The subject company of our case project (for both individual and team projects) is Comfort Systems, USA, Inc. Comfort Systems USA, Inc. (NYSE: FIX) provides heating, ventilation and air conditioning (HVAC) installation, maintenance, repair and replacement services.
Detailed Instructions for Individual Sections
1. Executive Summary (ES)
A. 1-2 pages in total
2.1 Company Background
A. This is general information of the company: history, evolution, general description of its businesses, ownership, and so on.
B. Possible research sources include: SEC archived information, Yahoo! Finance, and many other analysis reports.
2.2 Purpose of this Study
Less than one page would be fine in your complete draft.
3. External Analysis
A. You dont need to have a lot of content between section 3 title and section 3.1 title. Just 1-2 paragraphs here to introduce to readers what you will do/what the basic arguments are in the external analysis section.
B. Scope of your external analysis: Primarily at domestic level (US and possibly Canada), but still there may be some factors at global level in global segment.
C. Unit of your external analysis should be the industry. In other words, you should analyze the environment that the whole industry is facing. In other words, always say the industrys XXX instead of the Companys XXX, please.
D. Besides the industry reports and analysis, you can find, please read the Company and major competitors 10K annual reports because a lot of industry information is included in these reports.)
3.1 General Environmental Analysis
A. Again, one or more bridging paragraph(s) needed here (i.e., before section title 3.1.1).
B. Read the knowledge base articles in the project folder. The documents will give you some clues on what factors in each segment could have impact on our industry and/or relevant industries. Also refer to the sample report for some hints.
C. The key conclusion of 3.1 should be about how the focal industries are going to change in response to the predicted changes of the factors you proposed. The structure of your analysis for each segment should be:
a. A few sentences about what factors, in each segment, that may have significant impact on our industry and related industries.
b. For each segment (i.e., 3.1.1, 3.1.2, ), please analyze in the following sequence:
i. Identify the factors that could have significant impact on our focal industry (directly or indirectly). Use a few sentences briefly describe them;
ii. For each factor use 1-2 paragraphs discussing general relationship between the factor and our focal industry (and related industries) based on historical data/information,
iii. Investigate the trend of the factor (e.g., increasing/decreasing, more/less important, etc.) in near future; and
iv. Propose the expected resulting change of our focal industry.
c. Please start your analysis on those factors using the first factor in this segment is., the second factor to make your analysis logical and organized.
D. The unit of the whole Section 3.1 should be industry!!! Do NOT talk about firm level analysis such as demographic factors of the Company is
E. Length suggestion for whole section 3.1: 4-10 pages (APA writing style)
3.1.1 Demographic Segment
You are expected to analyze the impact of demographic factors on our industry and related industries. You need to some historical (longitudinal) data to show the correlation and also estimate the future trend.
Topics you may discuss include changes in population and demographic characters, and so on. Please read knowledge base articles for more details.
3.1.2 Economic Segment
Topics you may discuss include the impact of economic development (and fluctuation) on the growth of our industry (directly and indirectly); Please read knowledge base articles for more details.
3.1.3 Political/Legal Segment
This is about the direct and indirect impact of political and legal environment on our industry. Possible topics include political climate, regulations and laws, and their evolution over time and resulting impact on the industries in question. Please read knowledge base articles for more details.
3.1.4 Socio-Cultural Segment
Socio-cultural environment refers to the societal and cultural values of a population and their changes related to our industry. For example, the publics attitude toward renewable energy, environment protection and sustainability, and so on may have impact on the industry prospect. Please read knowledge base articles for more details.
3.1.5 Technological Segment
This is about the technological development in general and its impact on our industry and related industries. Please read knowledge base articles for more details.
3.1.6 Global Segment
This is about the status quo of globalization of our industry and the future trends of our industry because of the increasing globalization. You can start with the following aspects: globalization of the market (i.e., international trade); globalization of the production and outsourcing; and also localization and community engagement as anti-globalization advocate. Please read knowledge base articles for more hints.
