economic research paper

tesla inc/requirement.docx

The final project is 4-6 page (Sinle-spaced, 12 point font) analysis of a company.

· The paper's focus should be on analysis of a company based on nine questions (B term questions 1-10 including introduction) I provide on the last page. A common mistake is too much description, too little analysis.

· This project is intended for you to perform hands-on strategic analysis. If you were handed a project to analyze a strategic situation by the CEO of your company, what would you hand back?

A. Recommended Information Sources

Research Insight (RI).

This database from Standard & Poor’s offers up to 20 years and up to 48 quarters of historical financial information on public US and Canadian companies.

SEC’s Edgar Database

The Securities Exchange Commission (SEC) (http://www.sec.gov/edgarhp.htm ) maintains a database of SEC filings by public companies. The 10-K reports contain much of the same information found in annual reports and will be the most useful for this assignment.

Yahoo!Finance Company and Fund Index:

It offers company profiles, financial information, and links to a range of resources. (Start with the “Profile” link.) http://biz.yahoo.com/i/ Other major web portals such as MSN Money (http://moneycentral.msn.com/home.asp ) offer similar resources.

Mergent Online and Factiva offer company-level financial information.

B. Term Project Questions

1. COMPANY NAME and LOCATION

Identify the subject of this report by company name, company’s primary product and location.

2. COMPANY INDUSTRY

Identify the firm’s primary industry by name, its Standard Industrial Classification (SIC) code, and its North American Industry Classification System (NAICS) code. Give brief information about the industry size the company is operating.

Sources of information

· RI

· OSHA’s search page for SIC codes (http://www.osha.gov/oshstats/sicser.html)

· U.S. Census Bureau’s site on the North American Industry Classification System. Includes listings of NAICS codes and a history of its development. (http://www.census.gov/epcd/www/naics.html ).

3. CUSTOMERS

Describe the firm’s primary product’s customers (Households, businesses, schools, governments, etc.) To what extent does the company depend on international customers? If it is a multinational company find international sales data for at least five years as percentage of total sales (For example, Company: APPLE, Primary Product: IPHONE)

Sources of information

· Company’s web site and Annual Reports, 10Ks

4. DETERMINANTS OF DEMAND:

What are the major determinants of demand for the firm’s primary product? Explain your choice of variables. If necessary, describe how determinants differ across customer segments. What observable variables might this company use to detect changes in these determinants of demand? (Observable variables are measures that can be tracked over time to detect changes in demand conditions. Be specific.)

a. Please write the demand equation for the firm’s primary product based on observable variables you find.

b. EXTRA CREDIT- OPTIONAL: Find total product sales and the price of the primary product that the company sold for at least 24 months. Find the price of major competitors’ product and average income of target customers for at least 24 months. Estimate demand for the company’s primary product.

5. SEASONAL AND CYCLICAL SALES

You should also determine if sales are cyclical and/or seasonal. To determine if sales are cyclical, examine the pattern of company sales over the business cycle. To find out whether sales are cycle, please follow the steps:

a. Find GDP growth (quarterly) data for at least 5 years.

b. Plot the data and determine business cycles such as recessions and booms.

c. Add quarterly sales data to the same graph and compare the business cycles with company sales data during the cycles.

d. If appropriate, discuss the share of non-US sales in your interpretation of the plot.

To determine if sales are seasonal

a. Plot quarterly or monthly sales data and see if there are seasonal variations in the data.

Sources of information

· RI

· Company’s web site and Annual Reports

· Trade organizations: http://www.yahoo.com/business_and_economy/organizations/trade_associations/

· GDP data are available from the Federal Reserve Economic Database (FRED) http://research.stlouisfed.org/fred2/

6. FORECAST SALES

Find quarterly or monthly sales for at least 5 years. Plot the data, and forecast sales for 12 months using a trend line. If sales are seasonal add dummy variable to reflect seasonal variation in the data. Interpret your results.

Sources of information

· RI

· Company’s web site and Annual Reports

· Trade organizations: http://www.yahoo.com/business_and_economy/organizations/trade_associations/

· GDP data are available from the Federal Reserve Economic Database (FRED) http://research.stlouisfed.org/fred2/

7. PRICE ELATICITY OF DEMAND

Recall that price elasticity is a function of (1) the number of available substitutes, (2) the price level relative to customers’ budgets, (3) and time period of adjustment. Describe these factors for the firm’s primary product. Based on this analysis, does the firm face elastic or inelastic demand with regard to its primary product?

8. MARKET STRUCTURE

a. How would you describe the market structure of the industry in which your firm operates? To arrive at an answer you should discuss (1) the number of competitors, (2) product similarity, (3) barriers to entry, and (4) the importance of non-price competition. (Be sure to define the geographic nature of the market. Is the market best described as local, national, or international?) How much pricing power does the firm have? Are economies of scale a barrier to entry in this industry?

b. Determine company’s main competitors. Determine the market share of the company and main rivals in the industry. Based on your analysis what is the market structure of the industry?

Sources of information

· RI

· Factiva, Mergent

· Company’s Annual Report

· Concentration Ratios from the 1997 Economic Census: http://www.census.gov/epcd/www/concentration.html

9. COMPETITORS

Calculate the company’s sales and profit growth rates for the past five years . Do the same for the firm’s rivals (firms with the same industry classification). Has the firm’s growth rates matched its rivals? Summarize the company’s performance relative to the rivals?

Sources of information

· RI - Use the variables “Net Sales” and “Net Income” for revenue and profit.

· Annual Reports

10. GOVERNMENT

a. Has the Department of Justice or the Federal Trade Commission (FTC) taken action recently against this firm? Report any major findings. (If you conclude no action has been taken, explain your search procedure.)

Sources of information

· Both the Department of Justice (http://www.usdoj.gov/atr/index.html ) and the FTC (http://www.ftc.gov/ftc/antitrust.htm ) provide information on recent actions. Search by company or industry name.

b. Has Congress recently passed legislation that affects this firm? Is any legislation pending? (If you conclude no legislation is pending, explain your search procedure. Since legislation is not specific to a company, conduct your search using industry or product keywords.)

Sources of information

· Thomas Legislative Information on the Internet http://thomas.loc.gov/home/thomas2.html. You can search for keywords or by subjects under the section: Bill Summary & Status.

C. A note on documentation

You should document print and online information sources. No one formatting style for online sources is universally accepted but you can use the following examples as guidelines.

Examples:

Author. (Year). Title, Type of medium