Assignment 1:

Enterprise Risk Management and Moat Strength

 

3

JWI531 Finance II Assignment 1Template

HOW TO USE THIS TEMPLATE:

This is a template and checklist corresponding to your Assignment 1 paper: Enterprise Risk Management and Moat Strength. See below for an explanation of the color-coding in this template:

· All green text includes instructions to support your writing. You should delete all green text before submitting your final paper.

· All blue text indicates areas where you need to replace text with your own information. Replace the blue text with your own words in black.

· Headings and subheadings are written in black, bold type. Keep these in your paper.

TIPS:

· Write in the third person, using “he” or “she” or “they”, or using specific names. Do not use the second person “you”.

· The body of this paper has one-inch margins and uses a professional font (size 10-12); we recommend Arial or Times New Roman fonts.

· The Assignment template is already formatted with all needed specifications like margins, appropriate font, and double spacing.

· Before submitting your paper, use Grammarly to check for punctuation and usage errors and make the required corrections. Then read aloud to edit for tone and flow.

· You should also run your paper through SafeAssign to ensure that it meets the required standards for originality.

FINALIZING YOUR PAPER

Your submission should be a maximum of 4 pages in length. The page count does not
include the Cover Page at the beginning and the References page at the end. The final paper that you submit for grading should be in black text only with all remaining green text and blue text removed
.

Assignment 1: Enterprise Risk Analysis and Moat Strength

Author’s Name

Jack Welch Management Institute

Professor’s Name

JWI 531

Date

Introduction

An Introduction should be succinct and to the point. Start your Introduction with a general and brief observation about the paper’s topic. Write a thesis statement, which is the “road map” for your paper – it helps your reader to navigate your work. In your thesis statement, be specific about the major areas you plan to address in your paper.

The headings below should guide your introduction, since they identify the topics to be addressed in your paper. The introduction is not a graded part of your rubric but it helps your reader to understand what your assignment will be about. We recommend that you write this part of your Introduction after you complete the other sections of your paper. It only needs to be one paragraph in length.

Analysis and Recommendations

You must answer each of the following questions in your paper. Keep your responses focused on the topic. Straying off into additional areas, even if they are interesting, will not earn additional marks, and may actually detract from the clarity of your responses.

I. Where is each company in its corporate lifecycle (startup, growth, maturity or decline)? Explain.

Before writing your response to this question, make sure you understand what characterizes each of these categories used to describe corporate lifecycle. If you are still unclear based on your course readings, take some time to do additional research on the Web. In your answer, include a clear statement about where each (not just one) company is in its corporate lifecycle. Then, for each company, explain how it matches the characteristics that define the category. Include specific details such as how long the company has been around, whether demand for their products is growing or shrinking, and what the competitive landscape looks like. Your response to this question should be approximately two paragraphs in length.

II. Based on your review of the analysts’ reports and the 10-K reports, which company appears to have more risk? Why?

Note that this question requires you to review both the companies’ own published statements AND third-party sources. The focus of your response should be on the comparison of the overall risk levels the companies face. Do not simply restate the risks identified for each, but explain: (1) areas in which the risk levels are similar and (2) areas where they are different. Remember, you must explain WHY you have reached the conclusions you have about the overall risk-level comparison of the companies. You can probably address this question in a single paragraph, but your response should definitely not exceed two paragraphs.

III. Which categories of risk pose the greatest threat to each organization? Why?

This question is a continuation of the previous question. Now that you have compared relative overall risk levels of each company, you will get into detail about which risk categories pose the
greatest threat
to each organization. Your analysis may conclude that they face the greatest threats from the same risk sources, or that the risks each faces are from different sources. Since this question does not directly ask for a comparison in the way that the previous question did, you may decide that a paragraph on each company is the best way to respond, or you may prefer to first identify the risk categories that each faces and then create a second paragraph to explain why and defend your position. The second approach works well if the risk categories are the same for both companies. Your response to this question should be approximately two paragraphs in length.

IV. Which company has the stronger economic moat? Explain.

An economic moat is a metaphor for how a company creates and protects its place in the market. Moats are the capabilities the organization has to keep its customers coming back and to keep other competitors from stepping in and taking them away. Companies build moats through things like: price advantage, quality, speed of service, marketing, brand reputation, etc. In writing your response to this question, you must: (a) clearly state which company has the stronger economic moat, (b) summarize the factors that contribute to its moat strength in key areas, and (c) explain why you have concluded that the moat strength of one company is superior to the other. You can probably address this question in a single paragraph, but your response should definitely not exceed two paragraphs.

