FAQ
Zale Corporation - 2004
Note that these responses are not official additions to the questions; only explanations of what is required to answer them. Be sure you read the question and understand it fully before answering.
Research - I have been trying to send the companies on the list e-mails regarding their annual reports and my request doesn't seem to be going through. It advises that the address was incorrect and would not let me send it through. I wanted to know if I should try to call them direct or send a letter requesting this information.
E-mail is not a good method of contacting them for this purpose as you need a specific person's name for e-mail to be effective. Either regular mail or a telephone call is better. Ask for (or address to) investor relations.
I didn't receive complete information for one of the companies.
The 10-K is available from the SEC website:
Search the EDGAR DatabaseData is also available there for any other companies you do not receive reports on. Be sure to use only 10-K (the annual report) and for the correct year.
Most of the companies have their annual reports on their web sites.
General -
I have been reading the packages, and have a question. What exactly am I supposed to be looking at? I do not want to confuse myself with something if there is no need for me to look at it.
You need to get the following information from the various company reports:
A. What are the industry trends? (Q1)
B. What is the industry (market) that the company is in? How should it be defined? (Q1)
C. Who are the largest competitors in the company's industry? (Q1 & Q2)
D. What are the important competitive factors in this industry? (CPM)
E. What are the important characteristics of this industry? (GE)
F. What strategies are other companies following - important in selecting an appropriate strategy for the company? (Q5)You are also required to do "some" industry research looking for more information from industry sources on the above questions.
You need to get enough information from the companies and the industry research (including what I gave you) to understand the company and the industry and to answer the questions that the case poses.
Questions -
1. See FAQ - Market Definition & Market Share
In order to calculate Zale's market share we need market size. According to the handout we have figures for 2002 and 2003. Which one should I use considering the fact that Zale's annual report is dated 07/31/2003?
Since the latest company year-end is 7/2003 and other companies mostly end after then, you should use 2003 data to compute share of market.
For market growth rate should I consider the projected or the inflation adjusted projected growth rate?
I would use the current dollar rates, not inflation adjusted as mostly those are the numbers you would find.
If two companies have the same customers,
provide the same
product/service, in the same geographic location, and are the same in the
value chain, BUT sell their services and products using different methods are they still in the
same MARKET?
Remember, the market is defined by the customer. So, IF to the customer they APPEAR THE SAME, even though they may use different distribution or financing methods internally, they would still be in the same market. So the question is, do they appear the same to the customer?
If I find the size of the market in one of the annual reports can I use this information to estimate the market share of the company.
Probably not. That is one company's estimate, not necessarily the industry definition. One company's view of the industry does not necessarily equal another company's view.
Ideally, industry information should come from government or industry sources. This information IS available on the web.
I'm going to use the total sales of the industry and the sales of the company in question, to calculate the market share of the company. I found a total sales of the industry in 1. One competing company's report and 2. the Industry Surveys "Standard & Poor's" (which is in STU library) for "xxx", the total sales in this case is stated on a table, the source that they used is "U.S. Department of Commerce".
Neither seems appropriate. 1. See the above for why a number from one company is not appropriate and suggestions as to where to find this info. 2. The industry mentioned was too large to be the company's industry. There is data on the correct industry in government sources (probably also somewhere in S&P, although you should use a primary source, if possible).
2. What is the difference between the two major competitors required for question1C and the most important competitors required for question 2A?
1C requires you to include briefly all major competitors (could be 4 to 5 typically, as it was in other cases). 2A narrows down to two.
2A are the most important competitors (usually the largest as measured by sales within the same industry, not necessarily the largest companies overall). If you feel companies that are not the largest are the most important competitors to the company, then support why they are more important competitors than the larger ones. However, in general, small companies wouldn't be the most important competitively.
For question 2B, when we provide the description of their markets, does it need to be a formal definition like we did for the company in question 1A?
No. This should be more a discussion of how the definition varies which should cover at least the four factors in 1.A., but also other factors which might be appropriate.
For question 2B, should we use the same two competitors as we used for 2A?
Yes.
3. CPM - see FAQ - CPM - Competitive Profile Matrix
For 3A, the competitors are the largest companies within the company's industry or the most similar to the company (in terms of their market share or size)?
3A are the same two companies as 2A and 2B, plus the company.
4. BCG - See the BCG FAQ page for questions on the BCG.
5. Recommendation - see FAQ - Question 4 - Recommendation & Support
- 8/07/2004 - Last revised -