Strategic Management Project

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NoCompany Name: Calpine, Corp.

Type: Public

Traded as: NYSE:CPN

Industry: Electric Services

Founded: 1984

Founder: Peter Cartwright

Headquarters: Houston, Texas, U.S.

AT THE BOTTOM (PAGES 5 AND 6) ARE THE SECTION TO WRITE ABOUT AND WHAT SHOULD BE INCLUDED IN THEM.

Introduction

The purpose of this project is to familiarize you with the strategic management process and its real-life applications. For this assignment, assume that you are a team of management consultants hired to formulate a company’s strategy. As a management consulting team, you are required to research the company and the industry yourself, and to conduct the required analyses using the tools, theories, and ideas that you have learned in the program. To conduct this project you should follow a typical strategic management process. As depicted in the first five chapters of the textbook the strategic management process entails the following steps:

I. Framing company’s mission and vision statements

II. Analysis of the external environment

III. Analysis of the internal environment

IV. Strategic fit analysis (SWOT)

V. Strategy implementation (action planning and budgeting)

The main focus is on steps II to IV. Nevertheless, the company’s mission/vision statements should be discussed as part of the company’s introduction and the implementation of the strategy recommendations should be briefly mapped out. Below are some important notes along with more details about the expectations for each part of the project.

Important Notes

· Please only use relevant data and information that have strategic implications for the company. From all available facts and figures, many have no or little effect on a company’s competitiveness, and should therefore be omitted from the analysis.

· On the other hand, some trends and forecasts are too significant to neglect. Failure to identify critical facts leads to inaccurate conclusions and ineffective strategic recommendations.

· In analyzing the internal and external environment try adopting models and tools introduced throughout the course, with more emphasis on tools discussed in chapters 2, 3, and 4.

· It is essential that you use rational arguments and objective reasoning in your project, both in the analyses steps and in developing the recommendations. Gut feelings and intuition are not acceptable lines of logic, as they are individual-specific. You should be able to persuade hypothetical managers to take certain course of actions and you cannot ask them to follow your intuition.

· Recommendations should be strategies. Please refer to Porter’s article titled “What is Strategy?” for what constitutes a strategy. Also, please read chapters 1, 5, 6, 7, 8, and 9 for the definition and contextual examples of business and corporate strategy.

· You may include a few short, selected quotes from your data sources (properly cited with page numbers included), but for all intents and purposes, each and every sentence you write for this assignment must be crafted by you and your team members. You should avoid copying and pasting from any sources. That means citing full sentences (even if you use quotation marks) is unprofessional and therefore, unacceptable. Your assignment will be checked for originality.

· You should clearly link your data to your analysis, and your analysis to actual recommendations. Make sure that the logical progression be very clear to the people reading your final report. In fact, this is probably the most important aspect on which your project will be assessed.

· Strategy recommendations are broad and general directions for how the company tries to achieve competitive advantage. Such strategies require significant investment and allocation of considerable resources to accomplish. Therefore, implementing several recommendations at the same time can sometimes be next to impossible. In your project, you are expected to present between two and four recommendations.

· You should provide enough details on how your recommendations will be implemented to be convincing that it can be done given the company’s resources within a reasonable time frame. You should also briefly discuss what the likely outcomes are. Moreover, like any other plan, yours will be subject to risk factors. You should identify them, discuss their impacts, and suggest contingency actions.

· All the parts must be typed and double-spaced using font size 12, Times New Roman, 1 inch margins on all sides, spell- and virus-checked. APA style is required. You are required to provide appropriate references for all data and for all sources of information that you use in your analyses. Also:

· Include a table of content as well as a table of figures.

· Number each section and its subsections.

· Include page numbers.

· Check for grammar and spelling errors.

· Executive Summary should be at least 1 page, and should not exceed 2 pages. Please see the guideline titled “How to write an executive summary?” for more information.

