1. Corporate Research (Ch 5) Research Methodologies (Ch 6)
Welcome to Class 6
Introduction to
Corporate Research (Ch 5)
&
Research Methodologies (Ch 6)
Chapter 5 & 6

2. Overview
Research is a structured enquiry that relies on scientific methodology to answer questions and create NEW knowledge.
Remember “research” is comprised of two syllables – “re” and “search”
This means the careful “re”thinking and systematic search for facts related to some area of curiosity.

3. Research is divided into two broad categories:
(1) Basic
(2) Applied
Basic Research is the pursuit of NEW
Knowledge for the sake of Knowing
It attempts to improve the "knowledge of humanity.“
Applied Research is the pursuit of NEW Knowledge for a specific Purpose.
It attempts to improve the "condition of humanity."

4. Research Applied Corporate Context Performance Basic Corporate
Research is
a branch
of Applied
Research

5. Components of: Corporate Research Questions
The Corporate Research question contains three dimensions:
1) Did the company appropriately fulfill its social responsibilities?
2) Did the company adequately fulfill its financial objectives?
3) Did the company position itself for future growth and prosperity?
See textbook for an extended list of questions.

6. CAT Corporate Analysis Template
Research Activities
(Contextual and Performance Data)
1. General Environment
2. Competitive Environment
3. Internal Environment
4. Qualitative Performance
5. Financial Performance
Evaluation Activities
(Target and Benchmark)
1. Profit, Equity, & Share Value
2. Debt (financial leverage)
3. Cash
4. Asset (utilization)
5. Organizational Citizenship
6. Strategic Positioning
Reporting Activity
(Findings and Conclusions)
1. Grade assigned to each
performance category
2. Overall performance assessment
3. Rationale for conclusions

7. Data Mining for: Context Data & Performance Data

8. primary and secondary information.
Data Mining
I. Two categories of “data mining” in the CAT system:
(1) Collect Context Data
(The firm’s external environment – general & competitive)
(2) Collect Performance Data
(The firm’s behavior and achievements).
II. Data mined involves both:
primary and secondary information.
 “Primary” refers to observable data directly related to performance
 “Secondary” refers to opinions of other analysts about performance

9. Research Activities Data Mining Context Performance Target Company
Benchmark
General
Environment
Competitive
Qualitative
Financial
Research Activities

10. Competitive Environment
Collect Context Data
Context Data
General Environment
Competitive Environment

11. CONTEXT data: General & Competitive Environments
General Environment
Demographic
Sociocultural
Competitive Environment
Customers
Target
Company
Resources
Leadership
Suppliers
Creditors
Unions
Competitors
Associations
Substitutes
Internal Environment is
not CONTEXT
New Entrants
Interest Groups
Political/Legal
Economic
Technological

12. Collect Performance Data
How well did the company perform within the general and competitive environments?
Performance Data
Qualitative
Financial

13. Qualitative Performance: Organizational Citizenship
Employees
Customers
Competitors
Directors
Government
Environment
Community
Stockholders
Communication
Persona
Vendors /
Suppliers

14. Qualitative Performance: Strategic Positioning
Vision
Mission
Competitive
Advantage
Environment
Adaptability
Innovation
Plan
&
Progress

15. Financial Performance
Balance Sheets
Assets
Liabilities
Equity
Income Statements
Revenues
Expenses
Statement of Cash Flows
Operating Activities
Investing Activities
Financing Activities

16. Financial Performance
Profit, Equity, &
Share Value
Debt
Cash
Asset
The Financial Four

17. BRIEF BREAK

18. Data Collection Categories
SUMMARY of:
Data Collection Categories
Debt
Management
Asset
Utilization
Strategic
Positioning
Organizational
Citizenship
Cash
Profit, Equity, &
Share Value
Performance
Scorecard
PSC

19. Data Mining Methods PSC CAT
Corporate research is a process of mining (extracting) valuable informational gems from existing databases.

