© 2000 John Petroff
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© 2000 John Petroff |
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Assignments, Cases & Exercises
Research assignments for Industry Analysis:
R-14.1 Take a recent issue of a professional financial periodical (such as Baron's, Forbes or Fortune). Catalogue articles according to their approach to industries discussed in them, as either top-down or bottom-up. Report on the thrust of the observations found in each type.
R-14A1.1 Take six firms, each with a few (i.e. no more than four) lines of business. For each, study if the RMA industry ratios for each line of business differ significantly or not. For those with radically different industries, investigate if combining ratios is a solution, and if so, how that should be done (i.e. according to sales or assets). If combining ratios of several industries is not feasible, determine what should be the comparative industry. Make recommendations as to what set of ratios should be used for each of the six firms.
R-14A2.1 Read and report the reasons why NAICS replaced SIC in the United States. Discuss practical problems analysts will encounter. Explain how comparison over time will be preformed. Conclusion with your assessment of the change.
R-14A3.1 Obtain prospectuses of six different mutual funds. Study if the stated goal of each mutual fund correlates with the composition of the portfolio of industries.
R-14A3.2 Construct comprehensive lists of industries falling in each designation according to investor's motivation.
R-14B.1 Retrieve data on industry growth in countries of your choice (e.g. your country if different than the United States) from one of the sources of international data listed in Chapter 1. Compare these growth rates to those presented in Table T-14.1 for the United States. Comment on possible reasons for the growth sectors in those countries.
R-14B.2 Read in an advanced textbook on marketing or in articles the categorization of consumers in relation to innovations. Report updated behavior and statistics of the composition of each group.
R-14B1.1 Study the outlays of firms in emerging technologies (e.g. e-commerce, genetic engineering, satellite telecommunication in the 1990's). Report on companies that encountered such difficulties at the early stage that their product introduction was almost doomed to fail.
R-14B2.1 Select a group of start-up companies that all have recently introduced new products that are comparable if not competitive. Tabulate how companies obtain funds, what losses are incurred, how new customers are attracted, how fast are sales growing for each company. Catalogue similarities. Point out abnormal performance suggesting which companies will fail or succeed.
R-14B2.2 Take a large firm engaged in bringing new products to market (such as 3M, Merck or GE). Outline the product selection criteria reported in company publications and articles about the company. Discuss the rate of failures. Compare it to that of start-ups.
R-14B3.1 Outline the necessary conditions for an industry (of your choice) to enter its rapid expansion phase. Give statistics that show that conditions changed prior to the expansion occurred.
R-14B3.2 Choose an industry that illustrates the concentration process that accompanies the expansion phase of an industry.
R-14B3.3 Compare the marketing strategy, the financial strengths and the vulnerability of a technology leader and a price leader in the expansion phase. Use actual examples that illustrate your arguments. Indicate cases where either has eventually failed.
R-14B4.1 Analyze the characteristics of actual firms that succeeded in dominating their industry during the maturation phase of the industry. Point out the reasons competitors of these dominant firms, failed or were absorbed.
R-14B5.1 Choose six firms with standardized products. Compile their characteristics of sales growth, financial results, management and marketing strategies, remaining opportunities and risks. Explain why investors can still be attracted to such stocks.
R-14B6.1 Study a firm whose main product is approaching obsolescence (e.g. Smith Corona). Determine what the company is doing to enter an emerging new industry. Predict its future based on the company strategy.
R-14B6.2 Take a large sample (e.g. 100 firms) of recently failed companies. Trace the major cause of their closing: price competition, inability to adapt product to consumer preferences, financial problems, obsolescence of product. Report proportions of each cause. Draw conclusions.
R-14C1.1 Retrieve data on concentration ratios and firm size by industrial sectors of the country of your choice. Study changes over time to determine what sectors are undergoing significant transformation.
R-14C1.2 Choose a highly concentrated industry. Obtain information on the strategies of the dominant companies. Discuss whether an aggressive competition is present or a tacit collusion for the status quo.
R-14C1.3 Establish a correlation between industry concentration and age of product using empirical data for the countries of your choice.
R-14C2.1 Take three prototype firms representative of domination based on technology, price and size. Point out the characteristics of each.
R-14C3.1 Choose a large sample of small firms. Determine what makes the healthy ones succeed. Draw conclusion from the comparison.
R-14C3.2 Obtain information on what assistance is provided by the US Small Business Administration. Discuss how appropriate this assistance is for the majority of small businesses. Make recommendations for improvements.
R-14C3.3 Gather information on small business government assistance in a few countries of your choice. Compare and point out areas of accomplishments that other countries ought to follow.
R-14C4.1 Review some the recent major alliances (such as those between international airlines, telecommunication companies and pharmaceutical firms). Bring evidence that shows that the position of the firm in its own domestic industry is strengthened.
R-14C5.1 Study the motivation and strategy for acquisition of additional firms by a major conglomerate (such as Unilever, P&G, ITT). Discuss the impact it has on investors, if any.
R-14C5.2 Take the case of a major recent divestiture. Look at the reasons and impact of investors. Argue whether the divestiture was beneficial to the company's owners and other interested parties.
R-14D1.1 Use data on performance of start-up companies to show that growth industries should not be cyclical in principle, but they often actually are.
R-14D2.1 Choose a durable goods industry. Establish with data on orders, capacity utilization and profits, that the industry is highly cyclical. Obtain annual reports of leading firms in the industry and determine what these firms do to protect themselves from cyclical variations.
R-14D3.1 Tabulate all the industries that are or should be cyclical. Distinguish those that are because of investment demand for those because of disposable income. Point out which industries are especially affected.
R-14D4.1 Review all the industries that are or should be counter-cyclical. Point out the different reasons why one can expect each industry to be such. Discuss changes in pattern from prior years. Compare with patterns in other countries.
R-14D5.1 Catalogue the service industries that are cyclical and those that are not. Offer possible reasons for each. Comment on changes from prior years.
R-14E.1 Select one of the socio-economic trends listed in research assignment R-15A2.2. Link the historical performance of sales in an industry directly affected by the trend by running an OLS regression. Conduct a similar regression using the sales revenues of the dominant firm in the industry.
R-14F.1 Take an emerging technology (such as supersonic travel, digital television or molecular organic computers). List the technological alternatives, their advantages and shortcomings, consumer preferences and dislikes, reasons for past success and failures. Offer a forecast of the form of technology that has the best potential for success.
R-14F3.1 Study recent technological product expansions (e.g. cellular phones, digital television, e-commerce) and trace its international transmission.
R-14F4.1 List the international organizations that are most active in international standardization of technology in their sector. Review the achievements of some the most prominent ones. Infer the trends in similar sectors and the probable international spread of technology. Suggest business opportunities based on the likely changes.
Cases for industry analysis:
After studying the telephone and internet markets in the United States, analyze Warwick Valley Telephone Company expansion strategy in Case - WWVY. Should Warwick Valley Telephone Company expand? Does it have the internal strength and market opportunities to do so? How aggressive is the competition? Will the company be absorbed by one of its competitors?
Study the data and voice cross-border telecommunications industry
and Case - VYTL. Identify
major players. Discuss the strengths and weaknesses of each. Identify
the phase of product life cycle. Make predictions about the timing
of next phases and the evolution of the market. Determine the
wisdom of Viatel strategy in this context.
Study the product offered by ProBusiness in Case
-PRBZ. Determine the phase of the product life cycle of ProBusiness.
Identify the characteristics of a desirable marketing strategy
for a firm in ProBusiness position and verify if they are observed
in this case. What problems do you foresee for ProBusiness in
the coming years?
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