Strategic Audit and Recommendations: Analyzing a Company for Future Success

  For the Strategic Audit you will be analyzing a company of your choosing and using what you learn to make strategic recommendations going forward. The link between the past (in particular: how the company has performed over time), the present (in particular: the current strategy and trajectory), and the future (in particular: what type of strategy would best enable the company to achieve or maintain competitive advantage in light of the internal Selecting a company You may choose any company you’d like (excluding the 9 exceptions listed below). Part of the audit is a performance analysis, so keep in mind if you choose a privately-held company, it may be difficult to find the recommended three to five metrics for assessing performance. Because of past instances of attempted plagiarism you may not use the following companies: Tech Retail Auto F&B Footwear Travel Microsoft Target Tesla Red Bull Nike Delta Airlines Apple Walmart Ford Coca-Cola Samsung Amazon BMW Nvidia Starbucks Uber McDonalds •The more you can frame your analyses relative to main competitors in the firm’s industry or industry average, the better. I. Audit a. Strategy Analysis i. What is the company’s current strategy & tactics? 1. Business-level a. To what extent has the firm established a cost leadership advantage? i. How (see sources of advantage in Ch. 4)? b. To what extent has the firm established a differentiation advantage? i. How (see sources of advantage in Ch. 5)? c. For each of these questions, try to demonstrate that you understand what each generic strategy means. Provide a concrete example for your assertion of the level of cost leadership advantage and the level of differentiation advantage. 2. Corporate-level a. How diversified is the firm? b. In which markets does the firm compete and how they compete? i. General or focused scope ii. Extent of product diversification iii. Extent of geographic diversification c. Are there any important strategic alliances or recent acquisitions? b. Performance Analysis i. How has your company done relative to its competitors? 1. Use at least three metrics. Try to select those that are most relevant 2. For each metric, benchmark performance against competitors or industry average, and against the company’s past performance. a. Use two or more measures of accounting performance (See Table 1.1) i. Provide at least one of the following: ROA, gross profit margin, EDITDA, revenue growth ii. Do not use gross revenue/sales or share price b. If possible, try to find one non-financial performance metric that’s particularly relevant for the industry in which your company operates (e.g. occupancy rate for hotel chains, new customer activations for wireless network carriers, new product releases/patents for technology companies, etc.). If there is not a non-financial metric that is important or available, try to find a financial one that is particularly important for your company’s industry (e.g. same-store sales growth for restaurant chains) 3. In which aspects of performance is the company excelling and lagging? How well is the company performing overall and to what extent it has a competitive advantage? 4. How has the current strategy affected performance (remember that some long term strategies entail short-term sacrifices early in their implementation)? c. External Analysis i. What is the current industry structure/level of competition (perfect competitionàmonopoly) and what are the consequences (See Table 2.7) ii. At what stage is the industry in the industry life cycle (emerging, mature, declining)? 1. Is there potential to re-define the industry through innovation? iii. Analyze the industry and your firm’s position with Porter’s 5 Forces iv. What are the opportunities and threats related to the external environment? v. How does the external environment influence the company’s strategic options? d. Internal Analysis i. Identify at least three key resources/resource bundles/capabilities for your company 1. In what part of the supply chain are resources/capabilities deployed? ii. Analyze whether each key resource/capability is Valuable, Rare, and Costly to Imitate (See Table 3.3) 1. Use the VRIO analysis for resources/bundles of resources (not for the firm as a whole) iii. Are there resources/capabilities that the company needs to acquire/develop? iv. What strengths and weakness exist due to the internal environment? v. How does the internal environment influence the company’s strategic options? II. Conclusion & Recommendations a. Strategic Options Identifications and Evaluation i. What works what doesn’t 1. How has the current strategy affected performance (remember that some long term strategies entail short-term sacrifices early in their implementation)? 2. Potential fixes? ii. Describe multiple paths (as a collection of strategic & tactical choices) the company could pursue 1. When you evaluate important tactical decisions establish where they lie within the broader strategy 2. Look at each choice as either having two alternatives or a continuum along which the firm can aim at a certain point 3. Evaluate each choice individually a. What the advantages, disadvantages, and risks exist? 4. Evaluate the choices collectively a. Is there path dependency (e.g. if you choose a certain direction for one choice, will it dictate the direction for another choice)? b. Could any pair or group combinations create conflict within the overall strategy c. Do any combinations create synergies? 5. What should the company do going forward?