Reference no: EM132091

You are to perform an analysis of Panera Bread Company in 2012. Except for the data you need to conduct the industry and competitor analyses, you do not need to perform additional external research to complete your case assignment.

Your case should be in the outline format given below and must not exceed six single-spaced and numbered pages inclusive of all tables, charts and diagrams. Your cover page and the list of references are not included in the six-page limit. The cover page should include your name, course and section number. Your name should not appear anywhere else on the paper.

Case Outline

I. Industry Boundary Identify the specific industry you are analyzing

II. External environment Analysis

A. Identify and briefly describe three components of the macro-environment and each of their current impact on the industry
1. ________________
2. ________________
3. ________________

B. Evaluate the five forces of competition for the industry
1. Threat of entry of new competitors is (high, moderate, low) ______________, because_________. The barriers to entry include ___________. (Note: the supporting reasons you give for your answers in 1 through 6 should be based on the material covered in lecture and presented in chapter 3 of your text).
2. Suppliers to the industry provide (identify the products/services provided by suppliers) ____________. They are (strong, moderate, weak) __________, because___________.
3. Those who buy the product of the industry are (identify the specific buyers of the industry's products/services) ________________. They are (strong, moderate, weak) __________, because____________.
4. The substitute products are (identify specific substitute products/services) ____________. They are (strong, moderate, weak) ___________, because____________.
5. Competition in the industry is____________ (strong, moderate, weak) because___________.
6. Based on 1 to 5 above, the current profitability potential of the industry is ________ (strong, moderate, weak) because __________.

C. Draw a strategic group map of the industry (can be hand drawn and labeled)

D. Prepare a weighted competitive strength assessment for the focal firm and at least two of its rivals (see Table 4.4). How does the focal firm stack up against rivals?

E. Based on your analyses in A-D above, is the industry attractive? What are its prospects for above-average profitability? Support your answer.

III. Internal organization analysis

A. Perform a core competence analysis of the firm (see chapter 4 PowerPoint Slides). Does the firm have any core competencies that give it a competitive advantage? Which ones?

B. Draw a value chain of the firm and describe the primary and support activities of the firm (be as specific to the firm as possible).

C. Identify the company's resource strengths and weaknesses and its external opportunities and threats (at least two of each):

1. What are the company's strengths and resource capabilities?
2. What are the company's weaknesses and resource deficiencies?
3. What are the company's market opportunities?
4. What are the company's external threats?
5. What does a SWOT analysis reveal about the current situation of the firm?

D. Obtain Panera Bread Company's Income Statement and Balance sheet for 2008-2012 from MergentOnline (on the Library website). Perform the analyses in Tables 1 to 3 in Appendix A posted in Assignments on Blackboard. Include only the narratives for the year-to-year changes in the income statement, the common-size income statement (Table 2) and the ratio analysis in this section of your case write-up.What does the financial analysis reveal about the firm's financial situation vis á vis the industry?

E. Based on your analysis in A-D above, does the firm have a competitive advantage relative to the other firms in its industry? If yes, on which core competence (ies) is (are) the advantage (s) based? If no, why not?

IV. Strategy Analysis

A. Identify and briefly describe the firm's corporate-level strategy (ies) (e.g., vertical integration, growth, outsourcing, etc.).
B. Identify and briefly describe the firm's business-level strategy (ies) (chapter 5 - the five generic competitive strategies).
C. Identify and briefly describe the strategy for each functional area covered in the case (e.g., marketing, HR, production, etc.).

V. Strategic IssueaAnalysis (you need to analyze two strategic issues)

A. Strategic Issue 1

1. State the strategic issue (make sure to use a question format). Discuss the issue making sure to give adequate support as to why you think this is a strategic issue.

2. Generate and evaluate at least two possible strategic alternative actions
i. Identify strategic alternative 1-be sure to discuss the strengths and weaknesses of the alternative relative to the strategic issue you have identified
ii. Identify strategic alternative 2-be sure to discuss the strengths and weaknesses of the alternativerelative to the strategic issue you have identified
iii. Identify strategic alternative 3, etc.

3. Make a recommendation by selecting the best alternative action(s) from those above. Be sure to discuss how your selected alternative(s) will resolve the issue.

