The strategy of Zotefoams refer to the expansion through new customers for MuCell extrusion technology licensing business, partnerships or acquisitions in related technologies, products or markets and a combination of profitable organic growth of Polyolefin and HPP foams businesses. There are four key objectives of Zotefoams that explain the strategy’s core elements. • Grow – Grow sales in their polyolefin business. Sales growth in polyolefin foams grew by 8 percent in constant currency and exceeded twice the average rate of GDP growth. Company want to increase sales in excess of twice GDP growth through support customers in new application and product innovation. • Develop – Develop a HPP portfolio and MEL customer base to deliver increased margins. HPP sales increased by 51 percent to 3.60 million. Company see potential to increase margins and high profit in HPP portfolio so they tend to further invest in markets, products and technology from these high growth opportunities. • Improve – Improve their return on capital employed. Pre-tax return on capital employed (ROCE) rose to 20.8 percent in 2012. ROCE is a suitable benchmark for them because a result of lower of ROCE might occur in each year and the longer term shareholders expect a return over their risk. • Profit – Increase their operating margins. Group operating margins grew to 12.8 percent of sales. The polyolefin foams margins and HPP business were increased whereas the increased investment of MEL was loss. Therefore, they want to achieve in operating margins. However, they plan to keep on the same four key objectives of business, although the high levels of capital expenditure planned will impact the return on capital employed. Moreover, they extend the site of Croyd... ... middle of paper ... ...igh liabilities from the increasing of interest-bearing loans and borrowings in 2012. It might difficult to control and conduct this debt” Question 3: What are the company’s plan to cope with these liabilities and why company decided to use this plan? “From Five year summary, the revenue, profit before tax and dividends increased continuously from 2009 to 2012. The company could make the market to see the potential of the company in the future” Question 4: Do you have any plan to keep this improvement of performances in the future? “Company plan to keep on the same four key objectives of business (Growth, Develop, Improve and Profit), although the high levels of capital expenditure planned will impact the return on capital employed. Question 5: Why the company decided to keep on this four key objectives, although it will impact the return on capital employed?
The first observation from the financial data in appendix one is that General Motors has a low profit margin and is generally less than the industry average each year. The firm is able to keep a low profit margin because they have such high sales volumes throughout the world. This strategy can be both an asset and liability in business planning. The plus side of the strategy is that GM is able to sell a large number of vehicles in the marketplace due to the lower selling price as compared to the competitor. However, the down side of the strategy is that there is a possibility that if sales volumes decrease, the firm can incur a significant decline in the EPS because the profit margin on each item sold is very low. If the global economy sours, GM can have a very difficult time meeting shareholder expectations.
Nevertheless, it must “defend” its current market share if not increase it, by maintaining premium quality and develop innovative products. The marketing mix strategies will effectively achieve targeted revenue and profitability in the near future.
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 ...
You have asked me to analyze your plans for future growth and recommend the best form of business organization to accommodate that growth. I have also taken into consideration you’re your two main concerns of increased liability and ability to add investment in capital assets.
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.
Another interesting component is although the TATR has been trending down. Ford’s fixed asset turnover ratio is increasing. One could conclude that ford has been converting more of their assets into fixed assets. The horizontal analysis of Ford’s balance sheet for fixed assets for 2015 is 120.29% and 100% for 2013 (Ford, 2015a). Therefore, emphasizing the correlation between increases in fixed assets and growing FATR. Management is playing the field well, by increasing fixed asset efficiency, depreciating the fixed assets, and generating more revenue, thus creating a win-win scenario on the
Du Pont is organized into ten industrial departments. The department responsible for TiO2, the pigments department, is the second smallest of the ten departments. The revenue for this department in 1971 is $180 million which represent only 4.68% of Du Pont’s revenue. Although there is a considerable risk associated with the growth strategy, the committee is willing to grow this department because it is one of the smallest departments for du Pont, and the company performing so well financially as a whole. This leads us to the conclusion that the growth strategy should be pursued. Du Pont can afford to take a risk on this strategy given the small impact this department has on their associated financials, not to mention that the returns with the growth strategy are superior to the maintain strategy.
...ant improvement. The decline in property, plant, and equipment may be hurting Rondo and contributing to overall inefficiencies. Sales are growing but profits are not. Rondo's costs are too high and need to be reduced. In addition, inventory turns are degrading and inventory reduction strategies need to be investigated. A major problem for Rondo is the number of days it takes to collect accounts receivable. Significant focus is required in this area to free up cash, which can then be used to invest in property, plant, and equipment. These problems areas contribute significantly to an inefficient operation. This inefficiency inhibits profitability at Rondo and has led to a loss of investor confidence. Rondo's sales and net income have grown year over year and if the company can improve its efficiency in the areas noted above, investor confidence can be recaptured.
The benefits of these assumptions are that while maintaining the current growth rate of 13%; we can maintain our COGS. One of the major factors contributing to the firm’s poor profit margin is operating expenses.
The tool helps marketers to examine threats in the development of new product and expansion into new markets. One of its major advantage is that it helps organisation minimize risks and exposing them future opportunities. The Y axis of the quadrant which can be seen be...
Question 1: Critically analyze the growth strategy adopted by the Aditya Birla Group. What are your views on the business portfolio adopted by the group? (7 marks)
Finally, I have suggested some recommendations for the issues that I have mentioned above. In reference to the first issue, it will be profitable for the company to change to level monthly production.
of these ideas rather than their focus on the return on investment, which is the ideal scenario for the
When compared to the physical capital maintenance concept, the financial capital maintenance concept is the better choice for standard setting when distinguishing between a return of capital and a return on capital. The main argument in favor of physical capital maintenance is that it provides information that has better predictive value, confirmatory value, and is more complete. However, due to agency theory, prospect theory, and positive accounting theory, neutrality and completeness under physical capital maintenance would be impaired so gravely that predictive value and confirmatory value become inefficacious. As a result, financial capital maintenance, with its use of historical cost, is able to provide information to decision makers with stronger confirmatory value and predictive value.
During the last few years, Harry Davis Industries has been too constrained by the high cost of capital to make many capital investments. Recently, though, capital costs have been declining, and the company has decided to look seriously at a major expansion program that had been proposed by the marketing department. Assume that you are an assistant to Leigh Jones, the financial vice president. Your first task is to estimate Harry Davis’s cost of capital. Jones has provided you with the following data, which she believes may be relevant to your task.