Strategic Financial Analysis – BUSS 3083 Individual case study assignment for External students DUE DATE: 27 March 2018 at 12 noon This individual case study assessment is worth 40% of your course...

Strategic Financial Analysis


Strategic Financial Analysis – BUSS 3083 Individual case study assignment for External students DUE DATE: 27 March 2018 at 12 noon This individual case study assessment is worth 40% of your course mark. You are required to prepare a written report covering all parts of the task as described below. A submission link will be made available on LearnOnline closer to the deadline. Purpose: The purpose of this task is to critically evaluate the strategy, governance and ethics of a company to provide insight for a target audience. In this case, the target audience are risk averse investors with limited knowledge (your client), so please ensure that your analysis is concise, clear and free of jargon. Completing this task will highlight how many of the different topics covered in this course are interwoven and ultimately impact on investment decision making. While emphasis in this individual assignment is more on the qualitative aspects of analysing a company, these factors are important to providing context to the quantitative factors analysed later in the course. Task description: Please read the case study of the BP Gulf of Mexico Oil Spill called “Drilling into Disaster: BP in the Gulf of Mexico” on page 162-174 using the link below: https://www.cpaaustralia.com.au/documents/Corporate-governance-case-studies.pdf Important note: please ignore the “Discussion questions” contained on page 169. After reading the case, you are to prepare an analysis of the impact of the Gulf of Mexico Oil Spill on BP’s past performance and future prospects according to the three tasks below: 1) strategy, 2) governance and 3) ethics in relation to your role as a financial analyst. In terms of your role, consider yourself a junior financial analyst working at an investment firm which has invested heavily in BP on behalf of a group of shareholders (who are the firm’s/your clients and the target audience for which you are preparing your analysis for section 1 and 2). For section 3 (ethics), you will need to reflect on the ethical decision making process as if you are the one who has to resolve the ethical predicament. As this is a third year capstone course, please conduct further research to justify the assertions you make. The quality of your arguments, written language and professional presentation will be assessed. Strategy 1. a) Evaluate BP’s competitive advantage using the 5 forces model before the 2010 Gulf of Mexico Oil Spill. https://www.cpaaustralia.com.au/documents/Corporate-governance-case-studies.pdf b) Consider which, if any of the 5 forces, may have been affected after the Gulf of Mexico Oil Spill. Discuss implications for the company’s ability to implement its business strategy in the future. Word target: 500 words Governance 2. Write a letter to your clients, who are shareholders of BP, to evaluate the quality of corporate governance and communication at BP during and after the Gulf of Mexico Oil Spill. Guidance: Chapter 12 of the course textbook will assist in highlighting important points for discussion (if relevant). Further research is important. Focus your discussion on providing insight and implications for BP’s prospects as an investment. Word target: 500 words Ethics 3. Imagine that the manager from your investment firm (your boss) asks you to change some of the ‘inflammatory’ wording you have used in the letter prepared for task 2) above so as not to alarm your clients. The manager wants you to replace the following sentence in your report: “Despite strong financial performance, BP’s senior leadership team displays an alarmingly poor ability to manage risk which may lead to a further deterioration of its brand reputation, higher litigation costs in the future and negatively affect share prices in the short to mid-term.” with the following sentence: “We are confident in our earlier analysis of BP when recommending our clients to invest in the company. BP is a strong and sound company with a demonstrated track record of good financial performance. We expect BP to recover quickly as a result.” Apply the AAA model described in Topic 3 to arrive at a well-reasoned decision as to what you should do in this situation. Guidance: The facts in the case are necessarily brief. You will need to explain and apply each element of the AAA model while considering the potential motivations and various possible alternatives for all parties involved in this ethical dilemma. The quality of your reasoning is most important. Word target: 500 words BUSS 3083 - EXTERNAL Individual case study assignment Criteria Weighting Excellent Very good Good Acceptable Poor 1. a) Evaluate BP’s competitive advantage 5% A comprehensive application of the 5 forces model with relevant case examples to illustrate key assertions made. A strong evaluation is made as to the strength of the case company’s competitive advantage relative to the industry. A strong application of the 5 forces model with relevant case examples to justify most of the assertions made. A good evaluation is made as to the strength of the case company’s competitive advantage relative to the industry. A reasonable application of the 5 forces model with some relevant examples although some elements were lacking in discussion. An insightful conclusion is made as to the case company’s competitive advantage relative to the industry. A fair application of the 5 forces model, but some or all areas need further analysis and explanation. Examples from the case context were fair, but need to be stronger to support justification of the points made. Some discussion of the competitive advantage of the case company in relation to its industry is made. An inadequate and inaccurate representation of the 5 forces model. Examples did not support the analysis or needed further justification or explanation. Competitive advantage is not addressed in sufficient detail. 1. b) Evaluate BP’s competitive advantage after the disaster and future implications. 5% An excellent outline of the impacts of the disaster on the factors discussed in 1. A) above. Future implications for the company in terms of implementing its strategy are thoroughly discussed with An strong outline of the impacts of the disaster on the factors discussed in 1. A) above. Future implications for the company in terms of implementing its strategy are soundly discussed with good insight provided as to An good outline of the impacts of the disaster on the factors discussed in 1. A) above. Some future implications for the company in terms of implementing its strategy are discussed with reasonable insight provided as to An brief outline of the impacts of the disaster on the factors discussed in 1. A) above. Future implications for the company in terms of implementing its strategy are limited in discussion, with some insight provided as to investment in BP An inadequate outline of the impacts of the disaster on the factors discussed in 1. A) above. Future implications for the company in terms of implementing its strategy are limited in discussion or not strong insight provided as to investment in BP for the target audience. investment in BP for the target audience. investment in BP for the target audience. for the target audience. discussed. Insight provided as to investment in BP for the target audience is limited or not clear. 2. Quality of corporate governance and communication at BP 10% An excellent critical evaluation of significant and relevant aspects of corporate governance and communication at BP is provided. Balanced and insightful argument of the facts using excellent case examples. Discussion details corporate governance and communication thoroughly before and after the event, highlighting changes and implications for the target audience. A strong comparison of other companies in the industry is present in forming A strong critical evaluation of significant and relevant aspects of corporate governance and communication at BP is provided. Balanced and insightful argument of the facts using strong case examples. Discussion explains corporate governance and communication well before and after the event, highlighting changes and most implications for the target audience. A strong comparison of other companies in the industry is present in forming A good critical evaluation of significant and relevant aspects of corporate governance and communication at BP is provided. Good insight provided using some good case examples. Discussion is reasonable, explaining most aspects of corporate governance and communication well before and after the event. A number of key implications for the target audience are discussed. A good comparison of other companies in the industry is present A fair critical evaluation of significant and relevant aspects of corporate governance and communication at BP is provided. Some case examples are used, but can be better explained in relation to the argument presented. Discussion explains corporate governance and communication before and after the event. Some changes and implications for the target audience are presented. A reasonable comparison of other companies in the industry is present in forming A poor critical evaluation of significant and relevant aspects of corporate governance and communication at BP is provided. Unbalanced argument with little or no use of facts using case examples. Discussion explains corporate governance and communication well before and after the event is minimal. Implications for the target audience are unclear. A poor comparison of other companies in the