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Elements of Business Critical Evaluation Assignment   Each firm will examine their performance throughout the semester and reflect on the impact your strategy and operational decisions have had on the firm’s performance

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Elements of Business

Critical Evaluation Assignment

 

Each firm will examine their performance throughout the semester and reflect on the impact your strategy and operational decisions have had on the firm’s performance.  Two of these evaluations will take the form of brief memos regarding the company’s most recent results and management’s plans for the coming year.

 

• Comment on the current position of your firm with regard to the following areas:
  • Company performance: ROE, stock price, EPS, Credit Rating & image rating
  • Competition
  • Market positioning
  • Market Share
  • Any other areas you deem important

 

• Discuss your strategy to date and how that strategy has impacted the areas noted above – either successfully or unsuccessfully. Make sure you incorporate the impact of your competition via a competitor analysis.

 

• Discuss your decisions for the up-coming year and the basis for these decisions.

 

This is a brief memo and must be written clearly & concisely while addressing all the items discussed herein.  Every sentence must contain valuable information.

 

Critical Evaluations are to be structured as a memo to the Board of Directors. Language should be formal.  State facts regarding your performance – not opinions.  It’s not up to you to assess whether your performance is good or bad; rather how are you performing vs investor expectations & your peers and why? A template has been uploaded to Canvas for your use.

 

Organization of the Critical Evaluations:

 

Executive Summary: This section appears on the cover page of the memo and should include a financial results summary table (much like the table reviewed in class). The table shows how your company performed in the most recent year in terms of the five operating parameters (e.g. ROE, EPS, stock price, Credit Rating & Image Rating) vs. investor expectations, industry average, and industry best & worst. The Exec Sum text explains and analyzes your performance – i.e. what you did and why that enabled you to produce the results you achieved. It summarizes the analysis that follows in the memo – but in a highly condensed version (only the key points). The Exec Summary must NOT go beyond the cover page of the memo, so economize your writing and adjust your formatting accordingly.

 

While the Exec Summary comes first in the memo, it is written last by pulling key points from the ensuing sections. Think of the Exec Summary as being written for a Board Member that doesn’t want to read the entire memo, but needs to know the how’s, what’s and why’s of your company’s performance.

 

Background/Analysis/Strategy: Call this section(s) of the memo whatever you like. Here, you are to explain your strategy e.g. how you are positioned in the market place; who are your key competitors and why? Why are they out-selling you or why are you out-selling them?; what you are doing well and/or what you need to do better?  In addition you must discuss other operating decisions e.g. manufacturing, pay strategy, financing decisions (stock repurchase, dividends, debt); R&D investment, image rating, productivity enhancement strategies, etc.

 

This is the key part of the report and should include detailed analysis of your positioning, marketing strategy, cost structure, manufacturing initiatives, financing initiatives, etc. in the context of your performance results that you showed in the Exec Summary.

 

Consider using sub-headings to help organize the different categories of your initiatives – e.g. Production/Mfg Initiatives; Financing Initiatives, Corporate Social Responsibility Initiatives, etc.

 

This section should typically be about 3-4 pages and include embedded tables and figures showing data that support your analysis and conclusions.

 

Future Initiatives: This next section is a bullet point listing of your plans for the next year in terms of the Glo-Bus input parameters.  If you did a thorough job of writing the previous section, the Future Initiatives should be obvious to the reader.

 

Most importantly, the Future Initiatives are to only include action items you can control.  For example, do not write “Increase EPS” or “Increase ROE” or “Increase Market Share”. There are no inputs in Glo-Bus that increase EPS, ROE or Market Share – you have to change operating decisions such as product design, pricing, marketing, R&D investment, stock buy-backs, etc. which will impact EPS, ROE, Market Share, etc.

 

Be specific in your initiatives – if one of your initiatives is to “reduce manufacturing costs” then state how you will do this.  For example “…invest in R&D to lower component costs while maintaining current P/Q level and improve worker productivity; “invest in training to improve PAT productivity to lower labor costs”, etc.  Lowering P/Q to cut manufacturing costs is NOT a viable initiative. The P/Q level is a product positioning decision - not a manufacturing decision.  For example if Chevy needed to cut costs on its $75,000 Corvette, it wouldn’t start using the same engine, transmission and suspension components as its $12,000 Chevy Spark. These cars have different P/Q’s and are in different market segments.  Cutting manufacturing costs while maintaining the same P/Q or performance level is a manufacturing/engineering/R&D decision; reducing P/Q or performance level is a strategic marketing product positioning decision. You must understand this distinction. 

 

The Future Initiatives section should typically be about a page or less of bullet points that explain what you plan to do and why.

