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The individual practical project (IPJ-3) is a course that is provided by TSIBA Education to its graduate students. It is in partial requirements of TSIBA's Bachelor of Business Administration degree. The aim of the project it is to provide students with an opportunity to apply their theoretical and practical concepts learned over the course of the degree, applying project management skills and working within a company as an intern. The course runs for six months and during this time students have work in a company. During the process (course manual 2010) "Students are required to spend their time within a company undertaking specific projects and understanding the industry in which companies or organizations work" .
As a participant of the IPJ-3 course the above mentioned requirements play an important role in the planning and preparation of this report. The company that provided the internship and that will be discussed in this report is Brandhouse (Pty) ltd. It is one of the companies operating in the liquor industry of South Africa. The report will be looking at: the environmental analysis of the company;its strengths and weaknesses; recommendations on where to improve, if necessary; and the project that was undertaken during the process.
Purpose of this report
The focal point of this individual practical project report is to gain a deeper understanding of Brandhouse operating environment such as the internal and external environment of the company, and to look at the broader spectrum of the environment in which the company operates. The industry that Brandhouse operates in is the liquor industry of South Africa; and this industry is affected by many rules and regulations that companies need to follow in order to stay competitive in the market place (industry report 2005).
In addition to the above focus, this report will be on the feedback to the company on the it's strengths and weaknesses. Highlight specific challenges in which the industry that the company is operating in is faced with; as well as providing effective and viable recommendations to the company.
1.3 Important concepts
1.3.1 Corporate Governance
"Corporate governance is the set of processes, customs, policies, laws, and institutions affecting the way a corporation (or company) is directed, administered or controlled. It also includes the relationships among many stakeholders involved in the company and the goals for which the corporation is governed. The principal stakeholders who are affected by corporate governance of any company are shareholders, the board of directors, employees, customers, creditors, suppliers, and the community at large" (Lowry, J 2006)
According to (Deal and Kennedy 1982), culture is the single most important factor accounting for success or failure in organisations or companies. They identified four key dimensions of culture that any company has to follow which includes:
1. Values - the beliefs that lie at the heart of the corporate culture.
2. Heroes - the people who embody values.
3. Rites and rituals - routines of interaction that have strong symbolic qualities.
4. The culture network - the informal communication system or hidden hierarchy of power in the organisation or company.
Culture is unifying and refers to the processes that bind the organisation together. The idea of corporate culture reinforces the unifying strengths of central goals and creates a sense of common responsibility amongst the company's stakeholders.
1.4 Objectives of the report
Firstly this report examines the nature of the environment within which Brandhouse operates. As part of examining the environment, the following factors are the focus point; looking at the internal and external environment of the company on factors such as core business, culture, corporate environment, examining macro- environment and the market. Secondly it provides details of the project that was undertaken during the time of the internship. This section discusses factors such as purpose/ motivation of the project, business case, project description, scope, benefits of the project to the company and the budget.
The despondence used to conduct this project report is mostly interviews from 24th August 2010 until 24th of November 2010.
1.6 Demarcation of Chapters
Chapter 1: This chapter provides a brief explanation of the IPJ-3 (individual practical industry project) that TSIBA Education provides to its student as well identifying the objectives of the report. A short version of methodology used as well as literature review.
Chapter 2: This chapter is the main importance of this report it looks at the deeper level of the analysis of the industry; it focuses on describing the company, culture, macro- environment, market environment trends, barriers and challenges and the market leaders of the company.
Chapter 3: This chapter is a detailed discussion of project that Brandhouse provided; the chapter will be going into deep detail of the project in terms of phases of the project, project life cycle and the budget.
1.7 Conclusion for chapter 1
This chapter has introduced the individual practical industry project report and serves as a brief overview of the company that offered the internship in terms of the industry in which it operates in. it also provide a short literature review on corporate governance and corporate culture. It serves as an initiation phase of the report whereby it explains the methods used to gather information as well as state the purpose and objectives of the overall report. The following chapter focuses on analysing the industry in which Brandhouse operates in the company that provided the internship.