3.1.7 Summary of General Environmental Analysis
A. You should try to integrate the different segment together besides a good summarization.
B. Offer some implications of your analysis.
3.2 Industry Analysis
A. This part offers a big picture of the whole industry. The unit of your analysis should be still industry. Please dont only discuss the Companys market share and growth as that is the content for internal analysis part.
B. Just a few bridging paragraphs or a few pages would be enough here before you go to section 3.2.1.
C. Length suggestion for section 3.2.1 and 3.2.2: 2-6 pages (APA writing style)
D. Length suggestion for section 3.2.3: 3-6 pages (APA writing style)
E. You dont need to have a lot of content between section title 3.2 and section title 3.2.1. Put the major content in each sub-section, instead.
F. You need to careful in defining the industry and find industry data as well as selecting major competitors of the company. Keep in mind that you should base on the following criteria: 1) large overlap of business operations with the case company, and 2) significant market presence.
3.2.1 Description of the Industry
Please start your description with the formal definitions in the SIC or NAICS scheme. History and evolution of the industry should be also included.
3.2.2 Industry Dominant Economic Features
A. Read the related chapter content in our textbook first. Keep in mind that industry economic features can include more than the following three aspects I specified. You can add more sub-sections here to improve the quality of your analysis.
B. Longer period of data (e.g., around 10+ years) is preferred.
188.8.131.52 Market Size
184.108.40.206 Market Growth Rate
220.127.116.11 Industry Trends
3.2.3 Five Forces Analysis
A. Read the related chapter content in our textbook about five-force analysis. Follow the textbook guide.
B. The output of this section should be a table indicating the power of each force strong, moderate, low, or other wording for intensity.
C. You will need to collect and cite data/information/report to show your logic and reasons. For example, you need to figure out who are our suppliers, buyers, substituting products, etc. And then analyze their characteristics following our textbook content.
18.104.22.168 Threat of New Entrants
Keep in mind that investors/existing firms can enter this industry through greenfield development or acquisition.
22.214.171.124 Power of Suppliers
126.96.36.199 Power of Buyers
188.8.131.52 Power of Substitutes
184.108.40.206 Intensity of Rivalry
3.2.4 Summary of Industry Analysis
A. You should try to integrate the different sections together besides a good summarization.
B. Offer some implications of your analysis.
3.3 Industry Driving Forces
3.3.1 Brief Summary of 3.1 and 3.2
3.3.2 Industry Driving Forces
A. First summarize the whole sections of external analysis with emphasis on integration of different sub-sections in 3.3.1. Then analyze the industry driving forces in 3.3.2.
B. Read the content about industry driving forces in our textbook. The checklist provided in the book is very useful.
C. Read the file Knowledge Base for Industry Driving Forces in project folder (or in zip file)
D. It is abnormal to have many industry driving forces (i.e., more than five).
E. Length suggestion: about 2-5 pages.
3.4 Competition Analysis
A. All the companies in the same industry, as long as they exhibit current or potential competition threat to our case company, should be listed in this section, especially for your analysis in 3.4.1. From various reports and websites, you will find several lists of competing companies and reference companies, but you need to verify those companies to make sure that they are doing similar businesses. Collect all the names and list them in your analysis. If the list is too long, you can list those companies with significant market share (or firm assets). Keep in mind that some private companies, even though they may be large, have not included in most lists.
B. In searching for competitors, you may find IBISWorld very useful but please also look at the 10K annual reports.
C. Next, conduct detailed analysis on selected companies who are major players in the industry AND those who are important to the Company. Here is how to select those companies. One of the key selection criteria is the overlap of current product offerings and/or targeted customers/markets with the Company. Because those companies sharing similar group of customers or same markets will have direct competition and should be more important when you do competition analysis. You may find some useful information in the Companys most recent 10-K filing. Keep in mind that you need to specify in your writing why those firms were selected for detailed analysis.
