Resource-based approach Within this approach, we are analyzing how does Rio Tinto use their resources and capabilities in order to create value and competitive advantage. Their consistent and longstanding strategy has been successful - investing in and operating low-cost, long-life and expendable operations (Rio Tinto, 2015). Rio Tinto names six critical drivers which support their value proposition, which are combined in order to create a unique platform for their continuous success. 1. World-class portfolio of resources Rio Tinto has a portfolio of world-class assets – “from the Pilbara iron ore business, to Queensland bauxite ore reserves, hydro-powered aluminium smelters, global suite of copper mines and sector-leading energy, diamonds …show more content…
In 2015, they “reduced all injury frequency rate to 0.44 per 200,000 hours worked at the end of the year, compared with 0.59 in 2014” (Rio Tinto, 2015). 4. Balance sheet strength They are targeting a net gearing ratio of 20-30% so they would maintain their strong balance sheet (Rio Tinto, 2015). This target is enabling them to endure present industry pressures and capture any emerging opportunities that current market conditions create. In 2015, their net gearing ratio was 24%, meaning that they were in the lower half of their target range (Rio Tinto, 2015). 5. Capital allocation discipline Rio Tinto applies a disciplined and consistent approach to capital allocation. Their primary allocation is towards necessary sustaining capital (Rio Tinto, 2015). Secondly, they finance their primary contract with their shareholders, by the ordinary dividend (Rio Tinto, 2015). And finally, they estimate the optimal use of the remaining capital across alternatives of reduction of debt, compelling growth and additional cash returns to their shareholders (Rio Tinto, 2015). By implementing this, in 2015 they had sustaining capital of 2.1 billion USD, compelling growth of 2.6 billion USD, dividends of 4.1 billion USD and buy-back of shares of 2 billion USD (Rio Tinto,
In SIVMED’s case, based on the definition of WACC, all capital bases should be included in its WACC. These include its common stock, preferred stock, bonds and long-term borrowings. In addition to being able to compute for the costs of capital, the WACC also determines how much interest SIVMED has to pay for all its activities. The value of the firm’s stock, which we want to maximize, depends of the after-tax cash flow. Hence, after-tax values for WACC are also needed. Furthermore, cost of capital is used to determine the cost of each debt, stock or common equity. Being able to analyze these will be essential into deciding what and how new capital should be acquired. Hence, the present marginal costs are ideally more essential than historical costs.
Exxon Mobil Corporation- Exxon Mobile (NYSE: XOM) didn’t have a good start to the year, but the fourth-quarter results helped the company’s share to rise nearly 7% despite a disappointing financial performance. Its shares are now up approximately 3% year-to-date. The company for the quarter reported earnings of $0.67 per share, a slump of 57% as compared to earnings of $1.56 per share in the fourth-quarter of 2014. This decline in earnings is driven by weakness in the commodity market that has impacted its upstream business significantly.
By analyzing the internal environment of Coach we find that coach has a sustainable competitive advantage through characteristics such as solid tangible and intangible assets. Their competitive advantage can also be seen through the capabilities and dynamic capabilities they possess. Refer to Appendix B for further detail about how Coach continues to have a sustainable competitive advantage.
Canandaigua’s return on assets is better than the industry standard for 1998, and just under the industry standard in 1997. The company’s management has been able to improve the company’s ROA by almost doubling net income from the prior year. Management has in the past done a good job of utilizing its assets, and by the latest results is doing an even better job. Canandaigua’s gross margin(25.62) is less than the industry standard(43.80%). It appears that the company’s production costs are greater than others in the industry. Profit margin(6.78%) is greater than the industry standard(6.64%) in 1998. Canandaigua is very good at controlling selling & general administrative expenses. Higher sales in 1998 resulted primarily from additional beer sales, largely Corona Beer sales, additional table wine sales and additional spirits sales. The company has increased its return on common stockholder’s equity(12.84%), compared to the industry standard of 10.89%. Canandaigua does a fair job of controlling borrowing. Interest expense was reduced by ...
Earlier 2002, the stock price of Agnico-Eagle Mines sharply decreased by $1 finally closed at $13.89. This price has reached one of the lowest level, from the company's historical perspective. As a professional equity portfolio manager, who has a large number of AEM stocks on hand. Acker and his team are necessary to find a proper way to estimated the fair value of AEM as well as its equity. Discounted Cash Flow (DCF) has been chosen to do this job. The theory behind DCF valuation approach is that the firm's value can be estimated by using the expected future free cash flow discounted by an appropriate discounted rate (Koller etc 2005). However several assumptions need to be clearly examined within this approach. The following sections are showing the process of DCF step by step.
We defined several criteria to determine our choice – return, risks and other quantitative and qualitative factors. Targeting a debt ratio of 40% will maximize the firm’s value. A higher earning’s per share and dividends per share will lead to a higher stock price in the future. Due to leveraging, return on equity is higher because debt is the major source of financing capital expenditures. To maintain the 40% debt ratio, no equity issues will be declared until 1985. DuPont will be financing the needed funds by debt. For 1986 onwards, minimum equity funds will be issued. It will be timed to take advantage of favorable market condition. The rest of the financing required will be acquired by issuing debt.
