ADMN 4030H Fall 2020_K.

Chen

Capstone Project Specifications

The project represents a vital component of this demanding course. This document is created to
help you navigate, learn and succeed in this project. Students are expected to read the
specifications carefully and encouraged to follow the instruction/structure outlined here to
increase the odds of obtaining excellent grades. As always, I am here to help when you have any
question.

Choice of Organization

Each group must select

• A publicly traded firm in North America. That is, the firm must be currently listed on (e.g.,)
TSX, NYSE or NASDAQ.
• A firm that has a minimum three years of financial statements available.

It is the responsibility of the student group to select the firm that will be the basis of the
assignments and comprehensive strategic analysis. Authorization by the professor is to ensure
that two groups do not select the same firm. Although a firm that the student has selected in
another course is eligible for the capstone project, you are reminded it is a violation of academic
plagiarism policy to submit substantially similar analysis for two courses.

Practical suggestions. The following companies are suitable choices for the project. They are
grouped in related sectors.

• Air Canada, WestJet

• AMD, Intel
• Canadian Pacific Railway, Canadian National Railway
• Tim Horton, Second Cup
• Sleep Country, Leon
• Well Health Technologies, CloudMD

Research and Data

This project requires you to conduct extensive secondary research in order to develop your
analysis and strategic recommendations. Sources of secondary research can come from, for
example, media (e.g., the Globa and Mail; Bloomberg), government databases (e.g., Statistics
Canada) and company reports and annual statements (e.g., company websites, public filing,
Compustat). Primary research is not required.

Every section of your assignments (e.g., presentation and report) MUST utilize research and
empirical data/metrics to support what you argue. In other words, you must use data, statistics
and financials to demonstrate your analysis and recommendations. Assignments that do not
include substantial data/metrics will receive a grade in the lower regions.

You will be required to use data that is of high quality and objective. For example, you can use
data produced by government departments and agencies such as Statistics Canada and/or the
US Department of Commerce. You can also use data produced by corporations that are
considered “legal documents” (e.g. audited financial statements, disclosure documents filed with
the SEC or OSC, and/or similar regulatory bodies). Wikipedia is not a reliable source of
information and data.

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You are strongly discouraged from using data from advocacy groups such as unions, and
business associations as these organizations are trying to persuade the public or decision
makers of their position. Thus, data from advocacy groups is often less reliable as they are often
policy lobbyists that have an organizational self-interest.

Deliverable #1: One-Page Proposal (5%, due Oct 2nd)

• The proposal outlines the organization you choose to study, how you will study it (i.e.,
through what secondary sources), a schedule that ensures the project will be completed
on time, and the primary roles being played by each member of the group. The
organization you choose to study must be approved by the instructor.

Deliverable #2: External Environment and Internal Organization Analysis (20%, due Oct
23rd).
• The written report should be maximum 70 pages, double-space, including references,
tables and figures.
• The following structure can guide you through this assignment. It helps manage your
workloads and receive good grades.
1. Executive Summary of the report (1 page)
2. Table of Contents (1 page)
3. Firm Overview and Definition of its Industry (1 page)
4. External Environemnt Analysis (~ 30 pages)
a. Macro environment analysis (i.e., macro forces that are affecting the industry)
o Demographic environment
o Economic environment
o Political/legal environment
o Socio-cultural environment
o Technology environment
o Summary/takeaways of macro environment analysis
b. Industrial competition analysis (i.e., forces that are affecting the attractiveness
of the industry)
o Porter’s five-forces analysis (Recall, this is to analyze the focal firm’s
industry attractiveness)
o Major competitor(s) analysis (This is slightly different from the
‘competition rivalry’ in Porter’s five-forces which tends to be at the overall
industry level. This section requires you to zoom in and identify/analyze
your main competitors and their strategies/positioning. You should
include at least two competitors.)
o Summary/takeaways of industry and competitor analysis. Please explain
how (un)attractive the current industry is. For example, is the industry
extremely attractive, moderately attractive, moderately unattractive or
extremely unattractive? Is the focal firm in the right industry, should your
firm consider redefining or changing its industry? Finally, explain the
positioning (e.g., differentiated, cost leader, focused) of your firm and its
main competitors in the current industry.
c. A summary of opportunities and threats
o Conclude the external analysis by summarizing the key opportunities and
threats that are present in the focal firm’s external environment.
5. Internal Organization Analysis (~ 30 pages)
a. Company vision and mission
b. Value chain analysis using financial and non-financial data/information
o I create a table below to help. Please make sure you read it carefully. Do
not hesitate to ask me any questions.
o Keep in mind that the purpose of the analysis is to understand the
resources and capabilities of your firm. In practice, both financial and
non-financial information are essential because neither one alone is

