Company Project

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

- Tomasso - Babson 301

X4390 X4410

Due Date: Friday, March 2rd, 9:00 am Submit to: To Economic and Finance Faculty Submission Guidelines: See below Site Visit division 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 No grade, but REQUIRED. To be coordinated through the Ugrad Will be on a Friday (March 2nd, March 9th, March 30th, and April

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.

3. 4.

Brief Executive Summary 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) Brief Synthesis or Conclusion Exhibits

Turn in one hard-copy to your finance professor and one hard-copy to your economics professor.

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