A COMPANY’S ANNUAL report is an
opportunity for its CEO to address
shareholders, but I’ve found that it’s
also a useful teaching tool. For the last
three years, I have integrated corporate
annual reports into my traditional and
online MBA capstone strategy courses
at Xavier University’s Williams College
of Business in Cincinnati, Ohio.
ADVANTAGES FOR LEARNING
When it comes to providing students
insights into a business or industry,
corporate annual reports offer several
advantages over the case study method:
- Their information is more current
and comprehensive than many textbook
- They can be assigned immediately
after they are publicly available.
- They allow students to perform
more in-depth analyses of a company’s
strategic plan, financial situation, and
- They allow students to apply
finance, management, operations, and
economic theories that are the foundation
of strategic management.
- Their use minimizes plagiarism
among students, since no analyses exist
from previous years, either online or
from past students.
- Their use offers an efficient tool for
the assessment of student learning.
- Best of all, they are available online
for free, resulting in savings for students.
Although I find annual reports to be
invaluable as tools for teaching and
learning, I admit that reading and analyzing
them can be onerous. To make
this process easier, I have created a table
that displays how the parts of an annual
report relate to various strategy topics
and theories. (See my table below.) I share the table, as well
as additional related articles, with students
to provide them with a roadmap
for reading reports most effectively. I
require both my online and face-to-face
students to read these materials in the
first and second week of class.
>Click to enlarge chart
I also have created two tutorials to
prepare my students for the task. The
first explores popular strategy concepts
that they’ll use in their analyses. The
second relates directly to the assignment;
in it, I walk them through my
table, including what they should be
looking for as they analyze each section
of an annual report.
I use annual reports in three student
assignments. In the first, I split
students into teams, assigning each
team a different annual report. As they
learn to sift through the information,
students who are more proficient at
the task help bring others up to speed.
Students then present their analyses to
the rest of the class. (Online students
use Zoom to present their analyses in a
In the second assignment, students
write individual analyses of a single
annual report. And in the third assignment,
students work in teams once
again to analyze both the annual report
of a parent company after an acquisition
has been completed and the report
of the target company from the year
preceding the acquisition. Each team
assignment takes approximately eight
to 14 hours for students to complete.
The individual assignment is more
time consuming; it takes approximately
15 hours for students to complete and accounts for 25 percent of their
grade in the course.
A SAMPLE ASSIGNMENT
In the spring 2019 semester, I asked my
students to analyze the annual reports
of retail pharmacy CVS and insurance
company AETNA for their third assignment.
CVS had just acquired AETNA,
so I asked students to address this
question: How could CVS best fulfill the
expectations of key stakeholders, given
its now diversified portfolio?
The assignment can be broken down
into three parts:
Review. Even though this was their
third analysis, I began with a review, not
only of what my instructions were and
what rubric I would use to evaluate their
work, but also of how to read an annual
report. We also reviewed previous
lecture material on value chain, business
and global strategies, external environment
analysis, and internal environment
analysis such as SWOT.
Read. Next, I asked students to read
over our past lecture material on corporate
diversification, financial statement
analysis, corporate finance and portfolio
management, and corporate governance.
Evaluate and recommend. Finally,
students used all of the concepts
they had learned to analyze CVS’
current portfolio, as well as evaluate
the strategic and financial viability of
its acquisition of AETNA. Then, they
created their presentations in which
they recommended plans of action for
CVS at the corporate level, business
unit level (including AETNA), and
After their analysis, students offered
a range of recommendations. For example,
teams suggested that CVS close
its underperforming locations and even
rebrand itself as a health management
company rather than a pharmacy. Others
recommended that the company improve
its approach to customer education
and service, design more efficient
retail layouts, and rotate top and middle
management across strategic business
units to build leadership capabilities.
The depth and breadth of information
in an annual report provides the
information students need to conduct
a thorough analysis of a wide range of
factors, including a company’s industry,
past strategies, financials, HR
practices leadership, and corporate
social responsibility. I believe that
this assignment helps MBA students
cultivate practical analytical skills that
will serve them well, not only in their
career development but in their personal
The first year I used reports in my
courses, I had to create my own teaching
manuals each semester—a cumbersome
and time-consuming process.
However, there are several ways that a
professor can make the first-time use of
- Choose reports from companies
that you are familiar with and have
- Start small, with just a single assignment,
and limit students’ analyses to
a single company. You can assign reports
of diversified companies and those engaging
in M&As once you’re comfortable
with the method.
- Assign the same annual report
to every team to minimize instructor
preparation time. However, introduce
minor changes in the instructions for
each team to retain students’ interest.
- Give students a visual, such as my
table, that introduces a report’s structure,
important parts, and relationships
between those parts.
- Ask students to start their analyses
with the corporate report’s financial
statements. Next, direct them to the
notes, then to the CEO’s address to
shareholders. I’ve found this order to be
the quickest way for students to absorb
Today, I have become more adept
in analyzing corporate annual reports,
which in turn has led to my growth as a
teacher and scholar. Moreover, my students
have told me that analyzing corporate
reports has enhanced both their
skill sets and their career development.
Both of these outcomes have motivated
me to retain and continue to refine the
use of this teaching tool.
Hema Krishnan is a professor of management
and entrepreneurship at Xavier
University’s Williams College of Business
in Cincinnati, Ohio. To receive a copy
of Krishnan’s table, or to request more
information on her approach, contact her
at [email protected].