V. For the company that has the weaker economic moat, what two risk factors should they prioritize to improve their risk mitigation and strengthen their competitive advantage? Make specific reference to the applicable risk-management tools discussed on pages 30-63 of The CFO Guidebook.

The final question of your paper shifts from analysis to recommendation. Your reponse must present a plan of action. It is not sufficient to simply identify any two risk areas. Explain why these particular risks deserve to be prioritized. Remember, risk can never be entirely eliminated in business. It can only be managed. As you develop your position, stay focused on the two things that define risk management: (a) reducing the likelihood of the risk actually occurring and (b) minimizing the negative impact if the risk event actually does occur. A well-written response to this question must center on prioritization. That means you need to focus your recommendation on both the risks that could cause the most damage AND on actions that can be taken NOW to mitigate those risks. Focusing on a long-term high-risk factor may be important, but if there is a more immediate risk that needs to be addressed now, this may be the greater priority. Remember, your response must include a rationale for your recommendations. You can probably address this question in a single paragraph, but your response should definitely not exceed two paragraphs.

References

Use the information below to format your in-text citations correctly. Note how the source number connects each citation with the References list on the last page of your paper.

For more citation examples and a sample References page, see the Sample Professional Paper and the JWMI Writing Standards Guide. You can find both these documents in the Course Documents menu item in your Blackboard course.

In-Text Citations

Within the body of your paper, when concepts from specific sources are used, a citation with the author’s last name and the number of the citation in your References list is required: e.g., (Welch, 1). This is called an in-text citation. See below for two examples:

“Leadership is about helping other people grow and succeed” (Welch, 1).

In this example, notice the placement of quotation marks, cited text, and the period after the citation. The number 1 corresponds to the first entry on your References page.

When the reader looks at the References page, they should see the Welch book Winning listed as source number one (1). It is number 1 because it is the first source used in the paper, and throughout the paper this source will continue to be referred to as (1).

If the next source you use in your paper is Bragg, then your citation is (Bragg, 2). If you then refer to Jack’s ideas again later in the paper, he remains (Welch, 1) because it is the first source used in the paper, and throughout the paper this source will continue to be referred to as (1).

Linking Citations with your References Page

At the end of your paper, include a page with a list of all your references. It must include an entry for every source that you have cited or quoted in your paper.

The format of the references list varies by source type. There are examples of different source types in the sample References page at the end of this document. You may also refer to the Sample Professional Paper and/or the JWMI Writing Standards Guide. You can find both these documents in the Course Documents menu item in your Blackboard course.

Quotations

Originality is an important aspect of graduate writing. To ensure original thinking and avoid plagiarism, you should keep direct quotation to a minimum. Generally, keep your quotes to 25 words or less, and no more than 1-2 sentences. See below for an example of a direct quotation:

“Leadership is about helping other people grow and succeed” (Welch, 1).

In this example, notice the placement of quotation marks, cited text, and the period after the citation. The number 1 corresponds to the first entry on our References page.

Paraphrasing

When you paraphrase, you put the information from another writer in your own words. This is much preferable to quoting, as it shows your understanding of the material. In this case, you should use in-text citation, but quotation marks are not required. See below for an example of paraphrasing:

In his Rule 3, Welch says that strong leaders display an impression of vitality and confidence (1).

Since the author’s name was used in the sentence, we do not need to include it again in the parentheses, so we just provide the Reference number, which is (1).

Assignment 1

Risk Ranking
(pg. 26) Risk Name
(10-K Annual Report, Other) Description of the risk Risk Profile
(Pg. 28) Severity Scoring (pg 28) Mitigation Planning
(Pg 30)

Transfer the risk. I believe that this risk would be acceptable because it will cover the lost profits from business interuptions.

5- Potentially business threatening Transfer the risk. I believe that this risk would be acceptable because it will cover the lost profits from business interuptions.

Risk Ranking
(pg. 26) Risk Name
(10-K Annual Report, Other) Description of the risk

Severity Scoring (pg 28) Mitigation Planning
(Pg 30)

4- Major Disruption

4- High Activity

SAMPLE Salesforce.com

Risk Ranking (pg. 26)

Risk Name (10-K Annual Report, Other)

Description of the risk

Risk Profile (Pg. 28)

Severity Scoring (pg 28)

Mitigation Planning (Pg 30)

1 – highest severity/frequency (on the list on my table)

License Renewals

Forecasts of revenue are based on customers renewing their software license contracts. If price increases, customer service drops, or competition increases, then renewals and revenue will decrease.

