Business Economics: Term Project Assignment and Guideline

MUIC FEB 17Dr Narudh Cheramakara

Business Economic Term Project • Form a group of 3-4, each group is tasked to choose one of three

hospitality-related companies1. Bangkok Airways2. MK Restaurant3. Dusit Group• Objectives • Each group then uses the latest available annual report of the chosen

company as a basis for the project.• The aim is to identify a partner for merger and acquisition and

formulate the business plan of what will you do with the acquired company.

• At the end of the semester, your group will present the plan as if it is the actual annual plan for the company to the board of directors for the approval.

Assumptions: • - If any required information or data is missing, you are allowed to

make your own assumption (Do make sure that the assumption is reasonable or use figures from comparable companies)

Tasks • 1) Analyze current state of the company in terms of financial

performance, operations, costs, revenues, products and its competitiveness

• 2) Analyze the current state of the industry and business environment along with the players in the market

• 3) Identify potential partners and analyse their current states• 4) Choose one potential acquisition target and make a business

plan

Assessment: The assessment for your work will be based on the following criterion

• 1) Creativity - The creativity of the strategies and implementation • 2) Thoroughness - Make sure that all angles are explored and you

must demonstrate that you have a thorough understanding of the company you are working with particularly on the cost and revenue components.

• 3) Realism and practicality of the plan • 4) Theoretical Application - The ability to apply economic

theories to the plan and explain how it works in reality • 5) Presentation - You are expected to present this plan as an

actual one to the management. Therefore the presentation style must be convincing and interesting.

How do we approach the term project?1. Consider yourself as a member of strategic

planning department of your chosen company (Nok Air in this case)

2. Take a thorough study and examine your company. This could be- Financial performance- Its products/services = how do they compared with competitors- Particular attention to the costs/revenue components/subsidiaries/economic activities - What are the current issues with the companies - Its customers, market position, consumer behaviours etc.

3. Take a thorough study and examine your industry. - Who has the market power? - Who are the major players - How are they doing financially?- What are their products and services?- What is our competitive advantage- Can we achieve economy of scale?- Who is the potential partner?

4. Take a thorough study and examine your industry. - Who has the market power? - Who are the major players - How are they doing financially?- What are their products and services?- What is our competitive advantage?- Can we achieve economy of scale?- Who is the potential partner?- What are their plans?

5. Formulate a plan – Choose your potential acquisition partner and describe your rationale behind it on how it will strengthen and enhance your company performance

Economic analysis toolsYou must address these issues in your presentation

• Opportunity Cost, what are the other potential partners and likely outcome and why you didn’t choose it?

• Scarcity – you need to explain what are the limitation on resources you need and the concept of scarcity. Manpower, financial, capital resources, etc.

• Market power, In your case who has the market (Competitors? Supplier? Labour?) Is it a monopoly? Duopoly? Perfect competition? and why? What market power do you have? How would you improve the market power of your own firm? How do you deal with the market power of the larger player in the market? Who command the price?

• What are Costs and revenue components of your firm? What is the unit cost? And Unit revenue? (how could you reduce the unit cost or unit revenue? Considering the existing performance, is there a possiblility to optimise profit?

Economic Analysis (Cont’d)• Market segmentation: What market segment are you aiming at and

compare with your competitors and merger partner• Macro-economic situation: The industry outlook and external factors

that may be affecting the business (Fuel, currency, political issue etc)• The situation on the supply side? Number of operators and

competition? What are the capacity in the market, etc.• The demand side? The income? What are they coming from? Are they

rich? What are the socio-economic impact? I.e. currency? Fuel cost? , political, epedimic And trend? All the external factors? How will this impact the demand side? Also the supplies side? Is there of your costs are impacted by the external factors?

• Trend in costs? Trend in revenue?• Customers – price elasticity?