Identifying and solving business problems

Final Project Guidelines:

1. Identify the business problems you want to study and confirmed by class instructor. For example:
   The stock price of the company dropped significantly and you want to study what happened behind and what the company could do to make it better.
   The company just announced significant restatement of their financial statements and you want to study the reasons behind and the implications.
   The company faced with financial stress and you can study how to structure a reorganization to save the company.
   The reported profit or the return on equity of the company dropped significantly and you want to study the reasons behind and suggest possible ways to resolve the issues.
   The corporate failure of a company.
   The management fraud of a stated-owned enterprise (SOE).
   A corporate governance scandal including the composition of directors, effectiveness of the BOD, the risk management, the internal control, etc.
2. Specify the objectives for the managers involved. The objectives must be clear and specific, preferably quantifiable/measurable target. Some examples:
   If you want to study the drop of the ROE from 10% to 4%, you should set the target of your study how to increase the ROE from 4% to 11%. You can suggest some solutions with some assumptions. For example, cut staff cost by 10%, remove the office from Central to Causeway Bay to reduce rental by 20%, etc. If you want to devise a resumption plan for a company facing financial stress, you could specify the level which you aim at improving the financial indicators such as current ratio, Z-score, ROE, PE, etc. after the implementation of your resumption.
3. Identify the critical issues in the order of importance. All the knowledge you learned from other courses (not limited to accounting related) could be applied.
   For example, SWOT could be used to analyze the strategy of the company selected. The reasons/causes for business problems are ramified, so try to be thorough.
   A comparison with the benchmarking or main competitors may be necessary to reveal the strengths and weaknesses of the company. For example, you can compare the GP% of Cafe de Coral with Fairwood, discuss why this performance indicators is worse or better for Café de Coral.
   If you cannot simply identify the reasons based on the public information such as annual report, newspaper, journal, analysts’ report, etc, you can conjecture the possible reasons/causes.
4. Identify the possible solutions to the problem
5. Select a solution based on your judgement with reasons. You may discuss benefits and costs of each solution including practical implemental problems.
6. Briefly discuss how to implement the best solution