Financial Risk. Could also be partly operational, strategic, industry, or brand

3 – concerning to stakeholders

Take internal actions to mitigate the risk. This risk cannot be accepted or transferred. Internal actions include enuring that our pricing reflects market competition and customer expectations, that our products are meeting requirements, that our customer service is providing the highest level support, that we identify clients that are at risk of not renewing and actions are taken.

INTEL

3-Normal Activity

Intel face significant competition

The industry in which we operate is highly competitive and subject to rapid technological and market developments, changes in industry standards, changes in customer needs, and frequent product introductions and improvements. If we do not anticipate and respond to these developments, our competitive position may weaken, and our products or technologies might be uncompetitive or become obsolete

Industry Risk. Includes factors that can alter the competitive profile of the industry , such as changes in the entire size of the market that the industry serves, the rate at which the industry is consolidating , and the ability of new competitors to enter the market.

5- Potentially business threatening

Transfer the risk. I believe that this risk would be acceptable because it will cover the lost profits from business interuptions.

3- Normal Activity

Investments in new businesses, products, and technologies are inherently risky and may not succeed

An economic downturn or increased uncertainty may also lead to increased credit and collectibility risks, higher borrowing costs or limits on our access to capital markets, reduced liquidity, adverse impacts on our suppliers, failures of counterparties and other financial institutions, and declines in the value of our financial instruments

Financial Includes the risks of customer nonpayment , foreign exchange rate variability and capital availability concerns.

4- Major Disruption

2- Modest Activity

Global or regional conditions may harm our financial results

Adverse changes in global or regional economic conditions, including recession or slowing growth, changes or uncertainty in fiscal or monetary policy, higher interest rates, tighter credit, inflation, lower capital expenditures by businesses including on IT infrastructure, increases in unemployment, and lower consumer confidence and spending, could significantly harm demand for our products and make it more challenging to forecast our operating results and make business decisions, including regarding prioritization of investments in our business. A

Environmental . Includes -Fines and remediation costs related to pollutions, as well as damage to the environment. Catastrophic . Primarily includes natural disasters , such as hurricanes, earthquakes , tornadoes, and floods.

AMD

Risk Profile (Pg. 28)

5-Normal Activity

The loss of a significant customer may have a material adverse effect on us

If one of our key customers decides to stop buying our products, or if one of these customers materially reduces or reorganizes its operations or its demand for our products, our business would be materially adversely affected.

Brand-Includes issues that can cause the perception of a company’s brand to decline , such as a product recall, marketing flop, bad publicity, negative product reviews, and public squabbles with business partners.

5-Potentially Business Threatening

To accept the Risk- The likely payout from a risk may be so small that the company can easily bear the risk of loss.

4- High Activity

Global economic and market uncertainty may adversely impact our business and operating results

Uncertain global economic conditions have in the past and may in the future adversely impact our business, including, without limitation, a slowdown in the Chinese economy, one of the largest global markets for desktop and notebook PCs

Environmental- Includes fines and remediation costs related to pollution, as well as damage to the environment.

To accept the risk- Since global economic conditions happen quarterly the risk may be so small that the risk is low

Our operating results are subject to quarterly and seasonal sales patterns.

The products that we sell are complex and may be subject to security vulnerabilities that could result in, among other things, the loss, corruption, theft or misuse of confidential data or system performance issues.

Information technology- Includes factors that do not allow an organization to have responsive IT systems, such as being tied to legacy software and having a significant amount of systems.

2-Material Impact

Transfer the risk to Cyber Risk Insurance – Also known as network security liablity insurance, which is considered by CFO and also covers asset information.

&”Calibri Bold,Bold”&14&K000000&A

&”Calibri,Regular”&K000000&D &”Calibri,Regular”&K000000&F &”Calibri,Regular”&K000000&P

Instructions
1. The purpose of this template is to gather data that will be analyzed and discussed in the Assignment Part B submission. Insert the name of the company in the “Company 1 or Company 2” headings so we know which company is being reviewed.
2. The template uses the terminology in the CFO Guidebook chapter on Risks.
3. Risks of the company are disclosed in the annual 10-K report section Item 1A Risk Factors. Use the risks in the 10-K as your basis for your template. You can also get additional risks from the

Morningstar Analyst Report

, or from news articles about the company. Try to narrow down the laundry list of risks to a few unique (only applies to one company but not the other) and major risks.
4. There is no “magic” number of risks to be included in your template. Try to aim for 3-5 risks per company to compare and analyze. More is not better – quality over quantity.
5. You can delete extra rows, or add rows. You can also change the font size and the column widths. Keep the headings standard. While not a requirement, if you believe an additional column is required to better describe/classify your risks, then add it.
6. While not a requirement, you can copy/paste the Excel completed table as a picture to your Word document if it makes it easier to reference in your analysis and recommendations.