D. Also please do strategic map analysis of those important 3-5 rivals in 3.4.2. Read our chapter content for some description for strategic map. The most challenging part is how to choose those strategy elements as dimensions of your map. The strategy map is comparable to positioning map in Marketing despite of the differences of dimensions used. A detailed literature search and analysis in Section 3.4.2 would help you to find good dimensions for your map.
E. Length suggestion for section 3.4 (including sub-section): about 3-8 pages (APA writing style)
F. Please dont have a lot of content between 3.4 title and 3.4.1 title. Put your major content in sub-sections.
3.4.1 Industry Competitors
Make a list first, and then choose important competitors to make detailed analysis (following my suggestions above). You need to record some financial/market data too when describing those competitors.
3.4.2 Rivals Anticipated Strategic Moves
A. Search for the status quo and current strategies of those major competitors of our case company and find some report and information about their possible future strategic moves. It is a somewhat time-consuming work, but its definitely rewarding as this will help you a lot in doing core competence analysis and SWOT analysis later.
B. Use strategic maps to indicate their positioning in term of their current strategies, and their potential moves. Read the related content in textbook Chapter 3 to get more information on how to do strategic map analysis. But dont spend too much time on making those fancy bubbles as content always goes first!
3.4.3 Summary of Competition Analysis
A. You should try to integrate the different components in this section together besides a good summarization.
B. Give some implications of your analysis.
3.4.4 Industry Key Success Factors
A. Read the textbook content and knowledge base articles for more guidance
B. Its rare for an industry to have many (e.g., more than 4) key success factors.
4. Internal Analysis
[Just one bridging paragraph may be needed between this title and the title of 4.1.]
4.1 Organizational Analysis
Hints (also for sub-sections):
A. You can get a lot of information on this section from the Companys official website (including reports on their website). However, be skeptical, as normally companies may only expose the positive side or describe their issues in a positive way. Always find alternative sources to verify the information you got from the Company.
B. Be balanced. Discuss their problems, challenges, and obstacles too. Some other Internet sources may include www.glassdoor.com, www.indeed.com and so on.
C. Many of the sections are related to other courses you have taken. Discuss and analyze using the framework and terminology you learned.
D. Length recommendation for Section 4.1 (including all sub-sections): about 8-12 pages (APA format)
4.1.1 Corporate Visions and Mission
Give meanings to the companys visions, corporate value, and missions. However, as we assume the visions and mission statements are given, you may evaluate how well the current results of the Companys operation is aligned with the vision/mission statement. Dont try to criticize or revise visions and mission statement of the Company.
4.1.2 Products and Services
You can find very useful information on their official website and other sources. Give details about the role of each product line in generating revenue and profit, or in the companys long-term growth. You can also discuss the function/role of the products in the broader value creation processes.
A. Look for help from your leadership course;
B. You may discuss the following issues in this section: How the top managers were promoted and selected (e.g., from inside or outside); who they are (e.g., basic background); leadership style; recent changes; etc.
C. You should adopt formal framework and terminology, such as leadership style, suggested by your leadership course to evaluate the leadership of the firm.
D. Find information on the companys official website, and search on the Internet for individuals in the top management team for more information. Please do not copy and paste from their official website.
4.1.4 Organizational Culture
A. Look for the courses you have taken related to organization culture. You should use some formal framework from those courses to discuss the firms culture.
B. Dont just copy from their official website, as it might be biased.
C. Search on Google for any possible comments/review for this companys culture (e.g., www.glassdoor.com)
D. Keep in mind that organizational culture is NOT the organizations vision and missions.
E. There may be following types of organization culture. See the knowledge base material for more guidance. Definitely you can find different typology in your textbook or from other sources and you can use their typology too.
