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Discussion questions:

Q1. Personal Application

Provide your thoughts about the fundamental strategic issues facing the industry in which your organization exists. Compare the performance of your company against the industry within which it operates using either the Morningstar Database Industry Return on Investment or http://finance.yahoo.com/ (“Interactive chart” “Comparison” tool) if you are in a publicly listed company or use a similar publicly listed company or some other performance measure if you are not. Additional resources are available for those interested in learning more about performance factors for Government and Non-profit sectors. Please cover the following questions in your response.

Q2. Industry Perspective

1. Do some industries have better evolution of the stock value than others? Why? Search for your organization or a similar one and compare its evolution for the longest possible period to the main stock indicators (Dow, NASDAQ, S&P500) and competitive firms.

2. Do some industries have inherently better profitability, growth and market value than others? Identify common key performance indicators used within your industry. Compare for your firm these key factors.

3. What effect do different industries have on one another’s overall performance? Provide arguments and examples to justify your response.

Q3. Company Perspective

1. Is your organization performing well against the others in its industry? Provide arguments and examples to justify your response.

2. What factors explain the differences in company performance in the same industry?

3. How can some companies in poorly performing industries still do well?

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Student’s Answer 1:

I am currently employed by the House of Representatives. Although I cannot specifically analyse my specific agency due to the nature of work, I will analyse the D.O.D. According to U.S. Department of Defense (2015), the Department of Defense is America’s oldest and largest government agency. The mission of the D.O.D. is to defend the nation by any means primarily providing military forces to deter war.

• Capital driven by resources

 The Department of Defense has many capital driven by resources. Political capital is the most important capital. Political capital refers to the trust, concern, and influence that a politician shares with the public and other political figures. Stemming back to 9/11, the D.O.D. has been on the forefront to respond to terror attacks and prevent future ones. More recently, its public trust has been damaged by the leaks of classified information. As a result, many citizens fear that the government is violating their privacy. To repair the public trust, the D.O.D. must do a better job of being more transparent with citizens without jeopardizing the mission. Voters and taxpayers are very important to the D.O.D. They can determine who makes decisions regarding the agency as well as affect the finances of the agency. Nonetheless, the agency has a great opportunity to repair that trust. For example, the threat of war and cyber-attacks are constantly growing daily. The Department of Defense will be our main defense against them. Successful operations and reduction of terrorism will greatly affect the way the agency is viewed. In addition, the agency will satisfy the needs of its taxpayers and voters which could result in bigger federal budget allocations.

• Profits driven by market power

The Department of Defense will experience profits driven by market power by default. I say that because the defense of our nation is a priority. It has a monopoly in that regard. Despite the fact that the military can be reduced, the country must always be prepared to defend itself and allies. The competition to the agency is its enemies (terrorists/countries) and future presidents. As a result of the recent election, the country will face a new reality. The agency’s political capital will be affected but it is uncertain as to whether it will be positive or negative. Nevertheless, the agency is expected to experience an increase of market power (budget allocation) once the new president is sworn in. According to Shane lll, L. and Tilghman, A. (2016), the president elect wants a much bigger military. They also stated that defense spending has dropped to significantly low levels. In order to make a reality, the president elect will have to garner a lot of political support. Each government agency will be affected as a result.  As it stands, defense accounts for 21% of projected federal spending for United States for FY17.

• Growth driven by innovation

The world has progressed into a new age of technology. Everything is becoming faster and the world is becoming smaller as a result. Innovation is a key factor in this evolution. However, the enemy is evolving with technology as well. Cyber-attacks are becoming increasingly more common. My personal information was compromised during a recent attack on the Office of Personnel Management. Furthermore, it is suspected that the recent presidential election was sabotaged due to interference from a foreign country. To prevent similar events in the future, the D.O.D. will be called upon to create new ways to combat those attacks. This will cause the agency’s political capital to increase as well. The D.O.D. is currently revamping the way it handles those attacks. Innovation is encouraged to redefine how America progresses going forward. 

• Conclusion

In conclusion, the Department of Defense will have to repair its public perception with taxpayers and voters. It will need them in order to increase its political capital. However, it will be awarded many opportunities to do so very soon. In addition, the president elect has showed many indications that he will assist the agency in doing so. The next four years will reveal a lot in regards to where the agency and the nation is headed for years to come.

References

U.S. Department of Defense (2015). About the Department of Defense. Retrieved from https://www.defense.gov/About-DoD

Shane lll, L. and Tilghman, A. (2016). Trump’s military will have more troops and more firepower-if he can find more money. Military Times. Retrieved by http://www.militarytimes.com/articles/donald-trump-military-spending

Student’s Answer 2

Industry Perspective

Yes, some industries do have better evolution of stock values.  This is due to strategic planning and appropriate business models to leverage risks and opportunities. Industries with better evolution of stock values understand the industry, their competitors and capitalize on innovative opportunities (Schmitz, 2012).  Some other reasons include accurate predictions of company stocks as well as retaining investors that will preserve shareholder value.   