4. Implementation Issues - what kinds of implementation issues will the company have to address in order to put your recommendation(s) into action (e.g., obtain additional capital, hire new employees, layoff employees, change leadership, develop a new strategy, etc.).

B. Strategic Issue 2

1. State the strategic issue (make sure to use a question format). Discuss the issue making sure to give adequate support as to why you think this is a strategic issue.
2. Generate and evaluate at least two possible strategic alternative actions (see chapters 5 and 8 for alternative actions)
i. Identify strategic alternative 1-be sure to discuss the strengths and weaknesses of the alternativerelative to the strategic issue you have identified
ii. Identify strategic alternative 2-be sure to discuss the strengths and weaknesses of the alternativerelative to the strategic issue you have identified
iii. Identify strategic alternative 3, etc.
3. Make a recommendation by selecting the best alternative action(s) from those above. Be sure to discuss how your selected alternative(s) will resolve the issue.
4. Implementation Issues - what kinds of implementation issues will the company have to address in order to put your recommendation(s) into action (e.g., obtain additional capital, hire new employees, layoff employees, change leadership, develop a new strategy, etc.).

Financial Analysis

Conduct a financial analysis of the firm including year-to-year changes for income statement line items, common-size income statement, and key financial ratios compared with major competitors or industry averages. The tables should be appended to your case while the narrative for each table should be included as part of the text of your case analysis.

As indicated above, the financial analysis for your firm consists of three components:

1. Year-to-year changes for income statement line items (see sample in Table 1)

a. The purpose of this analysis is to enable you to determine the trend for each income statement line item. As indicated in Table 1, you need to calculate year-to-year changes for every line item in the income statement. The line items you will use for Table 1 should match the line items used in the income statement of the firm. From this you can then determine whether or not a particular line item, e.g., revenues, has increased year-after-year for the past five years or has declined year-after-year for the past five years and provide reasons as to the trend based on your research. An example of the narrative for your analysis might be:

The percent change in revenues suddenly jumped 58.5% between 2011 and 2012 reflecting a significant increase in the number of contracts won in 2011.  Since then, the percent change in revenues increased a more modest 2.6% between 2012 and 2013 due to an economic recession. The percent change in NIAT has been declining every year since 2010. One possible reason is the increase in the price of copper, an essential material in electrical contracting work, due to increasing global demand particularly in China and India. This has squeezed margins and compromised profitability.

2. Common-size income statement

a. The purpose of a common-size income statement is to reflect the income statement line items as a percentage of revenues. There are two reasons for doing this. First, you want to see what percentage of revenues is being consumed by the various income statement line items. Second, you want to see over time what the trend is for each line item. Again, the line items you will use in Table 2 should correspond to the line items in the income statement of the firm. You need to discuss the trends and provide a narrative of the reasons for the trends based on your research of the firm. An example for the sample might be:

Cost of sales increased from 65.9% of revenues in 2009 to 78.9% in 2013, one of the principal causes of declining NIAT during that time. As stated above, this can be attributed to the increasing prices of essential raw materials such as copper due to greater global demand in emerging markets such as China and India. NIAT declined from 13% of revenues in 2010 to only 2.6% in 2013.

3. Key financial ratios compared with major competitors or industry averages

a. You can determine the financial health of a firm by doing a historical comparison where you compare the firm's performance with its own performance in a prior period. The first two tables enable you to do this. However, a much more powerful evaluation of a firm's financial health is to compare it with other firms in its industry. Ratio analysis enables you to evaluate a firm's financial health by examining key performance ratios and to then compare these ratios to those of competitors and/or the industry.  You then need to provide a narrative describing the story of the ratio analysis and your comparisons. Your narrative might be something like this:

Good ratios. Current Ratio reflects the firm's ability to meet its current financial liabilities. It has been greater than 1.0 all five years and compares favorably with the industry average of 3.5. However, the 2013 value of 2.7 is less than half of what it was in 2011 (5.8). Inventory Turnover measures the effective use of a firm's inventory. Although it is very large at 709.6 in 2013, it is less than it was in 2012 (1,017.8). This compares well to the 960 industry average.

Bad ratios. The Average Collection Period reflects how long it takes the firm to collect payment on its sales. The 66.7 days is troubling, although it is within the range of 65% for the whole industry. This high ratio is due to the trend in the industry for public clients to withhold 10% of the total contract amount until after the project is complete (J&J, 2013).