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complete. Therefore, you must demonstrate strong effort to use both

types of data in your analysis.
o I want to emphasize that the financial statement analysis here is not
standalone. That is, it is different from (although related to) the kind of
analysis you preform in accounting and/or finance courses. Instead, you
are using financial analysis as a tool to support your value chain analysis.
There are two more specific requirements for the financial analysis:
• An analysis of (minimum) last 3 years of financial statements
for your firm AND the direct/major competitors. Note,
financial statements of your focal firm should be available to
you if you follow the instruction. Based on the industry
analysis, you should have identified your major competitors
in your industry analysis. Often, you can find financial
statements for your direct competitors (i.e., they are also
public companies). In the case where you can’t find financial
statements of your direct competitors, you can explicate this
in your report and find the close competitor’s financial
statements to develop the analysis.
• Because this analysis involves comparison between multiple
companies, data is often normalized to allow comparability.
Normalized data/metrics are ratio (e.g., cash flow to sales,
debt to equity) and rate of change (e.g., revenue growth,
change of expenses in percentage). Essentially, you need to
compare the key normalized metrics to judge the financial
performance and situation of your focal firm over time (e.g.,
over the past three years) and in relation to its competitors.
c. A Summary of strengths and weaknesses
o Conclude the internal analysis by summarizing the key strengths (e.g.,
VRIN capabilities) and weaknesses of the focal firm.
• Use a matrix/table similar to Table 3.5 on page 93 of the SM
textbook (12th edition) to support your assessment.
o Explain if the focal firm’s capabilities are aligned with its existing strategy
(e.g., differentiated, cost leader, focused) in the industry
o Explain what the capabilities and activities that are essential to the
competitiveness of the firm? What can be potentially outsourced to save
resources and improve competitiveness?
6. Conclusion (~ 5 pages)
a. Summarize your analysis using a SWOT table.
b. Step back and make observations on potential alternative strategies (e.g.,
SO, ST, WO, WT).
c. Conclude with the top five preliminary strategies (strategic recommendations)
to improve your firm’s competitiveness.
o These are not your final recommendation. As such, there is no need
to evaluate these preliminary ideas in great depth in this report. You
will do that in the final report. If you demonstrate that you begin to
consider the alternative strategies based on your analysis, you will
be fine in this assignment.

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Value Chain Analysis Combining Financial and Non-Financial Analysis (Examples and Suggestions)