20. Data Mining Methods What is an industry?
1. Start by understanding the concept of
INDUSTRY and INDUSTRIAL CODES
What is an industry?
An industry is an environment in which a number of companies are providing services or producing products that are closely related.
Remember:
The condition of an industry is a window into the challenges and opportunities that a company is facing.

21. SIC & NAICS Industrial Classifications
These are government codes to identify industries.
They are helpful in identifying and collecting data about the target’s competitive environment.
SIC = Standard Industrial Classification
NAICS = North American Industrial Classification System
For more information on SIC & NAICS see Chapter Two in your text.

22. They are: The Mother Lode of important information
What are Annual Reports?
They are: The Mother Lode of important information
The annual report is “The Mother Lode” of company-specific performance data.
It includes information about both –
► Financial Performance
► Qualitative Performance
The letters to the stockholders contain numerous clues about the internal environment of the company and how management is coping with the competitive and general environments.

23. General segments of the Annual Report
Report of Management
Board Chair accepts responsibility for annual report and asserts that it complies with SEC requirements. Also indicates control systems and internal auditing procedures are in place.
Auditor’s Report
Public accounting firm summarizes its independent audit of the company and indicates whether or not the company appears to be fairly representing its financial condition. It also states an opinion about the adherence to generally accepted accounting principles.
Management Discussion
This is management’s interpretation of its own performance. It includes a gamut of items both quantitative and qualitative. It will discuss results of operations and funding items.

24. General segments of the Annual Report (cont)
Financial Statements
Statement of Earnings (Income Statement),
Statement of Financial Position (Balance Sheet), and
Statement of Cash Flows are basic requirements by the SEC.
Other items can be included.
Selected Financial Data
This provides information helpful for making comparisons over longer periods of time.

25. Financial Statements in The Annual Report
Statement of Earnings (Income Statement) –
The Income Statement summarizes the revenues and expenses for a complete accounting period.
Generally three years of data are included in the Income Statements
Statement of Financial Position (Balance Sheet) –
The Balance Sheet reveals the year-end values of assets, debts, and equity.
Generally two years of data are included in the Balance Sheets.

26. Financial Statements in The Annual Report (cont)
Statement of Stockholders’ Equity –
The NET value in the stockholder’s account is simply…
Assets less Debts.
A comprehensive detail of changes in stockholders’ equity is usually provided.
Statement of Cash Flows –
Consists of a three-category summary of how cash has been flowing through the company.
The broad categories are:
Operating Activities
Investing Activities
Financing Activities

27. It contains information such as:
Proxy Statement & DEF 14A
Proxy statements are available from all publicly traded companies.
It contains information such as:
→ Invitation to the annual meeting
→ Legal rights and administrative details available to the shareholders
→ Biographies of all directors (most with pictures)
→ Board committees & board compensation
→ Executive compensation
→ Shareholder proposals
SEC Form DEF 14A is a filing with the Securities and Exchange Commission (SEC) used in combination with an annual proxy. It includes:
Adequate information to allow shareholders to make informed decision when voting their shares.
Date, time and place of shareholder meetings,
Dissenter’s right of appraisal, modification or change of securities, voting procedures, and other relevant issues and data.

28. Competitive Advantage
Corporate Analysis
Template
[CAT]
Research
Evaluation
Report
Financial
Qualitative
Synthesize
Defend
Recommendation
Recommend
Action
Profit, Equity,
Share Value
Debt
Cash
Asset
Organizational
Citizenship
Strategic
Positioning
Holistic
Judgment
Data Review
Employees
Investors
Customers
Directors
Governments
Competitors
Environmental
Community
Vision and Mission
Competitive Advantage
Innovation
Cultural sensitivity
Creditors
Other Stakeholders
Growth Plans

29. The End http://www.albany.edu/faculty/vanness/481NEW/TeamClass.pdf
Read Chapter 7:
Research: Qualitative Domain
Remember: Class 7, you will meet in your individual teams. For more information, click on the site below.