SAP Project Part 1

Strategy Analysis Project Part 1

Selected Company: Freeport-McMoran

The Strategic Analysis Project is designed to teach you to conduct a comprehensive strategic analysis of a publicly owned company. In this project, you will need to apply the concepts, analytical tools and frameworks of this course to analyze the firm’s external and internal environment, evaluate its strategic options and recommend a course of action for the firm to maximize its long-term performance.

In the first part of this project (Part 1), you will conduct a comprehensive external analysis of the firm. You will submit a 2-page executive summary of your project (appendix of supplementary analysis/research does not count against this page limit).

SAP Part 1 Report

The Part 1 written report will include the following information:

1. Define the industry and the key firms/competitors in the industry. Be sure to clearly identify the focal firm for your project.

2. Five Forces Analysis: Using the Industry Analysis Worksheet/Checklist, apply the five forces model to your industry. Discuss each force as follows:

Threat of entry: Characterize quantitatively and qualitatively this force as low, moderate, or high. Provide facts, data, and other information to support your assessment.

Supplier Bargaining Power: State who the suppliers in your industry are. Characterize this force as low, moderate, or high. Provide facts, data, and other information to support your assessment. Note that supplier power can vary across different types of suppliers.

Buyer Bargaining Power: State who the buyers in your industry are. Characterize this force as low, moderate, or high. Provide facts, data, and other information to support your assessment. Note that buyer power can vary across different types of buyers.

Threat of substitutes: State what the substitutes for your industry are. Characterize the threat posed by substitute or alternative products/services as low, moderate, high. Provide facts, data, and other information to support your assessment.

Rivalry among competitors: Name some of the important competitors in this industry. Characterize this force as low, moderate, or high. Provide facts, data, and other information to support your assessment.

3. PESTEL/General Environmental framework: Examine the external environment of the focal firm. Are any changes taking place in the macro-environment that might have a positive or negative impact on the industry in which your company is based? Apply the PESTEL/General Environmental framework to identify how different macroeconomic factors may impact your industry. What will be the effect on your industry?

4. How innovative is the industry in which your company is based? Describe some key technological and operational innovations that have impacted the industry in the last 5 years. How often do firms in the industry introduce new products and technologies?

5. Impact of Covid-19: With specific examples and statistics, describe the ways with which Covid-19 has impacted business in this industry. Describe interesting ways with which firms in this industry have innovated or introduced new products/services to cope with the impact of the pandemic.

Research. Good assignments will demonstrate that they have gone beyond a perfunctory examination of the industry/company. Appropriate use of research reports such as IBIS world is required for demonstrating depth of research and analysis. Make sure to provide a bibliography citing all the sources you’ve looked at.

Please NOTE:

-For grading I will consider your use and execution of each of the areas listed above and the polished final product.

-In order to optimize the use of your writing space, I strongly recommend providing the details of the analytical frameworks (e.g. Porter’s 5 Forces, PESTEL etc.) in an appendix and focusing your writing space on the main highlights and takeaways arising from the analysis. The Appendix will not count against your page limit.

-You MUST include an extensive bibliography indicating which sources (primary and secondary) you have consulted.

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Industry Analysis Worksheet (Required)

Buyer Power	High	Med.	Low	Sign	Reasoning
Specify buyer(s)
Concentration of buyers relative to suppliers (industry incumbents)
Purchase volume
Effectiveness of industry incumbents’ product differentiation
Threat of backward integration by buyers
Buyers’ knowledge of suppliers’ cost structures
Cost savings (for buyer) from suppliers’ products
Importance of suppliers’ input to quality of buyers’ final products
% of total buyers’ costs spent on suppliers’ input
Strength of Force
Supplier Power
Specify supplier(s)
Concentration of suppliers to buyers (industry incumbents)
Availability of substitute products
Importance of customer (industry incumbents) to supplier
Differentiation of suppliers’ products/services
Switching costs for buyers
Threat of forward integration by suppliers
Strength of Force
Threat of Entry
Importance of scale economies
Effectiveness of existing product differentiation
Capital requirements
Buyer switching costs
Incumbents’ control of distribution channels
Importance of proprietary knowledge
Incumbents’ control of access to supply/raw materials
Incumbents’ access to government subsidies
Ease of access to government to distribution
Strength of Force
Threat of Substitutes
Specify substitute(s)
Profitability of industry producing substitutes
Rate of improvement in price-performing relationship of substitute products
Strength of Force
Intensity of Rivalry
Number of competitors
Industry growth rate
Fixed costs
Storage costs
Effectiveness of product differentiation
Buyer switching costs
Exit barriers
Strength of Force
Overall Conclusion of Industry Attractiveness

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