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Company Project

Project Coordinators:
Professor Joel Ristuccia (OB – A1, A2, A3, A4) - Tomasso X4390
Professor Frederick Van Bennekom (TOM- A1,A2,A3,A4) - Babson 301 X4410

Project Description:

The objective of the project is to conduct a comprehensive analysis of a business unit in a


real world context, using tools and skills developed in IME2, as well as FME and IME1.

The project consists of a two stages:


• An external analysis of the firm: In this stage you will be asked by the Economics and
Finance stream to complete an assignment related to the company you have selected for
your project. For this stage you will be using secondary sources and will not be in direct
contact with the company. The work done by your team at this stage will give you
sufficient background for your questions during your company visit.
• A presentation of your research and analysis. Even though the presentation grade will
be accounted in the Marketing, Technology and Operations Management and
Organizational Behavior streams, all the streams (including Economics and Finance)
will be responsible for evaluating this segment of the project. Hence, the presentation
would be based on your initial analysis supplemented by your tour of the company’s
facilities.

Companies and sites have been selected, screened, and have agreed to participate in the
project. Students are assigned to teams. The teams will be introduced to resources available
at the Library. By the end of Week 3 each team has to have selected a company to analyze
and visit. The first deliverable is due to the Economics and Finance streams on Friday,
March 2rd. Your team will have to sign up for the firm visit and the visits will occur in
March and/or April (All visits are on Fridays). The final presentation is scheduled for
Friday, April 27th . The Project Coordinators are the primary faculty contacts, however all
discipline faculty are available for consultation and assistance on relevant aspects of the
project.

"Across-the-Curriculum" Competencies

The nature of the project leads to development and improvement of your ability in a
number of the competency areas. Specifically, your leadership and teamwork skills will
be tested. In addition, as this semester is all about analysis, numeracy and critical
thinking will also be important. The oral presentation, as well as your group’s site visits,
will address the rhetoric competency.

Course Evaluation:

Project Assignment 15% of Economics stream grade and 15% of Finance stream grade
Due Date: Friday, March 2rd, 9:00 am
Submit to: To Economic and Finance Faculty
Submission Guidelines: See below

Site Visit No grade, but REQUIRED. To be coordinated through the Ugrad


division
Will be on a Friday (March 2nd, March 9th, March 30th, and April
13th).

Project Presentation 10% of Marketing stream grade and 20% of TOM/OB stream
grade
Due Date: 8:00 – 1:00, April 27th, 2007
Submit to: Presentation made to all IME2 faculty
Presentation Guidelines: See below

Project Assignment Guidelines:

The project assignments for the Economics and Finance streams involve research and
analysis requiring extensive library and/or web-based research. On the project introduction
day (first TOM/OB) the reference librarians will come and talk to you about the using the
library resources and to assist you with focusing your research efforts. The library staff will
also assist you with specific research resources according to the industry to which you have
been assigned. There is a valuable library resource web-guide link posted in the Project
folder on Blackboard. This will also help you locate sources for your research. After this
class, if your team needs additional research support, the librarians will be happy to assist
you with private consultations, provided you come as a team for your consultations. This
not only eliminates duplication of information and work on the part of your team, but it
enhances your learning. The ultimate payoff is an extensive knowledge of your company
and the industry upon which to draw during interviews when you visit the company and for
the question and answer session of the project presentation.

Microeconomics Instructions

You need to address the following issues when analyzing your firm:

Who are the firm’s major competitors? What is the company’s market share? What
factors/conditions would make it very difficult for new firms to enter this industry? Who
are their major suppliers? Who are their customers? Are the customers more dependent
on the firm or vice-versa? What substitutes exist for their products? Are there any
government relations, technology, sociological or other forces that are likely to cause a
major change in the business environment? Will this lead to new opportunities for the
company or add to threats they may experience? How “intense” is competition in the
industry in your estimation? Cite specific criteria and pieces of evidence that you are
using in making this assessment. What specific entry barriers, if any, exist in the
industry? Assess the degree of difficulty that new firms will have entering the industry
attracted by the profits of established firms. Is there a risk, in your view, of profit erosion
among traditional firms because of new, innovative ways of producing the products? Is
rapid technological change possible in the industry? How much market power does the
firm have in the supply chain in relation to the other players in the industry? Where is the
focus of power in the supply chain?

Finance Instructions

Your goal is to understand the sources of profitability of your company. If you remember
the duPont analysis (and you should), a firm generates returns to equity investors through
a combination of three performance measures:

1. Profit Margin (net income / net sales revenue),


2. Asset Turnover (net sales revenue / total assets), and
3. Equity Multiplier (total assets / total owners’ equity).

Within each of these three performance measures lies additional information. For
example, high profit margins may be due to proprietary products which generate high
gross margins, or from superior cost control. High asset turnovers may be due to efficient
use of fixed assets or excellent management of accounts receivables and inventory. A
high return on equity may result from capital structure choices made by the firm. Your
team needs to extract this type of information for your firm.

Your task, therefore, is to perform a complete financial analysis of your company. With
the knowledge gained from this analysis, you will be well prepared to observe the
activities that contribute to or detract from profitability, asset efficiency, and ultimately
return on equity.

Obtain the financial statements of your company for the three most recent reporting
years. Analyze your firm’s financial performance. Compare and contrast your firm’s
financial performance to competitors’ financial performances. Once you have completed
your analyses, develop and support 5 important conclusions about your company’s
financial performance, as well important trends.

Submission Guidelines:

10 page limit on text + 5 page limit on exhibits, 12 pt. font, double spaced, 1-inch
margins
The document should at least contain the following:

1. Brief Executive Summary


2. Text of the paper: each stream discussion addressed under a separate heading,
i.e., Finance and Microeconomics (you can choose the order in which you
want to present the stream material)
3. Brief Synthesis or Conclusion
4. Exhibits
Turn in one hard-copy to your finance professor and one hard-copy to your economics
professor.