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Individual Company Analysis: Macy’s Inc.This paper MUST be 12-15 written pages, excluding the tables and exhibits at the end. Provide MLA citations for all sources used -Begin with a short executive summary—about four sentences—that explains which firm you are analyzing, what you looked at, and (in one short paragraph or less) what you recommend. This will help your readers grasp what is happening without reading the entire case in order to set up the scenario. -A complete analysis contains five main parts: A financial analysis to assess the company’s health An internal analysis of the firm An external analysis of the firm The identification of the firm’s strategy as well as the strategies of its competitors A set of strategic recommendations for the focal firm based on your analysis 1. Financial Analysis The financial analysis should demonstrate two things: Is the firm itself financially healthy? Look at its performance over time, both in terms of being profitable or solvent, and how the market has rewarded it. How strong is it relative to its competition? Are its competitors more or less profitable over time?How has the market valued them? You don’t need to be a finance major to complete this portion of the assignment. However, you should include appropriate figures and ratios to illustrate your points. Whatever you find from outside research, put it into useful charts or tables and place it in the exhibits section. State your conclusions in the report itself, and reference the specific exhibits when you do. The key is to support your conclusions. Everything you include must lead to a point, otherwise do not include it. The tables below should serve as a template for your analysis. Sample Tables for the Financial Analysis: Table 1.Change in Financials Case Firm Current Year Prior Year % Change Income Statement … Balance Sheet … Table 2.Common Size Statements of Case firm and closest competitor for 20__ Case Firm % Closest Competitor(s) % Income Statement Sales 100% 100% … Balance Sheet Total Assets 100% 100% … 2. Internal Analysis (including the Value Chain Analysis) The internal analysis sections should identify the resources and capabilities which the firm can leverage within its marketplace in order to remain successful in the future. The internal analysis of the firm describes the strengths and weaknesses the firm brings to its competitive environment. -What resources or capabilities can a firm leverage against its competitors and/or to tap new markets? -What weaknesses we might see that will handicap the firm in the future? -What are the key strategies the firm is pursuing? -Explain whether the strategies are good or bad, and provide support for your arguments. You should perform the internal analysis using the value chain approach. This approach consists of breaking the firm into the main activities in the value chain and then determining which activities may yield a competitive advantage for the firm. A good internal analysis will show the difference between core competencies and their results. As an example, cost leadership can be the result of engineering capabilities. While sometimes difficult to use, the VRIO analysis is another good analytical tool which can help you to organize your thoughts and develop a supporting argument for why a resource or capability yields a competitive advantage. A value chain analysis allows the firm to understand the parts of its operations that create value and those that do not. It is a template that firms use to: (1) understand their cost position, and (2) identify multiple means that might be used to facilitate implementation of a chosen business-level strategy. A complete value chain analysis broadly contains two main parts: Primary activities involved with: (1) a product’s physical creation, (2) a product’s sale and distribution to buyers, and (3) the product’s service after the sale; Support activities that provide the support necessary for the primary activities to take place. As illustrated below, the value chain shows how a product moves from raw-material stage to the final customer. To be a source of competitive advantage, a resource or capability must allow the firm: (1) to perform an activity in a manner that is superior to the way competitors perform it, or (2) to perform a value-creating activity that competitors cannot complete. As simple illustrations, the value chain analysis should include some the following ideas: (A) Primary Activities Inbound Logistics. What activities are used to receive, store, and disseminate inputs to a product (materials handling, warehousing, inventory control, etc.) in your companyOperations. Describe the activities necessary to convert the inputs provided by inbound logistics into final product form (machining, packaging, assembly, etc.) What are the chief elements of your company’s production strategy? (e.g., making plant upgrades, use of TQM/Six Sigma programs, etc)?Outbound Logistics. What activities are involved with collecting, storing, and physically distributing the product to your customers (e.g., finished goods warehousing, order processing, etc)?Marketing & Sales. Analyze the chief elements of your company’s marketing strategy (e.g., pricing, advertising, promotions, distribution channels, deployment of all the other weapons of competitive