In order for Cenovus to successfully perform in the market, the company uses various forms of technology and innovations to continue to be competitive. Positioning the company
In assessing Du Pont’s capital structure after the Conoco merger that significantly increased the company’s debt to equity ratio, an analyst must look at all benefits and drawbacks of a high debt ratio. The main reason why Du Pont ended up with a high debt to equity ratio after acquiring Conoco was due to the timing and price at which they bought Conoco. Du Pont ended up buying the firm at its peak, just before coal and oil prices started to fall and at a time when economic recession hurt the chemical industry of Du Pont. The additional response from analysts and Du Pont stockholders also forced Du Pont to think twice about their new expansion. The thought of bringing the debt ratio back to 25% was brought on by the fact that the company saw that high levels of capital spending were vital to the success of the firm and that high debt levels may put them at higher risk for defaulting.
Even though a myriad of tools and techniques learnt in the Strategic Cost Management and Strategic Business Analysis courses are not fully exploited in this essay, it is generally recognised that those techniques are useful for a corporate to formulate strategy, do strategic planning, control costing and quality, as well as eventually elevate its values, regardless the nature and size of organizations.
2. Given the forecasts provided in the case, estimate the expected incremental free cash flows associated with Du Pont’s growth strategy and maintain strategy for the TiO2 market. How much risk and uncertainty surround these future cash flows? Which strategy looks most attractive (i.e., using the DCF (e.g., NPV) method)??
Selecting a business strategy that details valuable resources and distinctive competencies, strategizing all resources and capabilities and ensuring they are all employed and exploited, and building and regenerating valuable resources and distinctive competencies is key. The analysis of resources, capabilities and core competencies describes the external environment which is subject to change quickly. Based off this information a firm has to be prepared and know its internal resources and capabilities and offer a more secure strategy. Furthermore, resources and capabilities are the primary source of profitability. Resources entail intangible, tangible, and human resources. Capabilities describe environment and strategic environment. Core competencies include knowledge and technical capability. In this section we will attempt to describe in detail the three segments which are resources, capabilities, and core competencies.
DESCRIBE THE STRATEGIC CONTEXT IN WHICH QUINTANA SHOULD JUDGE MUSIMUNDO’S PERFORMANCE. WHAT ARE THE CHARACTERISTICS OF THE ENVIRONMENT THAT MUSIMUNDO COMPETES IN? WHAT ARE PEGASUS’ STRATEGIC OBJECTIVES FOR MUSIMUNDO? HOW DO THESE FACTORS AFFECT THE BUDGETING PROCESS?
Resources are being classified into tangible and intangibles assets as the followings: *Resources of *Virgin Group Tangible Resources Intangible Resources Capabilities of Virgin Group are established by the integrated resources that assisted it to stay competitive and to outdo its competitors. Valuable capabilities will aid Virgin Group to effectively tap and explore spotted opportunities as well as to minimize threats in the external environment. Should capabilities are consistently and effectively utilized, they will turn significant and be difficult to be imitated or substituted. With the resources discussed above, 3 capabilities of Virgin Group are identified as follows: - *Capabilities 1: Unique C*ulture of *"Making difference and creating uniqueness"* (*Contributed Resources: *Financial, Organizational, Human, Innovation*, Technological*) Creativity, Innovation are the foundations to Virgin and Richard Branson’s success! Technology push is the spine for innovation and likely to simulate process innovation in how service is provided when looking into Virgin. Technology is more likely to simulate process innovation. Every turn and businesses Branson venture has been with some kind of innovation or creativity element if not something unique, something that has not been seen or heard of before in the relevant market. Virgin Group has achieved a competitive advantage among its competitors by uniformly followed its culture in all business in serving good value and service to the customers in different ways. The basic and the core competence of all Virgin Group's business ventures are to do things just a little bit differently from the rest. And also they always tried to add value by adding a little fun to the business. By differentiating in strategy itself to fit of the activities and the ways of doing business have also differentiated itself from the rivals and make it difficult to imitate Virgin’s strategy. Hence, they have established their business to an untouchable position. How would you characterize the corporate strategy of Branson's Virgin Group? The answer to that question will not be so different from the ones above. However to better understanding we can characterize the corporate strategy of Virgin Group as "Making difference and creating uniqueness" in any kind of customers' service. They are not stuck to any business field so that makes them flexible of thinking and creating new ideas for their customers and the whole consumers around the world who need (or will need) Virgin's service.
... al. 1999) the estimated cost to society is 2-14% in various countries. In developing countries, the mortality rate caused by workplace injuries is higher due to the fact that the workers are faced with a higher number and numerous hazards. In addition, in developing countries there are less resources for the prevention, rehabilitation and treatment of workplace injuries (Concha-Barrientos et al. 2005).
Russel Y., Topper S., Akerman L., Oliveira J., Strydom Z.; 2013; Studying Business NSC Business Studies Grade 12; 2013 Edition; Paardekraal; Excom Publishers; 26/05/2014