2. Chapter: Industry analysis
2.1 Description of the company
2.1.1 Company Profile
"Brandhouse Beverages (Pty) Limited (Brandhouse) is one of the leading premium alcohol beverage companies in South Africa with a portfolio that consists of many of the world's leading international brands such as: Johnnie Walker, Smirnoff, J&B, Bells, Captain Morgan, Jose Cuervo, Baileys, Heineken, Amstel, Windhoek and Guinness. The company is a joint venture between three internationally acclaimed mother companies namely Diageo, Heineken and Namibia Breweries Limited" (Brandhouse 2003).
2.1.2 Background of the Company
According to the Brandhouse story (2003) on the 1st of May 2003 Diageo, Heineken and Namibia Limited started a talk about forming a joint venture in South Africa; the above mentioned companies are the leading alcohol manufacturing companies and respected companies in the Olthaver and list groups. They saw an opportunity of expanding their businesses and decided to combine themselves so that they can have their products on the South African market. They decided to form a joint venture called Brandhouse of which they are the shareholders. After the formation of the joint venture it began trading in the South African market on the 1st of July 2004 and since its inception, it has been delivering an outstanding record of success for its shareholders. At the end of June 2009 the company celebrated its fifth full year of trading, exceeding its targets and with record performance by many of their brands. The joint venture has also been responsible for a sharp upswing in profits and a strong growth trajectory for brandhouse, when compared to the previous trading results of the three parent companies in South Africa. The company was also voted by its employees as the best medium sized company to work for in the Deloitte's Company
to work for (Survey, 2007 and 2008). Today Brandhouse is one of the leading premium alcohol beverage companies in South Africa employing more than nine hundred people across the country. The company has branches in all nine provinces of South Africa (Brandhouse story 2003).
The company's purpose and vision statement
The purpose it is "Celebrating life everyday, everywhere". And the vision statement is as follows is "To be the most celebrated company in South Africa" (Brandhouse 2004).
Diageo, Heineken and Namibia limited, as the shareholders of the company, nominate members who are going to be the in the leadership team and who will represent their interest. The following members are the senior leadership team of Brandhouse namely:
Gerald Mahinda- who is the managing director of the company; he over sees the whole business of Brandhouse. He works hand- in- hand with his personal assistant Annalene Ward.
Jag Dhanji- is the Human Resource director, the HR department of Brandhouse consist of sixteen employees
Norman Reyneker-Corporate Relations Director; the corporate relations department consists of eight employees.
John Campbell- Business Support Director who has thirty seven employees
Richard Wells- Commercial (off trade) Director with twenty four employees
Peter Simons - Commercial (on trade) Director with seven employees
Garry Ballentine- Director of the Supply Chain with five employees
Gavin Pike- Director of Marketing with forty seven employees
Peter Hart-Projects director with two employees
And Valeria Juarez-General manager of the SADC markets.
In total there are more than two hundred and ninety people working for Brand house Cape Town branch (Brandhouse org. 2010).
2.2.1 Corporate governance
When interviewed on the 23 August 2010, Mr. N Reyneker (Corporate Relations Director) confirmed that Brandhouse's corporate governance is based on their aim or goal of being an admired corporate citizen. Their purpose and values is what determines the way they work and perform as a business; Brandhouse commit to being the most trusted and respected company n Africa. He also stated that since they operate in the liquor industry they have a responsibility of setting out a good example for society by drinking responsibly. And the liquor industry has many rules and regulations that they have to abide by such as legalisation of the business, managing of their employees and following the legal requirements in terms of selling their product.
Mr. Reyneker also confirmed that all the employees of Brand house are provided with company policies before they join the company. These include the alcohol policy and business conduct, and the laws and standards of the industry. All employees have to agree to the terms and conditions of all of these policies. If for example an employee drinks on the premises during office hours and is caught that is taken as a serious offence at Brandhouse. They can be dismissed immediately or can be regulated by their line managers. The company has an on going programme that it provides to its employees called "Phuza Kahle" meaning drink responsible which emphasises the importance of responsible drinking to the employees. Brandhouse conducts its business in a manner that encourages honesty, sincerity and trustworthiness amongst their employees. As well as acting in a truthful and co-operative manner in all government or legal investigations conducted in the company.