1) General Culture Types:
a. Fragmented low sociability, low solidarity
b. Mercenary low sociability, high solidarity
c. Communal high sociability, low solidarity
d. Networked high sociability, high solidarity
2) Specific Culture Types:
a. Customer Service Culture focused on service quality
b. Safety Culture a culture where safe behaviors at work are expected and valued
c. Diversity Culture a culture that values diversity of all types
d. Creativity Culture a company focused on fostering innovation
F. After describing the current culture, you may also evaluate it from the following perspectives: is the culture productive or counterproductive? Is the culture a fit to industry key success factors you proposed in earlier section? Is the culture a fit to the vision and mission statement you discussed in the previous section?
4.1.5 Current Organizational Structure
A. You may find some information from their official website. You may also find some information here: http://www.theofficialboard.com, but you need to verify and revise the chart. You are encouraged to search for more information.
B. You need to make an organization chart for the Company based on your findings.
C. Identify the type of structure they currently have, e.g., divisional, area, or matrix. (Please refer to the framework you learned in previous courses about organizational structure for an official classification and description.) What are the pros and cons of the current organizational structure? How did the structure evolve along with the companys growth? Was any future restructuring proposed by the company?
4.1.6 Current Corporate and Business Strategies
A. Strategy can have two levels: one is at corporate level (corporate strategy that is addressed in details in Chapter 8) and another is at business level (business strategy that we focus on in Chapter 5).
B. You need to follow the framework in Chapter 5, 6, and 8 in our textbook to analyze the firms strategy.
C. Search for industry reports and firm analysis on the firm. Keep in mind that strategy is evolving over time.
D. As a company primarily in one industry, there is no significant corporate strategy that can be identified for the Company. Thus, please specify this and focus on its business strategy such as differentiation or low-cost strategy (Chapter 5).
E. After you identify the corporate and business strategy of the firm, you may need to give some details about how the company is doing to achieve the strategies.
4.1.7 Summary of Organizational Analysis
4.2 Analysis of Firm Resources and Capabilities
A. From Chapter 4 in our textbook you will find a good guide for this section. Follow the lists in the chapter and search for related data for our case company.
B. Make your own judgment on resources, capabilities, and competences using terms like strong, moderate, and weak by comparing our company with other firms in the same industry.
C. Your competition analysis in Project Part One should give you some thoughts for better understanding the strength of the firms resources and capabilities.
D. Keep comparison in your mind when you make judgment like strong, moderate, and weak. Please see outline template for more details.
E. Keep in mind that your analysis for Section 4.2 should be the basis of your S and W of your SWOT analysis.
F. Length recommendation for Section 4.2 (including all sub-sections): about 8-12 pages (APA format)
G. As you will have detailed analysis in sub-sections, only 1-2 bridging paragraphs are needed under the title 4.2.
4.2.1 Tangible Resources
4.2.2 Intangible Resources
The following table describes seven common types of capabilities. Follow that typology to analyze each of them following the same sequence and requirement as that in the previous section (4.2.2). Keep in mind for each of these capabilities you need to 1) describe/analyze the capability, 2) Briefly compare it with industry peers, and 3) give your judgment (strong, moderate, weak, etc).
4.2.4 Core Competencies and Sustainable Advantages
A. In this section you need to identify core competencies of the firm from the capability/resources you analyzed in other 4.2.1-4.2.3. But you need to make sure those competencies identified can create sustainable advantage for the Company using the VRIN framework based on Barney (1991) article. You can find some information about VRIN here over the Internet
B. Here are two articles relevant to this section: Barney (1991): Firm resources and sustained competitive advantage; Prahalad and Hamel (1990): The core competence of the corporation. (Please find them in UHV online library, the database Business Source Complete, or through Google Scholar website)
C. No more than four core competencies, because too many competencies would not be called core!
D. Read the sample reports for some guidance.
4.2.5 Value Chain Analysis
A. Please read the value chain analysis part of Chapter 4 before you start.
B. First you need to briefly describe and analyze the value chain for related industries following the content in Chapter 4.
C. Then, analyze the companys value chain following the guidance in the textbook. The sample papers may give you a good example too.
