide a table (in the appendix) summarizing your findings using the format shown below. Industry profitability is defined as its long‐term profit potential of the industry. Please refer to Figure 3.2 and pages 42‐54 of your textbook (4th Ed.).
D. Industry Competitors Analysis and Analysis of their Anticipated Strategic Moves (2‐3 pages): This section delves deeply into the specific industry of the assigned firm (as opposed to the general environmental analysis). In this section, the focus is on the competitors, and their Anticipated Strategic Moves. Please refer to pages 61‐62 of your textbook (4th Ed.). In addition, this section explains all strategic groups in the industry (Please refer to textbook pages 59‐61). E. Industry Key Success Factors (1‐2 pages): This section provides an examination of 3‐5 key success factors (KSFs) you identify in the industry. A KFS may be defined as what any firm in the industry must have to survive and grow. Please refer to Table 3.4 and pages 62‐64 of your textbook (4th Ed.). 4.3. PART II: Internal Analysis Page limit: 10‐15 pages total, excluding figures or tables which should be included at the Appendix section. A. Organizational Strategy Analysis (4‐6 pages): This section examines the company’s current strategy and its components. For analyzing a company’s current strategy at the business level, Figure 5.1 on page 94 of your textbook is useful. Please use this table as a framework for analyzing the current business strategy for the company. For example, if you think the company is pursuing a cost‐leadership strategy, your analysis should include a rationale based on market segmentation and key functional areas (basis of competitive advantage). This section also includes analyses of mission statement, core values, organizational culture and leadership. A. Financial Analysis (2‐3 pages): Please provide an interpretation of the financial ratios. This section explains completely what the numbers mean in terms of the financial health of the company. Please refer to pages 240‐241 of your textbook (4th Ed.). The financial review includes the past 3‐5 years. Industry average ratios and/or 2‐3 major competitors’’ ratios need to be included in the comparative analysis. Please include summary tables in the appendix. B. Value Chain Analysis (4‐6 pages): For the value chain analysis, you may refer to Figure 4.1 on page 78 of the textbook. A complete value chain analysis includes examination of the company and at least ONE of the competitors or industry average statistics so that you can assess the company’s cost competitiveness in relation to its rivals. Be sure to identify major primary and support activities undertaken to deliver value to the customer, and value chain activities that firm does more or less well (or more or less efficiently/cost effectively) than competitors. Your analysis should help you understand the internal cost structures of the firm (vs. competitors), and the resources and capabilities of the firm. Please also refer to Table 4.1 on pages 71 of your textbook (4th Ed.). 4.4. PART III: Strategic Fit Analysis Page limit: 5‐10 pages total, excluding figures or tables which should be included at the Appendix section. C. Strategic Opportunities and Threats (1‐2 pages): Based on Part I analysis, these section lists 2‐4 external opportunities and 2‐4 external threats. Please refer to Table 4.2 on pages 76 of your textbook (4th Ed.). Identification of an opportunity or threat depends on the level of company capabilities to respond to them. With a relevant and strong internal capability, the company may see an external challenge as an opportunity. However, when a company lacks the necessary capabilities to properly respond to a strategic challenge then that challenge becomes a threat. The potential benefits of pursuing each opportunity should be identified. The consequences of failing to address each threat should be identified. D. Core competencies (1‐2 pages): Based on Part II analysis, this section lists 2‐4 internal strengths and 2‐4 internal weaknesses. Please refer to Table 4.2 on pages 76 of your textbook (4th Ed.). Using the 4 tests framework (Chapter 4, Pages 71‐72 in your textbook), you need to justify which of the internal strengths may be considered as the most important core competency of the company. E. Strategic Fit (SWOT) Analysis (3‐6 pages): This section explains the link between Strategic Challenges (O&T) and the organizational competencies (S&W). You need to provide a “SWOT summary table” (in the appendix) that recaps the strengths, weaknesses, opportunities, and threats.
After strengths and weaknesses are matched with opportunities and threats, strategic directions emerge at their intersections. You need to identify 4‐5 such strategic directions. The following matrix describes the 4 types of matching with related questions which may help you identify the strategic directions. Needless to say, not all internal and external factors may match well with each other. Therefore, you need to only focus on the meaningful, relevant, and significant fits. You need to provide the “SWOT Matrix Table” (in the appendix) that recaps 4‐5 strategic directions.
4.5. PART IV: Recommendations Page limit: 5‐10 pages total, not including figures or tables which should be included at the Appendix section. A. Selection and Justification of the Top Two Recommendations (1‐2 pages): In part III, you have identified a set of 4‐5 strategic directions. In this section, you need to select the top 2 out of those and include a complete discussion to justify your selection. Each of your top 2 choices needs to answer the questions of what, why, how, and when to really develop into sound recommendations. What: You need to develop specifics rather than vague, general statements like “they should innovate.” Your recommendations should include detailed descriptions. Be specific about what you are recommending and how you propose it be accomplished. For example, “we recommend the company expand its northeast coast operations through a balanced combination of retail outlets and direct sales approaches”. Why: You need to explain why it is important that the company implement your recommendations. For example, “Our recommendation will produce needed sales growth, utilize excess capacity, build on our reputation for quality products and is projected to produce $30 million in revenues in the first year”. How: You need to explain how the company may implement the recommendations and how to acquire the required capital to pay for it. For example, “Since sixty percent of our current customers purchase our products in retail outlets we propose forming an exclusive relationship with PDQ Corporation to provide the needed additional retail channels. PDQ Corporation is the Northeast’s leading retailer of products and has 156 locations in the most densely populated regions of the northeast. Our proposal will be funded by issuing $50 million in debt and financing the rest of the needed working capital through short‐term credit. Please refer to appendix 3C which illustrates. . . ”. When: Describe the time horizon for the plan. How long will the plan take to implement? B. Implementation of the Top Recommendation Action Plans, Deliverables, and Milestones (2‐4 pages): The first step in strategic implementation is to develop action plans. A 3‐year or 5‐year projection is very helpful. Your action plans should be a straightforward description of the specific actions that are required to accomplish your strategies. Action plans are effective when they incorporate the following elements. Specific tactics and actions. Action plans should specify what exactly needs to be done today, tomorrow, next week, next month, or next quarter. Clear period for completion. You action plan must specify when actions start and when objectives will be reached. Deliverables. The next step is to define major deliverables—the expected outputs over the life of the improvement project. Deliverables typically include time and quantity. Milestones. A milestone is a significant event in a project that occurs at a point in time. Resources, Technical requirements, and Budgeting (2‐4 pages): This section the following elements: Identification of personnel involved: You must specify which organizational department or manager is responsible for each action in the plan. Will current staff handle the strategies? Are you planning for staffing increases or layoffs?
Identification of materials and costs: You must specify at what cost, if at all, can the raw materials be procured? Can the materials be found in time to support the effort? Technical requirements: You must specify technical requirements to ensure proper performance of the new product or service. Examples from IS projects include speed and capacity of database systems and connectivity with alternative systems. Budgeting: Allocating scarce resources involves funding capital projects, shifting resources, downsizing some areas, upsizing others, killing activities no longer justified, and funding new activities with a critical strategy role. Specifically you should suggest a project budget to explain resource allocation, the cost control metrics you think are valid, and milestone reports. You must specify the Key Performance Indicators for each phase of the plan. Explain why you chose each of them. You should also discuss cash flow considerations and resource constraints.