Looking at the external environment there are many factors that are affecting alcohol industries in terms of corporate governance such as government. The government has a huge influence on Brandhouse because there are rules and regulations in place that are created for any alcohol industry which Brandhouse has to abide by. For example getting the license from government on whether to continue the business or not. Since the company sells alcohol they have to pay a tax called sin tax that goes towards institutions such as hospitals, prisons etc; because alcohol is perceived as the main cause of many people ending up in hospitals, jails and even dying. They also have to follow the laws of the National Liquor Act of 2003. Brandhouse decided to regulate itself by creating a marketing code that is in compliance with government regulations as well as ARA (Industry Association for Responsible use of Alcohol) and ASA (Advertising Standards Authority) codes. The code is the method that the company uses in order to help them meet the expectations that the market has on them. For example all the company products must have health standards on them as well stipulate the legal age for drinking. They also do not advertise their products during family times like when parents are driving their children to schools from 5 -8am and Sundays they do not advertise at all (Brandhouse 2003).
According to (Deal and Kennedy) cultural model states that: "corporate culture is one of the key drivers for the success or failure of an organisation. A good, well aligned culture can propel it to success. However, the wrong culture will stifle its ability to adapt to a fast changing world". The culture that exists at Brandhouse is a culture that allows people to be dependent on each other. It encourages team work amongst the employees. They determine the future they want to create in all aspects of their business, and then make it happen, together as a team. Below is the list of visual codes of the company such as dress codes, work environment, seating arrangements, conversations, work/ life balance, building, titles or job descriptions, organisational structure and building; and the invisible aspects of the company consist of values, invisible rules and the world views.
See my comments earlier. You must follow the standard report order: Intro, facts, theory, analysis, conclusions. You have mixed facts and theory here. Provide the theory after your observations here and below.
When interviewing Mr. Norman Reyneker on the 25th of August 2010, confirmed that the company doesn't have a specific dress code, but most of the employees dress semi-formally when they are inside the company. An example would be a person wearing jeans and a formal shirt or top. However when they have a meeting with any external individual they are strictly formal.
The work environment that exists at Brandhouse allows people to be dependant on one another. It encourages people to work in an open plan environment whereby they work in teams and they have a line manger that they report to. It is also an environment that allows people to enjoy themselves, succeed and achieve their own aspirations as well as to in turn, achieve the business goals (Skillsportal 2006). When interviewed on 16 of August 2010 Mrs. H Noble (job title please), confirmed that part of the companies motivation of its employees every Wednesday the company provides lunch to everyone and also Tuesday afternoon after four o'clock employees goes to the company's bar. She also mentioned that the company has an ongoing programme called DRINKiQ that every employee has to go through that encourages employees to be responsible drinkers and not drink and drive.
2.3.3 Seating arrangement
Every department at Brandhouse has its own team and they work in open plan space for example marketing department has its own team and have their line manger that they report to, HR department has its own team and also has their own line manger which they report to, and that particular individual reports directly to the general manager of the company. The teams decide themselves on how they want to arrange their seating.
It is a culture at Brandhouse that every week the teams meet and find out as to how far they are with the work and they discuss issues that they are unclear about and then it is the responsibility of the line manager to make things clear if the teams are unclear about something. The line manager is the one that goes to the top managers and speaks to them on burning issues and he or she then comes back and gives feedback to the teams; or one of the senior managers will go to the teams when they have a meeting and speak to them.
MR. N Reyneker confirmed in a meeting on 24 August 2010, that Brandhouse is currently looking at different ways in which they can encourage flexible working. At the moment the company is making use of home working or teleworking whereby they make arrangements for employees to work from home; so that employees can have balance of working as well as take care of other things at home.
2.3.6 Titles & Job Descriptions
Brandhouse senior management team is male dominated which that contradicts one of the values that the company has which is "valuing each other". The main aim of this value is that they value each other and develop talent to build a team that reflects the rich diversity in their market. It consist of the following Gerald Mahinda who is the managing director, below him is the other directors such as John Campbell, Norman Reyneker, Richard Wells, Gary Ballentine, Valeria Juarez, Jag Phanji, Gavin Pike, Peter Simon and Peter Hart . They are divided up into the other units of the business they work and manage the teams and they are all responsible to make sure that the teams meet deadlines that the company requires from them; and all the directors report directly to the managing director (Brandhouse 2010).
2.3.7 Organisational Structure
The company is structured differently in that there is no structure that one can use and say it is the over all business structure. The first structure of the business is the senior leadership structure that consists of the managing director and all the other directors within the business that reports directly to him. After that is the structures of the other business units for example the HR department has its own structure that states the roles of every individual that works in HR department and the same as corporate relations, marketing etc; as a result one can find hard to find a structure that they can say is the overall business structure (Brandhouse 2010).