4.2.6 Summary of Firm Resources, Capabilities, and Value Chain
4.3 Financial Analysis
A. Before you start, review the related courses you have taken. Our sample projects is always an example to look at (despite of the different structure it may have).
B. You need to compare the Company with 2-5 competitors that you have selected in the competition analysis (Section 3.4) and with industry averages for those ratios and numbers throughout the whole Section 4.3.
C. When you do analysis and make tables, please use longer period of data, for example, 6-10 years annual data or longer, because a longer period of data will give us more accurate information about trends and shocks.
D. From here you can find companys financial information. Filings to SEC from the Companys web site; Website of key competitors and their filings to SEC or other authorities; Financials in spreadsheet format are available in our online databases (including Mergent Online and D&B Hoovers).
E. Make sure the financial data are comparable between companies. If a company you selected for comparison has very different businesses or in different industries, please find financial data for its divisions that are comparable to the Company. (Many companies do have major financial data divided by division in their filings.)
F. Dont copy and paste all the tables. Please just include the data that are relevant to your analysis. A normal mistake is putting many tables on paper with only a few sentences for analysis, which makes this section quite long, but less meaningful and less constructive.
G. For each of the following sub-sections, you need to give meanings to those numbers, and also offer your verdict, i.e., how the Company is doing after you compare it with major competitors, industry average, and its historical performance. If possible, please mark down possible solutions to the Companys financial problems because they are very useful in identifying strategic issues and formulating strategic recommendations.
H. As you will have detailed analysis in sub-sections, just a few bridging paragraphs are needed under this section title.
I. Length recommendation for Section 4.3 (including all sub-sections): about 5-10 pages excluding financial graphs and tables. (APA format)
4.3.1 Valuation Analysis
A. You should find more information from your textbook and other materials for what should be included in a valuation analysis.
B. Following the sample reports is a good idea, although they not perfect. You may include the indicators like value of assets, valuation in the market, and stock price changes, and so on.
C. Comparisons needed to interpret the data and ratios.
4.3.2 Growth Analysis
A. Again, review your courses you have taken about growth analysis;
B. Read the sample reports for the indicators you might include;
C. Make sure that you compared those indicators of the Company with its past data, industry averages, and those of major competitors.
D. Make sure you give your verdict about the Companys growth based on the data comparison and trends.
4.3.3 Profitability Analysis
A. Besides the conventional financial analysis, you may consider Dupont analysis model. See the knowledge base article for more guidance. Definitely you can find more by search on Google.com.
B. Comparisons needed to interpret the data and results.
4.3.4 Financial Strength Analysis
Use those financial strength ratios, and compared with industry major competitors, top performers, industry average, and past data. Our sample reports offer a good example, although it is not perfect. Again, comparisons needed to interpret the data and results.
4.3.5 Management Efficiency Analysis
First you need to know what those efficiency measures are. You can follow the sample reports, although it is not perfect. Again, comparisons needed to interpret the data and results.
4.3.6 Summary of Financial Analysis
You should summarize the financial health of the Company based on your analysis by comparing its data to the ideals, its past, and/or the major competitors/industry averages. Find out financial strength and weakness.
[Section 3] [Should be included in both individual and team projects]
5. Strategic Issues Analysis
A. This section is critical to the overall quality of your project. This section should be a consistent and logical expansion of your previous external and internal analysis.
B. The purpose of this section is to identify the Companys strategic issues. You should first analyze the Companys critical challenges (Section 5.1) from your external analysis, especially industry driving forces and success factors. Then Section 5.2 analyzes how the Companys resources and capabilities can/cannot match with the critical challenges in Section 5.1. Section 5.3 summarizes your findings in 5.1 and 5.2 and previous sections by identifying the strengths, weaknesses, opportunities, and threats (SWOT) faced by the Company. In Section 5.4 you are expected to identify strategic issues by conducting fit analysis between the Companys current strategies and SWOT.