Value Chain Activities
Primary activities
Supply chain management
(or inbound logistics)
Operations
Distribution (or outbound
logistics)
Marketing (including sales
and R&D/new product
development)
Customer service
Support activities
Finance
Human resources
management
Management/technology
information system
Leadership structure (i.e.,
quality and stability of the
top management team)
Key Strategic Examples of Financial
Questions to Consider Analysis/Info
• Cost of key supplies
• Cost of good sold
• Revenue size and growth
• Gross margin
• Revenue/gross margin per (e.g.,)
store, employee or customer
• Other operational efficiency
related measures
What are the value- • Usually, the usefulness of
creating activities? financials is limited here.
• But revenue growth may shed
Does the firm have light on the situation of distribution
sufficient resources and activities
capabilities for these • The size and growth of marketing,
activities? advertising and selling expenses
• R&D expenses
Is there any VRIN
• The efficiency of those expenses
capabilities (or core
(e.g., expense per revenue)
competencies)?
• Patents size and growth
• Usually, the usefulness of
What capabilities the firm
financials is limited here.
should focus on
maintaining, upgrading
and developing?
Are there any activities • Avaliable capital resources
that add relatively little • Indicators of financial health (e.g.,
value? Should the firm debt ratio, cash flow ratio, ROE)
consider outsourcing • Number of employees
some of these activities? • Revenue per employees
• Employee compensation (size
and change)
• Compensation competitiveness
• Usually, the usefulness of
financials is limited here.
• Usually, the usefulness of
financials is limited here.
Examples of Non-Financial Analysis/Info Sources of
Information
• Discussions on suppliers, challenges or
innovations in supply chain
• Discussions on factors key to the operation.
• Discussions on the efficiency of operation
• Industry certification (e.g., ISO)
• Industry award (e.g., best managed firms)
• Discussions on market share and market
coverage (i.e., channel of distribution) For financial
analysis/info,
financial statements
are the key source.
• The current marketing strategies (i.e.,
product, communication, pricing) and their
For non-financial
effectiveness
analysis/info,
• Online reviews of offerings of the focal firm
sources can
• Industry award (e.g., best advertising
include:
campaigns, most innovative companies)
• The current customer service policies and • Management
their effectiveness discussion in the
• Online reviews annual reports
• Industry award (e.g., service excellence) • Media coverage
• Industry awards
• Usually, the usefulness of non-financial info • Analyst reports
is limited here. • Primary
research
• Discussions on HR management policies (optional)
(e.g., firm website, annual report, media)
• Industry award (e.g., best employer)
• Union dynamics
• Discussions on investment and development
of technology system in the firm
• Discussions on the top management team,
its tenure, turnover and structure
• Compensation of management (e.g.,
perceived fairness)

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Deliverable #3: Final Presentation (10%, due November 24th or Dec 1st)

• Each group will make a verbal presentation to the class based on your final analysis and
recommendations. The maximum time for each presentation is 25 minutes. The assigned
grade will be based on the quality, effectiveness, and professionalism of the presentation.

Deliverable #4: Final Written Report (15%, due December 1st)

• The final written report includes all the work that you have done. It should be maximum
90 pages, double-space, including references, tables and figures.
• The following structure can guide you through this assignment.
1. Executive Summary of the report (1 page)
2. Table of Contents (1-2 pages)
3. Introduction (~ 2 pages)
a. Explain the structure of your report and connection between sections
4. External Environment and Internal Organization Analysis (A recap and refinement of
the deliverable #1, ~ 60 pages)
a. You should improve, revise and shorten the contents from Deliverable #1 based
on feedback as well as the deeper understanding of your firm and course
materials.
5. Strategic Recommendation (~ 20 pages)
a. Create and explain alternative strategies (or strategic recommendations) at both
the business level and the corporate level based on the analyais (i.e., the
SWOT analysis).
b. Business-level strategy recommendations
o Using Porter’s generic strategies (e.g., differentiated, cost leader,
focused), explain if the firm is pursing the right strategy, and if not, what
the generic strategy should be based on your (external and internal)
analysis.
o Support your recommended strategy by identifying and explaining the
resources and capabilities that are key to pursing the business-level
strategy you recommend.
o Provide at least five strategic recommendatins at the business level.
o Evaluate these recommendations formally using a scoring matrix
• Please explain your decision criteria and the rationale for them
clearly.
c. Corporate-level strategy recommendation
o Identify the firm’s current corporate strategies (e.g., vertical location,
horizontal location and geographic diversification).
o Based on your (internal and external) analysis, provide at least three
strategic recommendations at the corporate level.
o Evaluate them formally using a scoring matrix
• Please explain your decision criteria and the rationale for them
clearly.
7. Conclusion and limitations (~ 5 pages)
a. Recap the overall recommendations at both the business and corporate levels
and how they might contribute to the firm’s competitive advantage
b. Explicate some of the limintations in your analysis. You can briefly discuss the
data that is missing from the report and that you wish you would have access
to. You can also explain some of the key assumptions in your work and link to
some of real-world strategic management insights and challenges (e.g., the
Strategy Safari presentations and discussions).

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