The building is decorated according to the company's corporate ID colors that were selected when Brandhouse was established. The colors include blue, rubine red, orange and sky blue; and they have been selected to ensure vibrant and exciting color palette that enhance Brandhouse corporate signature (Corporate identity, 2004 ).
2.4 The invisible aspects of the company
The values of the company consist of the following:
â€¢ Passionate about Brands, Consumers and customers
â€¢ Be the Best
â€¢ Inspired by Ideas
â€¢ Freedom to Succeed and Learn
â€¢ Integrity in Word & Deed
The company's values influence the way they work, everyday and everywhere. (Brandhouse, 2010)
Alcohol businesses are affected by many rules and regulations that a lot of people are not aware of and they have to follow those rule in order for the businesses to be successful; for example government have their own rules that they impose on alcohol industries which includes licensing of the business. Brandhouse have to get an approval license from government in order to continue running the business. When interviewing Mrs. Asyia Sheik on 23rd of August 2010, she confirmed that the company has to pay tax called exercise tax to government. Every alcohol company has to pay the same percentage tax to government regardless of their income. There are also issues around the legal age; they have to sell their products to individuals eighteen years old or older. Their products have to state the legal age and health issues that may affect people if they misuse of alcohol. (Coate, D &Grossman, M. 1998)
When interviewing Miss Phumza Rengqe on the 24th of August 2010, she confirmed that since Brandhouse is an alcohol company a lot of people have different perception about them. Some people think if someone works for Brandhouse they drink alcohol. That is not always the case because some of the employees at Brandhouse do not drink at all . She also confirmed that society always blames the issues that are related to alcohol on them for example issues such as misuse of alcohol, under age drinking and drunk driving. As a company Brandhouse has the responsibility of making a change in society and that is one of the reasons why Brandhouse is involved in campaigns that encourage change in communities.
You have added no detailed theory (which follows all your observations above. All of which are considered facts only). You should add your literature review here (Deal and Kennedy,Schein and preferably some others too. THEN you must analyse your observations based on the theory, and finally come up with conclusions. You MUST do this for this to qualify as an academic document.
Description of macro-environment
The PEST analysis of Brandhouse examines changes in a marketplace caused by Political, Economical, Social, technological, ecological and legal factors. The above mentioned factors influence the decision making of the company as well as performance and strategic planning of the overall business unit.
Political environment- the South African liquor industry is affected by many political factors that are needed to be taken into consideration by companies operating in the industry. Because they form part of government alcohol harm reduction these factors include elements such as licensing of the business, taxation and pricing and policy developments. The local government has a huge influence on Brandhouse because the company is operating in a liquor industry; the government uses the political authority throughout history in order to finance the its goals such as taxing the companies operating in the industry; because Brandhouse is operating in an industry that is filled with rules and regulations that every company in this industry has to follow which include paying of tax called excise tax which is an indirect tax imposed on the sale or use of alcohol products. Every alcohol industry has to pay tax to the government regardless of what their income is. According to Mrs. Aysia Sheik (job title please) in an interview on 23rd of August 2010 before they started with the company they had to gain a liquor license which proves that they are fit enough to operate in the industry. Because in South Africa there is a lot of informal industries which are operating illegally; which are mostly unregulated by laws of the government. In terms of policy development alcohol industries are obligated to create an action plan that encourages safer drinking practices amongst their employees (Parry C D H, B Meyers and M Thiede 2003).
