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Three pages (double or single spaced) Times New Roman 12 font (use around 7-10 references APA format)
Please use more simple words when writing this, something that is straightforward nothing too advanced but still applies the data and questions needed.
in performing your analysis, you should put your team in the position of a consulting group. You have been hired by the Board of Directors to conduct this strategic audit. You are to determine whether the organization’s strategy is effective and to provide specific advice and implementation ideas on how to improve the firm’s strategy.
There is no one right way to conduct a strategic audit. How you conduct the audit depends largely upon the
company, the industry, and the level of analysis. You should tailor your audit to your specific firm. The general
guideline is that you should conduct an internal and external analysis of the organization and external
environment in order to suggest the strategic choices the leaders of the organization should make. At a minimum
your audit should provide detailed answers to the following questions:
1. Provide an analysis of the external environment. Tools to consider using for the external analysis include the PESTEL analysis and Porter’s Five Forces model. Questions to answer may include: 1) How attractive is the primary industry this firm operates in based on the 5 forces? 2) Does the structure of this industry suggest the firm will be able to generate above-average returns in the future? 3) What variables in the PESTEL analysis should be carefully monitored and managed as they will likely affect the future success of this organization?
2. Provide a detailed financial analysis of the firm and at least two of its closest competitors. For this analysis, you should gather data from at least the past 5 years. Using the Compustat database from the library to acquire the data is strongly recommended. In your analysis, you should assess how a firm can improve its financial performance on measures such as ROE, ROA, profit margin, sales growth, etc. You should consider doing a Dupont Identity analysis along with other relevant financial analyses that you have learned in your accounting and finance classes.
The PDF attached will be from a book that we are reading called Mastering Strategic Management by Dave Ketchen and Jeremy Short
The library has some very useful resources such as Standard and Poor’s Industry Surveys, Moody’s, Compustat, Mintel, and various other materials. I strongly encourage you to utilize the resources of the library and do not assume that a Google search will get you everything you need.
I appreciate this so much, let me know if you have any questions or need anything from me!
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Porters five forces model:
The purpose of five forces analysis is to identify how much profit potential exists in an
industry. To do so, five forces analysis considers the interactions among the competitors in
an industry, potential new entrants to the industry, substitutes for the industry’s offerings,
suppliers to the industry, and the industry’s buyers. If none of these five forces works to
undermine profits in the industry, then the profit potential is very strong. If all the forces
work to undermine profits, then the profit potential is very weak. Most industries lie
somewhere in between these extremes. This could involve, for example, all five forces
providing firms with modest help or two forces encouraging profits while the other three
undermine profits. Once executives determine how much profit potential exists in an
industry, they can then decide what strategic moves to make to be successful. If the situation
looks bleak, for example, one possible move is to exit the industry.
The Elements of the General Environment: PESTEL Analysis
An organization’s environment includes factors that it can readily affect as well as factors
that largely lie beyond its influence. The latter set of factors are said to exist within the
general environment. Because the general environment often has a substantial influence on
an organization’s level of success, executives must track trends and events as they evolve
and try to anticipate the implications of these trends and events. They must also attempt to
figure out whether a particular trend is temporary or if it will endure. Some trends, such as
new hairstyles and fashion, are almost always temporary. Other trends, such as increasing
obesity in the United States, have evolved over decades. Trends that may or may not be here
to stay are more difficult to analyze. Tattoos, for example, are quite popular and have been
for at least a decade. Back in the 1990s, however, few people outside the military wore
tattoos. It is difficult to predict whether tattoos will remain popular in 2030.
Trends in healthier eating have led to success in juice bar concepts such as Nékter Juice Bar.
PESTEL analysis The examination of political, economic, social, technological,
environmental, and legal factors and their implications for an organization. is one important
tool that executives can rely on to organize factors within the general environment and to
identify how these factors influence industries and the companies within them. PESTEL is
an anagram, meaning it is a word created by using parts of other words. In particular,
PESTEL reflects the names of the six segments of the general environment: (1) political, (2)
economic, (3) social, (4) technological, (5) environmental, and (6) legal. Wise executives
carefully examine each of these six segments to identify major opportunities and threats and
then adjust their companies’ strategies accordingly (Figure 3.1).
Consider a scenario where the interest rates on home loans go up. This economic trend
would increase the monthly payment that a family would have to make on a mortgage
because they would be paying more interest on the loan. For example, a mortgage payment
that would have been $1,000 a month might rise to $1,100 due to the increase in interest
rates. One result is that the home construction business would be threatened because fewer
people would be able to afford to buy a new home. The CEO of a home construction
business might respond to this threat by lowering prices on the homes that her company
builds to make up for the higher interest. By being willing to accept less profit, the company
might reduce a potential customer’s mortgage payment and thereby overcome the economic
trend of rising interest rates.
From there, the construction company must figure out how much to reduce its prices. Data
analytics, otherwise known as “Big Data,” can be extremely helpful here. By analyzing
massive amounts of data on customers’ behavior, characteristics, and preferences,
companies can better serve their customers. In the case of the construction company, Big
Data might reveal that a reduction of the mortgage payment to $1,050 per month would
lead many potential homebuyers to sign on the dotted line but that a further reduction to
$1,000 per month would not entice any additional customers. In this scenario, the
construction company would want to reduce its prices enough that customers achieve a
$1,050 monthly payment, but no more. Reducing prices such that the payment is $1,000
per month would simply be giving money away, because no additional business is gained at
this level.
Companies such as Amazon and eBay use Big Data to figure out what suggested items to
display when a customer logs on to their websites. If other customers who closely parallel
your past buying behavior, your age, and your income level are increasingly purchasing a
particular smartphone, for example, these e-commerce firms are likely to feature the phone
and others like it when you visit their sites.
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