· Recommendations should specify the following:

· What: You need to develop specifics rather than vague, general statements like “they should innovate.” Your recommendations should include detailed descriptions. For example, do not just say they need better marketing, or improved customer service. Be specific about what you are recommending and how you propose it be accomplished. For example, you can describe a recommendation as “we recommend the company expand its northeast coast operations to permit access to those population centers through a balanced combination of retail outlets and direct sales approaches”. Please note that the title of recommendations is different from their descriptions and can be short.

· Why: The “why” of your recommendations should be based on your analyses from previous sections as to why it is important that the company implement your recommendations. For example, “Our recommendation will produce needed sales growth, utilize excess capacity, build on our reputation for quality products and is projected to produce $30 million in revenues in the first year”. This link between the analyses and the recommendations should be established in your SWOT analysis.

· How: This aspect of your recommendations provides specific descriptions of how to implement the recommendations (do not just say they should market more – be specific. Also, explain how they should pay for it, for instance.) For example, “Since sixty percent of our current customers purchase our products in retail

outlets we propose forming an exclusive relationship with PDQ Corporation to provide the needed additional retail channels. PDQ Corporation is the Northeast’s leading retailer of products and has 156 locations in the most densely populated regions of the northeast. Our proposal will be funded by issuing $50 million in debt and financing the rest of the needed working capital through short-term credit. Please refer to appendix 3C which illustrates. . . ”. This part should be covered in chapter 6 of the report, when you discuss the execution of your recommendations.

· When (the milestones): Describe the time horizon for the plan. How long will the plan take to implement? Target dates (month, quarter or year) and results for each time period, based on prioritizing the recommendations. Give a recommended time line.

· How Much: You are required to include budgets, performance metrics, and estimates of strategic impacts, risk assessment and contingency plans, long-term effects, the impact on all the stakeholders and the control systems needed to monitor the success of the selected strategies.

NOTE: THE EXTERNAL ENVIRONMENT SHOULD NOT DISCUSS THE COMPNAY DIRECTLY BUT THE GEOTHERMAL ENERGY INDUSTRY AND NATURAL GAS FUELED POWER PRODUCERS

PART I: External Environmental Analysis

· Economic Segment

Explain what the economic segment of the general environment is. What are the underlying factors that constitute this segment? Which factors are more relevant to and more influential for the case company’s industry? How do those factors change? Describe the potential impact of such trends. Conclude this section by summarizing the important trends, notable opportunities and threats, and possible driving forces resulting from this segment of the general environment.

Some of the underlying factors of this segment include (but are not limited to):

· Inflation and interest rates

· Unemployment rate

· GDP (and its growth rate)

· Saving rates

· Trade deficit/surplus

· Exchange rates

· Physical Segment

Explain what the physical segment of the general environment is. What are the underlying factors that constitute this segment? Which factors are more relevant to and more influential for the case company’s industry? How do those factors change? Describe the potential impact of such trends. Conclude this section by summarizing the important trends, notable opportunities and threats, and possible driving forces resulting from this segment of the general environment.

Knowledgeable

Some of the underlying factors of this segment include (but are not limited to):

	- -	Availability and level of natural resources Pollution rates of air, land, and water
	-	Energy reserves and consumption

· Industry Dominant Economic Features

Describe the economic characteristics that distinguish this industry from others. You can find examples of industries’ dominant economic features in chapter 3 of the textbook.

· Five Forces Analysis

Briefly explain the five force model and its purpose

· Power of Substitute Products

Briefly define the threat of substitutes and identify the substitute product/services for this industry. List the major underlying factors of this force (see chapter 3 of the textbook for the detailed list). Using data show how each factor applies to this industry. Conclude by assessing the strength of this force, explaining its implication for the profitability of the industry, and identifying the related opportunities and/or threats.

· Power of Buyers

Briefly define the bargaining power of buyers and identify the buyers in this particular industry (What type of companies or individuals buy from this industry?). List the major underlying factors of this force (see chapter 3 of the textbook for the detailed list). Using data show how each factor applies to this industry. Conclude by assessing the strength of this force, explaining its implication for the profitability of the industry, and identifying the related opportunities and/or threats.