Economic environment-The liquor industry makes a significant contribution to the South African economy, not only in terms of its contribution to the GDP, but through its payment of taxes such as company tax, VAT and excise duties, provider of employment,
supplier and user of a variety of goods and service. The industry is economically important to the country in that according to the industry survey (2010) alcohol manufacturers contributes an overall thirty two percent of the country's GDP and the industry is an important source of employment opportunities. Brandhouse employs more than nine hundred people every year and Miss S. confirmed this in a meeting on the 11 October 2010 that the company's rating on the South African GDP in terms of employment equity is between thirty five and thirty seven percent. However there are also factors that contribute negatively to the country such as the misuse of alcohol that costs the country millions of rands every year. There are various reasons as to why alcohol industries are important into the country; because they create jobs and provide skills to a number of people. They also produce enormous amounts of alcohol each year, but every industry has to protect itself. Brandhouse has a tremendous impact on the economy in that the company employs more than nine hundred people from all over the world. They contribute to wealth by creating exports, provide taxes to government and also contribute fund to research projects. Alcohol taxes are an economic benefit to the country; the government uses the income generated from alcohol and tobacco taxes to contribute to infrastructures such as hospitals, schools, and roads. In terms of protecting themselves Brandhouse has a marketing code that is like a guideline to them, but it is also in compliance with government rules they are self-regulating themselves so that they can commit to responsible marketing and effective self-regulation. The liquor industry is an important source of employment opportunities in South Africa (SA liquor survey 2005). According to (Lisa Steyn 2010) states that the cost of alcohol to the economy is well over one billion rand and this figure does not include the money spent on research and prevention of alcohol abuse or absenteeism of employees. "The shortfall is closer to five billion rand," she said.
Social Environment- Alcohol makes a valuable contribution to South Africa's economy; however it also cost the country hard rands and social misery. In South Africa, all the economic cost of alcohol abuse adds up to about nine billion per year and that is about one percent of the country's gross national product. Alcohol abuse is responsible for many societal issues such as deaths throughout the country, with half of all murders and
road accidents; more than sixty percent of hospital trauma cases are the result of drunkenness. South Africa has some of the highest rates of HIV and sexually transmitted infections (STI) in the world. Alcohol is believed to being the reason for the increase of sexual behavior and unprotected sex because when people drink alcohol they become less inhibited. Overall there are many issues that are associated with alcohol. Society believes that the companies that sell alcohol are killing a lot of people because alcohol is a drug that leads a lot of people to be addicted and end up causing damages that can affect other people. Alcohol contributes to many divorces, marital discord and break- ups; heavy drinking also contributes to the cycle of poverty. When interviewing Miss. Phumza Rengqe (job title please) on 24th of August 2010; she confirmed that Brandhouse has a huge impact on society in that even though the company sells alcohol to the people it is doing everything in its power to make a difference in society. The company is involved in a variety of projects that are working towards addressing the underlying issues related to alcohol. They decided to invest their resources and expertise and work together with government to solve the problems that the country is facing when it comes to alcohol. The following is a list of projects that Brandhouse is involved in namely:
No.1 Taxi driver campaign aiming to encourage taxi driver's to be responsible of their commuters,
Drive dry campaign which the company convey in television, radio's, cinema and outdoor it aim at creating awareness to alcohol consumers to not drink and drive and finally is the responsible drinking campaign that is sharing the widespread concerns about alcohol abuse, underage drinking, binge drinking and drink driving and therefore they are committed to doing whatever it take to drive positive changes in attitudes and behaviors towards alcohol and seek to be at the forefront of industry efforts to promote responsible drinking and combat misuse.(H Donson and A Sukhai 2003)
Technological environment- technology has an important role in alcohol industry; because the production process of alcohol require the use of technology from the staring point to the finishing point. Alcohol industries use technology in the means of marketing and advertising. Technology does influence the way in which Brandhouse runs their business because the company manufactures and sell alcohol throughout the world that and that requires them to make use of Technology and their means of communicating is through technology because the company has offices in Johannesburg, Umtata, East
London and Bloemfontein in order for one to communicate to other employees on the other side they have to make use of technology. For example most of Brandhouse marketing is done via technology either Websites, TV's. Cinema's and Radios. Mr. R Rhoode confirmed this in a meeting on the 4th October 2010 that technology has became a major contributor in the challenges that the industry faces because China is using technology in order to design counter fettered products that look exactly the same as the product that they sell at Brandhouse.
Ecological environment- alcohol has a huge impact on the environment in that there are a lot of environmental factors that get affected in the creation of alcohol. Brandhouse decided to create an environmental policy that recognises the importance of these factors to the company. The company committed to operate its business in an environmentally responsible manner to protect and enhance their people, brands and communities in which they work and live in. In doing so, they aligned themselves to support environmental sustainability and biodiversity by creating an environmental standards for their company and it is as follows:
Energy & Greenhouse Gases
The company's aims at minimising their direct & indirect greenhouse gas emissions; by monitoring the use of fuels, promote awareness of the need to increase energy efficiency, implement programmes of energy use reduction, favor electricity from renewable sources and follow their mother company Diageo guidelines when seeking to offset emissions. They also set timed targets for greenhouse gas emission reductions.