My current employer is within the environmental services industry.  Although MES has been in business since 1970 and has partnered with publicly traded companies such as Middlesex Water Company (MSEX); MES remains a nonpublic traded company.   The most similar company would be Waste Management.  Based on a Nasdaq comparison, Waste Management has the highest market value at $32 million and P/E ratio of 27.63 (close to neutral), Beta ranking of .58 points to low risk as compared to others within the same industry, positive EPS and a dividend yield of 2.33.   Over a span of 10 years you can see the growth of market value.  2007 stock value was $35 per share, you can see rise and fall of market shares throughout the years.  The current market value is $73.21 per share, double the 2007 values and steadily increasing ("Stock Comparison: Compare Waste Management, Inc. (WM) to Other Stocks," 2017). 

Yes, some industries do have better profitability, growth and market value, such as healthcare, energy and consumer technology.   Key performing indicators used within my current industry include quality; quality of recycled materials collected and quality of materials sold.  Environmental impact of initiatives (dredging, recycling, conservation) and finances (National Research Council Staff, 1999).  MES currently follows the mentioned performance metrics as well as in-house metrics.  Quality of materials are based and valued upon bid/market value as well as vendor quality specifics.  The value that is attained from selling recycled material is measured by the ability to affectively run a facility.  For example, most facilities are able to operate on a profit basis with minimum organizational financial input.  MES also measures performance based on late payments.  MES enacted a measurement of late payments (31+ days) organizational wide to be 10% or below.  This secures their financial stability and credit worthiness. 

Consumer pressures (needs/demands) and industry competition effect overall performance.  Panera recently switched their menu items to not include artificial flavors, sweeteners and preservatives in a push to gain the competitive edge while giving consumers access to “clean food” ("Panera cuts packaged artificial ingredients - Business Insider," 2016). An older example would be Nike.  Currently holding over 50% of the athletic share, Nike was faced with extensive campaigning of their labor practices that threatened to lower their market share.  Nike in turn raised minimum wage, instilled better oversight and addressed environmental factors to change their image and deter boycotting ("Social Pressures Affect Corporate Strategy and Performance | Stanford Graduate School of Business," 2010).

Company Perspective

Although not a publicly traded company, in my opinion MES is functioning at and above its closet competitor; Waste Management.  MES’s facilities capabilities to operate solely on profit promotes growth and overall organizational stability.  Market value of materials does change as well as vendors (both domestic and international) but quality measures help insure that MES receives the highest bid possible. Yearly Financial Statements/Annual Reports reflect positive revenues and operating expenses that fluctuate yearly.  Currently a member of D&B to measure growth and open connectivity to other partners.

Efficiency is a factor that explains the difference in company performance.  Organizations should be able to effectively maneuver their strategic plan (implement new processes and policies if necessary), use resources wisely and effectively monitor and cultivate leadership.  Organizations that can balance both internal and external (culture, political, technology, economical and environmental) factors can see the most gains (Pettigrew, Thomas, & Whittington, 2010) and able to manage competitive advantage and product/service differentiation.  This also works for weak performing companies, if the companies follow strategic plans and can differentiate the products/services provided they can still do well. 

References:

Committee on Industrial Environmental Performance Metrics, & National Academy of Engineering and National Research Council. (1999). Industrial environmental performance metrics: Challenges and opportunities (pp. 29-32). Washington, DC: National Academy Press.

Mastering Strategy: Art and Science. (n.d.). Retrieved from https://saylordotorg.github.io/text_mastering-strategic-management/s05-mastering-strategy-art-and-sci.html

National Research Council Staff. (1999). Industrial Environmental Performance Metrics: Challenges and Opportunities (20-32nd ed.). Washington, NY: Joseph Henry Press [Imprint.

Panera cuts packaged artificial ingredients - Business Insider. (2016, June). Retrieved from http://www.businessinsider.com/panera-cuts-packaged-artificial-ingredients-2016-6

Pettigrew, A. M., Thomas, H., & Whittington, R. (2010). Handbook of strategy and management. London: Sage Publications.

Social Pressures Affect Corporate Strategy and Performance | Stanford Graduate School of Business. (2010, December). Retrieved from https://www.gsb.stanford.edu/insights/social-pressures-affect-corporate-strategy-performance

Stock Comparison: Compare Waste Management, Inc. (WM) to Other Stocks. (2017, April 7). Retrieved from http://www.nasdaq.com/symbol/wm/stock-comparison

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Q4. The Newsroom and Current Events

This is the place to post links to current items from newspapers, magazines, journals or blogs. Explain how this news item or journal article is applicable to one or more topics from this week's learning.  To open a discussion, click on the "Start a New Thread" button at the bottom of the screen. Type in a descriptive topic heading and post your comments. Others can join the discussion by responding to the topic.

Student’s answer:

For this weeks personal discussion I focused on Verizon as a company. One of the the item's I pointed out was the industry was ripe for new entrants to come in attempt to gain some of the massive profits found in the Wireless Telecommunications industry. One company who has done that is T-Mobile USA. I found this article fit well with our readings on strategy. It reviews the successful strategy T-mobile USA has taken to gain significant market share from its rivals.

http://ezproxy.umuc.edu/login?url=http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=120353823&site=eds-live&scope=site

References

Legere, J. (2017). T-MOBILE’S CEO ON WINNING MARKET SHARE BY TRASH-TALKING RIVALS. Harvard Business Review, 95(1), 37-42.