Company Profile

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by Clemens Werkmeister - 2nd draft version, 30/12/2011


Idea

Constructing knowledge about resources of companies (financial, human and organizational resources) by description and analysis of real companies, their problems and their solutions. The company profile serves, thus, as a counterpart to methodological training via exercises.

Students (individually or in a team) choose a company and collect information about the company, from different sources (company web-site and reports, Bundesanzeiger, financial newspages, newspapers, other websites …). Usually they will use external sources but, if available, internal sources are welcome too. They select and organize the information, starting from typical concepts of business administration, either to provide a structured overview of the resources or an in-depth presentation of specific topics. A look on competitors or the industry helps to identify normal and atypical observations.

The students present their company profile using posters, slide-show, …, and if possible with a story.

Purpose

Students should learn to
- identify important patterns and indicators of company’s resources
- gain insight into the resources situation of real companies
- describe, analyze and explain the current or aspired resources situation
- describe and analyze links between different resources or indicators
- search, find, gather information about real company’s resources
- cope with abundant, redundant or missing information about resources
- present the resources-profile of a company.


Overview or Focus Approach?

Overview approach

  • description of the overall resource strategy of the company
  • identification of the company's resources following the resource based view
  • indicators for financial, human and organizational resources (see below)
  • organized in a scorecard, profile, with graphs, etc.
  • highlighting some interesting observations or important links between some indicators
  • and/or comparing to industry average / previous years.
  • sources: company website, annual reports, stock-quote provider

Focus approach

  • select one of the topics
  • explain in detail a specific resources-related strategy, activity or problem of your company
  • starting from the contents of our sessions
  • sources: company website, annual reports, newspaper, social media, others


Topics of the profile: Financial Resources

Important financial indicators

  1. equity, debt, total capital (absolute figures and ratios)
  2. (net) working capital
  3. cash flow (profit + depreciation, or more detailed cash flow statement)
  4. profits, cash dividends, payout ratio, plowback ratio
  5. debt/equity ratio (capital structure)
  6. market capitalization (market value) of equity
  7. book value, market-to-book-ratio
  8. ratios (RoE, RoI, RoA, RoS, EPS, P/E-ratio, …)

Details of specific equity or debt

  1. bonds (amount, nominal interest rates, price, maturity, duration, volatility, term structure …)
  2. common stocks (price, average return over xxx years, standard deviation…)
  3. preferential stocks (price, …)
  4. convertible bonds, …
  5. purchase rights, rights issue
  6. options

Risk, portfolios and indices

  1. securities and their risk
  2. dividend return
  3. average return
  4. volatility (standard deviation)
  5. specific and market risk factors
  6. correlation and beta
  7. participation in DAX, MDAX, STOXX, S&P500, …
  8. development compared to relevant index or industry

WACC and Cost of Capital

  1. debt interest rates (average interest rate = interest expenses / debt)
  2. yields of bonds
  3. corporate tax rate (country or company)
  4. equity cost of capital (beta, market return, risk-free rate)
  5. WACC of the company or of comparable companies
  6. Discounted cash flow (DCF)

Highlights of financial resources (if applicable; see focus approach)

Facts and explanations about (among others):

  1. issue of new equity
  2. initial public offering (IPO)
  3. stock repurchase
  4. issue of new bonds
  5. debt restructuring
  6. debt/equity swap
  7. new projects,
  8. cum- and ex-dividend share prices
  9. capital market imperfections,
  10. behavioral finance observations, ...


Topics of the profile: Human Resources

Human resources strategy

  1. local, global
  2. diversity
  3. work-life integration
  4. universalist, contingent, resource-based-view approach

Recruitment and retention

  1. turnover rate
  2. # of employees, of recruited staff
  3. recruitment strategy and methods
  4. internal / external recruitment for employees / members of board
  5. employer branding
  6. career website

Performance management and pay

  1. underlying motivation and performance management model
  2. overall / average personnel expenses / compared to total expenses
  3. change to previous year(s)
  4. fixed / variable payments of staff / of management / of board
  5. incentive systems

Human resource development

  1. HR development as lip-service?
  2. apprentices
  3. trainees
  4. vocational training, continuing training, off-the-job training
  5. master / doctoral study programs

Leadership and skills

  1. Managers, leaders and entrepreneurs
  2. leadership traits
  3. leadership/management styles
  4. coaching and mentoring


Topics of the profile: Organizational Resources

Organizational basics

  1. institutional view vs functional/instrumental view
  2. value creation chain: inputs, transformation/conversion, output, environment
  3. advantages of an organization:
    1. economies of scale and/or scope
    2. specialization and division of labor
    3. management of the environment
    4. power and control
    5. transaction costs
  4. organizational effectiveness:
    1. external, internal/innovation approach, technical approach
    2. balanced scorecard

Stakeholders, managers and ethics

  1. stakeholders of the company
  2. important goal conflicts
  3. authority and hierarchy within the company
    1. ownership (concentration, international distribution, ...)
    2. board (number, position, diversity of members, changes, ...)
    3. divisional and functional management (idem)
    4. line and staff roles
  4. ethics and compliance
    1. example(s) of a dilemma: problem and solution
    2. underlying model of ethical reasoning
    3. code, policy of ethics and conduct
    4. ethical training

Organizational design

  1. roles
  2. basic structures:
    1. functions: direct and indirect
    2. divisions: product, regions, customers (markets)
    3. matrix
    4. further: hybrid, network, projects, boundless, ...
  3. fundamental challenges:
    1. vertical and horizontal differentiation vs integration
    2. centralization vs decentralization
    3. standardization vs mutual adjustment (flexibility)
  4. organizational patterns:
    1. mechanistic or organic structure
    2. tall or flat structure
  5. organizational strategies:
    1. global level: multi-domestic, international, global, transnational
    2. corporate level: vertical integration, related/unrelated diversification
    3. business unit level: structure follows strategy?
    4. functional level

Organizational change

  1. goals of change
  2. forces for change
  3. resistance against change
  4. evolutionary change promoted by
    1. managers
    2. systems (TQM, Six Sigma, ...)
    3. flexible working organization
  5. revolutionary change
    1. business process reengineering
    2. restructuring or downsizing
    3. innovation
  6. organizational development techniques
    1. intergroup training, organizational mirroring
    2. confrontation meeting, open spaces
    3. process consultation, team building

Conflict, power and politics

  1. kinds of organizational conflicts
  2. resolution strategies: structural, individual
  3. organizational power
  4. political tactics


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Financial Exercises
Financial Resources Formulary