Materials & Solid Waste
In procuring materials used in their operations, they favor those from renewable or recycled sources and those that we manufacture, deliver or use have a lower environmental impact. They monitor waste streams promoting awareness of the need to increase materials
Efficiency. To minimise the waste to landfill, the company operates a hierarchy of action which includes omit, reduce, reuse, recycle and dispose. They also monitor levels of waste recycling and set timed targets for reducing waste sent to landfill.
The company monitors water sources, destinations and flows through their sites in order to understand the water balance and promoting awareness of the need to increase water efficiency. They seek to comply with internal targets set. They also look for alternative uses for effluent waste and also set timed targets for reducing water use.
In designing and renovating brands Brandhouse aims at minimising their environmental impact in manufacturing, distribution, use and disposal. They aim to deliver brands that are in packaging with the smallest environmental footprint for example by seeking to make their packaging recyclable. They also set timed targets for improvement and encourage consumers to reuse or recycle our packaging after use.
Where significant hazards exist the company maintains emergency response plans and adequate containment measures. They also reduce the possibility and severity of accidental spills and release any events that may cause environmental damage (Brandhouse 2008).
Legal Environment- Government has a huge influence on the overall business of Brandhouse; because they are operating in the liquor industry there are various rules and regulations affecting South African liquor industries. The following is the set of rules affecting the industry namely: The core legislation pertaining to the South African liquor industry is the Liquor Act of 2003 (Act 59 of 2003), which was promulgated by Government Gazette in April 2004. Related legislation are the National Liquor Regulations, 2004, which relate to the procedures for registration of liquor entities and other related matters as required under the Liquor Act of 2003. The two key objectives of the national legislation are to restructure the liquor industry and to address the social-economic costs of alcohol abuse. To restructure the industry, government is seeking
greater control over the sector at all levels, while also to deal with potentially anti competitive conduct by dominant industry players, and to facilitate greater participation in the sector especially by historically disadvantaged groups. Brandhouse also works hand in hand with ARA (Industry association for responsible alcohol use) it is a volunteering organization that has been in existence for the past twenty years and is focused on the prevention of the negative consequences of alcohol abuse. As a member of ARA Brandhouse has to subscribe to a very strict marketing code which includes the following:
Advertising: alcohol advertising does not increase consumption or affect abuse of alcohol; rather, its main purpose is brand building through brand differentiation.
Age Limits: supports 18 years as minimum (unsupervised) drinking age, emphasizes importance of decision-making empowerment through education (of youth) as more effective than overly restrictive drinking-age limitations.
Availability: sees no causal link between availability of alcohol (i.e. type of beverage sold by licensee, opening hours, number of licensed outlets), per capita alcohol consumption and alcohol-related problems. Instead feels that focus on risky drinking patterns of individuals or groups holds greater hope for success.
Moderation and Benefits: advocates the importance of moderate drinking, but at the same time takes the position that the message of moderation should run in parallel to the message that moderate consumption has positive health effects.
Pregnancy: advocates the use of caution with respect to the consumption of liquor during pregnancy; actively providing funding for research into FAS (foetal alcohol syndrome).
Taxes: a policy based on high taxes has limited, if any, effect as a means of controlling the consumption of liquor due to unfavorable demand / price elasticity also believes that
increased excise taxes as a means of moderating consumption imposes an excessive and fundamentally unfair burden on responsible drinkers and thus defeats its apparent objective Inelastic demand means that a rise in prices leads to a relatively smaller drop in demand.
Warning Labels: believes that warning labels would be ineffective in combating irresponsible alcohol use, and sees its 'voluntary restraint' of adding positive messages about possible health benefits relating to moderate alcohol consumption as a trade-off against the use of warning labels.( Survey of SA liquor industry 2005).
What about the recent resurrection of the argument to allow alcohol sales on a Sunday?
The information you provide on the company is excellent!
There is still a fair amount of information that we have already covered that is not in here. So far you have very good factual observations but very little theory and no analysis / opinions of your own. These are vital for an academic report. You will need to do a fair amount of work including these before your final submission.