 

Appendix: Competitor Analysis: At a minimum, you need to apply here what you did in the first two Glo-Bus Assignment Questions. The Appendix is a self-contained section that contains a detailed Competitor Analysis. Assume the Board Member will NOT read the competitor analysis so the most important points must be repeated in the body of the memo. The Competitor Analysis shows the following:

 

1. Who are your key competitors and why? Key competitors are those firms that are preventing you from growing your business, not necessarily those firms having higher EPS, stock price, ROE, etc. For example, Tesla would not be a key competitor of Hyundai, but is a competitor of Porsche since they both sell products of similar price and features. As a guide, companies having a P/Q within +/- 0.5 stars are key competitors. Also, a company with a much higher P/Q selling cameras at the same price is also a key competitor. The Price vs P/Q figure should be used here.

 

2. Compare key operating decisions in terms of product (P/Q, warranty), price, promotion (advertising, promotions, tech support), place (regional analysis if applicable), cost structure (requires some creativity to do this), etc. See the Presentation of Results ppt for an example of this. The marketing analysis table should be used here.

 

The purpose of the Competitor Analysis is get a better understanding of your competitors which will enable you to write a thorough “Background/Analysis/Strategy” section. Therefore, this section should be done first and then used as a source document for the Background/ Analysis/ Strategy section.  

 

If you do a thorough Competitor Analysis, it should be very clear as to why you are doing well (or not well); which companies you are beating or are beating you - and why; and most importantly, what decisions you need to make in order to maintain your competitive advantage or close the gap on companies that are beating you.

 

Formatting and General Instructions

• When reporting results, you must only state facts – not opinions. So for example, if you ranked #1 in all categories, do not characterize your results as “Excellent”. Instead, simply state that you were the top performing company in all five performance criterion. It’s not up to you to characterize your results as “good” or “bad” – that’s up to the Board of Directors. 
• The Critical Evaluation is a memo to a company’s Board of Directors. So for purposes of this assignment, do NOT make any references to Glo-Bus or your company’s overall score. Assume this to be a real world assignment – there is no simulation and no overall score in the real world. Evaluate your results in terms of the five key parameters (stock price, ROE, EPS, Credit Rating & Image Rating) and your criteria for performance (exceeding investor expectations and industry average).  This is how companies are evaluated in the real world. 
• The memo must be in block paragraph form – single spaced paragraphs which are separated by two spaces; single or double sided; stapled in the upper left hand corner.
• Tables and Figures must be labeled accordingly – e.g. “Table 1”; “Table 2”; “Figure 1”; “Figure 2”; etc. You must direct the reader in the text to the tables and figures contained in the memo and the table or figure must be in close proximity to the reference (do not reference a figure that is on a following page. You can, however, reference the reader BACK to a table or figure that you referenced and showed earlier in the report. I will not look at a table or figure unless it has been labeled properly AND referenced in the text.
• Economize your writing: you have to convey a lot of information in only a few pages, so make every sentence count. When proof-reading your reports, if removing words or a sentence does not detract from your message then take it out.
• Grammar, spelling, word usage, typos are not acceptable. Proofread your papers before submitting. You should be proofreading the papers several times to check for organization, wording, grammar, spelling and typos.
• Color vs. black & white: I don’t care if you use color vs. B&W tables and figures just as long as they are readable when printed. If you use shading to highlight data within a table then make sure the shading does not obliterate the number(s) you are seeking to highlight.
• I cannot stress enough that you need to proofread you papers several times before submitting. Make sure the formatting from the computer screen is reflected in the hard copy. Don’t blindly take the printed copy and hand it in without looking it over to make sure it looks as you intended.
• Overall length: As a guide, the memo EXCLUDING the Competitor Analysis in the Appendix should be about 4 pages. There is no penalty if it’s longer or shorter as long as it’s well organized, well-written, and contains thorough analysis.
• The Competitor Analysis is not limited to any specific length and must be well organized and contain useful information.
• All papers are to be stapled in the upper left corner. Points will be deducted for papers that are not stapled, that contain plastic covers, and in general do the follow the formatting requirements contained herein. Late assignments will not be accepted.

 

Grading

Your evaluations will be graded using the following critera:

 

• Exec Summary and presentation of results (5 points): are you presenting your results in a clear and concise manner?
• Analysis (10 points) : How well do you understand ALL aspects of your business and that of your competitors and how well you communicate that to the reader
• Format/Readability (5 points): Is the memo well organized and does it flow for the reader?  Are your tables and figures additive to your written explanations? Did you use clear and concise wording? Typos, grammatical errors, etc.?
• Competitor Analysis (5 points): Is the analysis thorough and complete? Adequate use of tables and figures? Identify your key competitors and your rationale as to why you consider these firms to be your key competitors?

 

 

 

 

 

I have read and understand these requirements for the Critical Evaluation:

 

 

 

 

Company Name:_______________________

 

 

Co-Manager:_______________________

 

 

Co-Manager:_______________________

 

 

Co-Manager:________________________

 

 

Co-Manager:________________________

 

 

Co-Manager:________________________