C. Suggested length of this section: about 6-12 pages (APA format). Again, no need to put a lot of content between section tiles 5 and 5.1.
5.1 Critical Challenges
This is about how external factors exert significant impact on the focal industry and the Company. It should be a logical outcome of your external analysis especially the industry driving forces and success factors with comparisons to the Companys current situation. For example, a critical challenge could be that the Company is not at a market position where it can fully adapt to the changing economic situation (such as lowering consumer confidence index due to COVID-19 outbreak). Besides challenges, you can analyze opportunities too.
5.2 Resources and Capabilities
This section is about how the Companys abilities (identified in your internal analysis including resources, capabilities, and competences) meet or match with the challenges or opportunities in Section 5.1. The analysis here should focus on how the firms resources, capabilities, and competences can/cannot deal with the challenges/opportunities identified in Section 5.1. Thus, it should be based on the findings of Section 4 rather than simply repeating the its content.
5.3 SWOT Analyses
A. SWOT are the crystalized findings of Sections 5.1 and 5.2. It provides a clear picture of the Companys current situation. Please also read your external and internal analysis carefully to maintain close connections and high consistency.
B. Please read carefully textbook Chapter 4 about SWOT analysis. You are encouraged to do so if you prefer a dynamic SWOT recommended by some literature.
C. You may find several SWOT analyses for the Company in UHV library databases for your reference. However, dont just copy them because your previous analysis must support your SWOT. Besides the existing SWOT analysis from other sources, you should also read other various reports on the Company for more insights.
D. Keep in mind that S & W are related to the internal analysis and Section 5.2, and O & T are related to the external analysis and Section 5.1; but you need to consider them all simultaneously to get SWOT. The rationale for integrated thinking is shown below in more details.
E. Strengths are about the Companys core competencies/intangible resources (more or less compared with competitors).
F. Weaknesses are about the Companys inability (using firms resources and capabilities) to overcome its challenges from external environment.
G. Opportunities are those external characters/changes/challenges that the Company has resources and capabilities to overcome or meet them.
H. Threats are those characters/changes/challenges beyond the companys control, and/or the firm has no sufficient capabilities and resources to overcome or meet them;
I. At the end of this section, you may need some analysis on the interwoven nature between S & W and O & T by offering more details related to above hints D to H.
5.4 Strategic issues
A. 5.4 analyzes the Companys strategic issues based on Sections 5.1-5.3. Critical strategic issues should be the most challenging issues coming from the companys inability to respond to the industry driving forces or match the industry success factors. This inability is originated from the problems with past and current strategies. The evaluation of the Companys current strategies will unpack its deficiencies in its fit to SWOT. The outcome will be strategic issues, the general findings of the whole Section 5.
B. First step in this section should be your evaluation of the Companys current strategies. After briefly summarizing your findings in Section 4.1.6, please assess them from the following aspects (i.e., fit analysis): How did the current strategies fulfill the Companys vision and mission statement? How did the strategies fully grasp the market opportunities by exploiting the companys core competencies and resources (i.e., strengths)? How do its strategies fit market and industrial conditions? How did the strategies properly handle the weakness of the firm and mitigate the existing and potential threats? How are the strategies clearly defined and implemented in a consistent way? (As Chapter 10 of our textbook discussed, strategy execution is also a source of competitive advantage.) How does the Companys corporate strategy promote its sustainable competitive advantage?
C. The strategic issues (i.e., problems, deficiencies, and/or room to improve to make the strategy a better fit to the external and internal environment summarized by SWOT) can therefore be identified and justified based on your evaluation of current strategies.
D. Identify 1-2 most critical strategic issues (i.e., critical issues) that you think should be addressed the recommendation section. You need to justify why these 1-2 are more critical than other issues.
E. Keep in mind that the analysis you give here forms a foundation for your recommendations. Also, it should be consistent with your analysis in previous sections.
5.4 Summary: The Most Critical Issue Identified
You can do APA formatting before your final submissions.