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STRATEGIC MANAGEMENT-STRATEGIC ANALYSIS PAPER-SPRING 2020

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Select one pair of companies from the following list:

  • Dollar General (DG) and Wal-Mart (WMT)
  • UPS (UPS) and FedEx (FDX)
  • Target (TGT) and Kohl’s (KSS)
  • Coke (KO) and Pepsi (PEP)
  • Starbucks (SBUX) and Dunkin Brands (DNKN)

Review the most recent annual reports for each of the two companies to gain an understanding of each company’s products and services, the markets they serve, and their financial performance. The annual reports are found on the websites of each company.

Completea financial analysis of each company to determine which of the two companies is better performing by reviewing the most recent full-year financial reports (use company annual report data only). Compare key financial performance metrics of the two companies (see sample below).

A good performing company is one whose financial returns are better than the industry average over a long period. A company’s overall financial performance is generally measured by Return On Invested Capital (ROIC). This is calculated by dividing net income after taxes by total capital invested (total equity plus long-term debt). The net income after taxes is found on the company Profit and Loss Statement, and the total equity and long-term debt are both found on the company Balance Sheet.

A company that achieves superior financial performance has consistent annual revenue and profit growth, higher profit margins, and a strong balance sheet,

Excellent financial performanceis the result of a good business strategy that is well executed and often includes investments in technology, visionary leadership; talented and dedicated employees; a customer focus; having and maintaining a competitive advantage; and a strong operational focus on strategic goals.

Based on your analysis, identify which of the two companies has better overall financial performance and explain why. What does the company do well to achieve superior financial performance?

What is the strategy of the better performing company (cost leadership, differentiation, focus, or a combination of several)? How does their strategy compare with their competitor?

EXAMPLE OF FINANCIAL ANALYSIS:

Financial Comparisons

Financial Metric

Company 1

Company 2

Current Year Total Revenues

$12.3bn

$6.7bn

Current Year Total Net Income

$0.54bn

$0.23bn

Net Profit Margin

4.39%

3.45%

Return on Assets

8.57%

6.22%

Return on Invested Capital

18.6%

21.7%

Earnings Growth (3yr. avg.)

-1.7%

+15.4%

Revenue Growth (3 yr. avg.)

4.2%

2.7%

Each paper should have a Cover Page, an Abstract, an Introduction, an Analysis section, a Summary and Conclusions of the paper’s key points and a Reference page. The paper is to follow the APA format guidelines. See all requirements for written assignments under Course Guidelines posted on Blackboard.

The paper is to include a minimum of FOUR credible outside references.