rivalry).Service. Describe the activities designed to enhance or maintain your product’s value (repair, training, adjustment, etc).Firm Infrastructure. Analyze the activities that support the work of the entire value chain (e.g., general management, planning, finance, accounting, legal, government relations, etc). For example, what are the chief elements of your company’s finance strategy (e.g., the use of debt, dividend payments, sales/purchases of stock, use of cash, etc)?What is your company’s strategy for exercising social responsibility and being a good corporate citizen?Human Resource Management. How does your company recruit, hire, train, develop, and compensate its personnel (e.g., use of overtime, worker compensation)?Technology Development. What activities are completed to improve your firm’s product and what processes are used to manufacture it (process equipment, basic research, product design, etc)?Procurement. Describe the activities completed to purchase the inputs needed to produce your firm’s products (raw materials and supplies, machines, laboratory equipment, etc). (B) Support Activities 3. External Analysis The external analysis of the firm describes the context in which the firm must compete. A thorough external analysis will first address the general environment (legal, political, economic, etc.). Second, look at the industry dynamics and competitive market (e.g. who is the firm selling to, what challenges does the firm face in profitably reaching their customers). Next, the analysis should discuss the firm’s competitors—are they larger, smaller, more profitable, more flexible? What advantage or disadvantage would these competitors have in the marketplace? The 5-forces model is a good tool to organize your work when defining the competitive environment. While not perfect, it will ensure that you have covered the main points. 4. Identification of the firm’s strategy and its competitors’ strategies This section is meant to accomplish two goals: First, you are asked to summarize the focal firm’s strategy as well as its competitors’ strategies, based upon your analysis of the internal and the external environments. Second, you should discuss why each firm has chosen its respective strategy, as well as the main advantages and disadvantages of each, based upon the firm’s characteristics. Keep in mind that this does not mean that you should replicate the same level of analysis that you have performed on the focal firm on every competitor. However, you should be familiar enough with each competitor to discuss its strategy at a high level. This task should be accomplished by means of a table, as follows: Firm Name Strategy Highlights Rationale for Strategy Pros and Cons Focal firm … Competitor 1 … Competitor 2 … … 5. Recommendations Having analyzed the firm and its competitors, you should have an idea of what strengths the firm should be leveraging on and you can look again at the external environment to see what opportunities it should pursue.In many of the cases, the firm in question is contemplating, or has implemented, several specific strategic actions (e.g., an acquisition). In this situation, the written case analysis should also include an evaluation of these specific strategic actions and, where appropriate, recommendations should be made and justified. The recommended strategy should occupy the last quarter of your analysis. Ideally, you would give one to three alternatives, possibly listed in bulleted form. One option could actually include “don’t change anything,” but very likely this will not be the best choice, especially in a competitive market. Select one of these alternatives as the preferred recommendation. While all three might be good, a firm may only be able to attack one at a time, and will want to know which one you think has the biggest return. Explain why you believe this is the best option for the firm. The alternatives need to be specific action items—something that if it were developed into a plan, you could go to a bank and get financing. As an example, instead of saying “form an alliance,” you could recommend “form an R&D alliance with Q to leverage this firm’s superior product rollout capabilities against Q’s more advanced technology.”It may take some effort, but this will show that you understand a) what makes the firm strong or weak and b) how it can take advantage of those factors. You could even recommend a firm liquidate—be specific and say how management should sell it off. Additional Requirements Obviously to do a good strategic analysis of a firm, you will need to compile additional data. Keep records of what you find. If you cite from press releases or articles, list them in a bibliography. If you use numbers from an investing website, compile the information you use into some easy-to read tables or charts, and put all of this into your exhibits. Try not to include things in the exhibits for the sake of taking up space—predigest the useful knowledge for your audience so that they can quickly spot what is important. Finally, you should be thinking critically about the firm in this analysis. I don’t have to agree with your conclusions or recommendations, if you argue them convincingly. I am looking to see that you understand the process for completing this assignment. Once you understand the logical framework to follow, good answers come with practice.