Assignment 2

Morningstar Analyst Report

2018 2017 2016

	Company 1 INSERT COMPANY NAME HERE		Company 2 INSERT COMPANY NAME HERE
			2018				2017				2016
Valuation
Price/Sales
Price/Earnings
Price/Book
Earnings Yield %
Growth
Revenue %
Operating income %
Net Income %
Financial Health
Quick Ratio
interest Coverage
Debt/Equity
Profitability
ROA
ROE
ROIC
Net margin %

&”Calibri Bold,Bold”&14&K000000&A
&”Calibri,Regular”&K000000&D &”Calibri,Regular”&K000000&F &”Calibri,Regular”&K000000&P

Instructions
1. The purpose of this template is to gather data that will be analyzed and discussed in the Assignment Part B submission. Insert the name of the company in the “Company 1 or Company 2” headings so we know which company is being reviewed.
2. The template uses the ratio terminology in the CFO Guidebook. We have also provided you with a Course Ratio Checklist you can use to understand what the ratios mean and how they are calculated. Please use Current Year ratios as the base ratios. For example, the most recent full year.
3. Ratios for the companies are included in the Morningstar analyst report provided in the course. Some ratios are also provided in the 10-K Annual Report, from online sources, or can be calculated – but for this exercise you can use the Morningstar analyst report as you primary source.
4. Do not delete ratios from the table. There is no requirement to add extra ratios, unless your believe there are othe ratios that best helps you describe the performance impacting the valuation of the companies. More is not necessarily better – we are looking for quality over quantity.
5. The ratios in this execrcise are based on historical performance. When comparing the ratios of the two companies side-by-side, you will notice differences. One company may seem to have performed better – we are looking for your insight for that difference in performance.
6. You can also change the font size and the column widths. Keep the headings standard. While not a requirement, if you believe an additional column is required to better describe/classify your risks, then add it.
7. While not a requirement, you can copy/paste the Excel completed table as a picture in your Word document if it makes it easier to reference in your analysis and recommendations.

Assignment 3

Company 1 INSERT COMPANY NAME HERE Company 2 INSERT COMPANY NAME HERE

2018 2017 2016 2018 2017 2016

Morningstar Analyst Report Data

Income Statement

Revenue (Bil)

Operating Income (Bil)

Net Income (Bil)

Operating Performance

Gross Margin %

Operating Margin %

Net Margin %

Days Sales Outstanding

Days Inventory

Days Payables

Receivables Turnover

Inventory Turnover

Fixed Asset Turnover

Total Asset Turnover

&”Calibri Bold,Bold”&14&K000000&A
&”Calibri,Regular”&K000000&D &”Calibri,Regular”&K000000&F &”Calibri,Regular”&K000000&P

Instructions
1. The purpose of this template is to gather data that will be analyzed and discussed in the Assignment Part B submission. Insert the name of the company in the “Company 1 or Company 2” headings so we know which company is being reviewed.
2. You will be reviewing the financial data from various years looking for trends.
3. The template uses the ratio terminology in the CFO Guidebook. We have also provided you with a Course Ratio Checklist you can use to understand what the ratios mean and how they are calculated.
4. Ratios for the companies are included in the Morningstar analyst report provided in the course. Some ratios are also provided in the 10-K Annual Report, from online sources, or can be calculated – but for this exercise you can use the Morningstar analyst report as you primary source.
5. Do not delete ratios from the table. There is no requirement to add extra ratios, unless your believe there are othe ratios that best helps you describe the performance impacting the forecast of the companies. More is not necessarily better – we are looking for quality over quantity.
6. When comparing the forecasts of the two companies side-by-side, you will notice differences. One company may seem to have better trends – we are looking for your insight of the difference in performance.
7. You can also change the font size and the column width. Keep the headings standard.
8. While not a requirement, you can copy/paste the Excel completed table as a picture in your Word document if it makes it easier to reference in your analysis and recommendations.