Specification of the Company Report

For each relevant industry for the company identify

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For each relevant industry for the company, identify the elements within the five forces that affect the profitability of that industry. Explain the effect the element has on profitability and why. Then explain the net impact of each force on profitability given the effect of the various elements in that force. Finally explain the net impact of all forces on the profitability of the industry and why some forces have more impact than others. Generic Strategy Our determination of generic strategies involves simple determination of the economic model using information from the financial statements. The revenue (in principle quantity times price per unit), cost (in principle quantity times cost per unit) and investment can be drawn from these statements. Then pick two significant competitors and compare their returns on invested capital (this is the return to all interest-bearing debt in the company plus equity). If the company has a higher average return over the past three years we will say that it has a sustainable competitive advantage. Then compare the percentage gross margins. If the company has a higher average gross margin over the past three years we will say that it is low cost. If the company has a higher average percentage in GSA and marketing over the past three years, we will say that it is differentiated. This gives us a basis for determining the generic strategy of the company. After this determination, describe whether you think this is an accurate depiction of the generic strategy and why you have this opinion. Value Curve The value curve provides a visual illustration of what customers consider important when considering the product &/or service. The horizontal dimension is simply a set of characteristics that customers think are important. The vertical access deals with the level of attractiveness of a company’s offer with respect to the characteristics. Note that the higher on the vertical scale, the more attractive the offer is to the customer. Hence a low price will score high while high convenience (a characteristic customers like) will also score high. Compare the company’s offer against either the industry’s standard offer or that of two main competitors. Describe what the characteristics are, why they matter and why the companies and/or industry score where they do. The characteristics of the 2
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Draft 2012-03-11 offer according to the value curve are differentiators when the company scores differently from competitors and/or the industry. Dynamics (internal and external) The dynamic situation facing the company involves changes that are happening external to the company or in the company which have an impact on its performance given its current strategy. To describe the dynamics, separate your description into these three classes: 1) changes in the environment as described by PESTLE (and have been referred to as “driving forces”). Describing this class involves identifying major trends in PESTEL factors which will affect all companies in the industry. These tend to be trends, the effect of which will be felt more deeply in future.
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