Description
you will need to paraphrase from Costco, you should analyses ratios that I already download them, and follow these points.
- Company Situation
Provide an introduction that characterizes the essence of the company situation and sets the stage for the analysis that follows. Calculate the past sales growth rate for the company if there is historical data. If the case has data on historical industry sales, calculate the sales growth rate and determine whether the industry is in the introduction, growth, maturity or decline phase of their life cycle. If there is information such as the revenue of the top 3 competitors for the last few years, combine their sales and calculate the change in sales growth to infer where the industry is in their life cycle. Then discuss this analysis in any of the sections where it is appropriate. Based on the conclusions from the preceding section and the case analysis, determine the stage of the industry life cycle (introduction, growth, maturity or decline). Identify the key company-specific issues with which the company is dealing.
Financial Analysis. Be sure to distinctly address each of the four areas of financial analysis—profitability, liquidity, leverage, and activity—identify each in the topical sentence for that paragraph. See pages 231-232 for the formulas and definitions of the ratios. The financial analysis must be thorough and accurate. Look at trends and compare the company’s performance to industry targets, if available. Evaluate the primary financial indicators, provide supporting data and interpret them to show how they affect the company regarding its present and future strategic performance.
Put the calculations of the ratios in a table in the APPENDIX.
Close this analysis by writing a paragraph that draws a conclusion about the company’s overall financial situation, prospects and the impact of its financial condition on its potential strategic plans. The fundamental question you are trying to answer is, “What is the overall financial status of the company now, and what does its current financial status mean for its future strategic success or ability to grow sales?”
Common Errors
Incorrect computation of the ratio.
Incomplete computations of the ratios (trends, etc.).
Focusing on the definition rather than the strategic impact that the ratio implies.
SWOT Analysis. Discuss each of the four legs of the SWOT fully—strengths, weaknesses, opportunities, and threats in this section. Be clear that events are not the same as attributes. SWOT is about attributes, not events. An attribute describes the characteristics of the company. For example, you might say, “The company isn’t profitable.” True, but what is its weakness attribute? What characteristics of the company drives its lack of profitability? A better way to express it is, “The company has not managed costs in its value chain. This is supported by the sustained increase in the cost of goods sold accompanied by flat sales reflecting a weakness that must be overcome to improve profitability.”
Summarize the SWOT analysis in a one-page table and place it in the APPENDIX. Discuss the table in the body of the paper.
SWOT is the “integrator” of the analysis. SWOT draws from the findings resulting from the Macroenvironment, Industry Analysis, and Financial Analysis. No new information is provided. Use the terminology in the previous sections. For example, “An opportunity identified in the discussion of the competitive analysis . . .” Another example, “The dumping of foreign products into this industry, identified earlier as a driving force, is a significant threat to incumbents.”
Common Errors
Not linking the findings to the previous analysis through the use of common terminology.
Omitting important findings discussed previously.
Focusing on historical events rather than inherent strengths and weaknesses.
Not recognizing obvious strengths and weaknesses in the business functions: financial analysis, marketing (product, price, place and promotion), human resource management, operations, etc.
- Recommendations
Strategic Issue. This is the same question that is presented at the end of Section 2.
Strategy Recommendations. Identify GENERIC and functional strategy recommendations. These will tie closely to the SWOT analysis. The recommendations should play into the company’s strengths and opportunities. They should minimize the company’s weaknesses and overcome their threats. Discuss each strategic initiative in detail including the actions required in the functional areas to support the strategic recommendations: marketing, operations, human resource management, finance, etc.
Objectives. Specify the performance objectives that should be monitored and result from the strategic recommendations and earlier analysis. What key performance indicators should be reported and what are the appropriate targets? For example, what are the sales and profitability goals? What goals should be established for nonfinancial indicators?
Strategic Justification. Justify why your recommendations are the best option and why other options are not. This is a comparative analysis. Develop this fully, tying it back to the various factors in your strategic analysis. Evaluate the pros and cons of the recommended direction. Demonstrate that you understand the implications of your recommendations.
A justification analysis weights the strength of the pros and cons for a given alternative in comparison to the other alternatives. It presents a rationale for why the pros of the recommended alternatives are better than the pros of the other alternatives. It also addressed why the cons of the recommended alternatives are less significant the those of the rejected alternatives.
Common Errors
Not naming and discussing a generic and several supporting functional strategies
Developing recommendations that don’t tie clearly to the previous analysis.
Not describing distinguishing characteristics of the strategies.
Not aligning strategy recommendations with objectives.
Writing in generalities rather than company and situation-specific.
Not describing strategies for all the relevant functions, e.g., human resource management, finance, etc.