...DIVERSIFICATION: Savoir-Relier TM INTRODUCTION 1/2 The Walt Disney Company has been created in 1923 and has grown by doing well in almost all of its activities and mostly due to diversification. It is today a group worth $ 25B with an average 10-year ROE of 15%, largely superior to other players in the industry (but still inferior to the 20% objective settled by Eisner when named CEO of the company). Used to taking risks, Disney is present in more sectors than any other of its direct competitors, excelling them (first top 6 positions for theme parks even though entry is more expensive than other parks; first 24 positions for top grossing animated films; top market share in domestic box office since1994; Most watched TV Show in 19992000 with Who wants to be a millionaire). But is this a sustainable scenario? INTRODUCTION 2/2 Disney Stock Performance vs SP500 350% 300% o Total assets grown steadily from 2.4 billion in 1983 to 45 billion in 2000, which also confirms the constant growing / diversification across years. A huge investment step occurred in 1996: from 15 to 37 billion - acquisition ABC ($19B) 250% 200% 150% 100% 50% 0% -50% o From 1996 – company didn’t attain the expected 20%/year ROE (decreased from 11% to 4% from 1983 to 1997) o Stabilization of operating margin, ROA and ROE while developing activities (increased revenue & net income, increase of assets) o In 1998 and 1999, the situation worsens internet failure (portal and subscription service)...
Words: 1509 - Pages: 7
...the U.S. market. The net result is that the systematic risk (beta) of the average Hong Kong stock from a U.S. perspective is only 0.85, compared with a beta of 1.0 for the average U.S. stock. In other words, diversifying into Hong Kong stocks will reduce the riskiness of a portfolio currently concentrated in U.S. stocks. 2. What characteristics of foreign securities lead to diversification benefits for American investors? ANSWER. The two basic characteristics are: a) Many foreign securities are issued by companies that produce goods and services not available from U.S. companies. b) All U.S. companies are more or less subject to the same cyclical economic fluctuations. Foreign securities by contrast involve claims on economies whose cycles are not perfectly in phase with the U.S. economic cycle. Thus, just as movements in different stocks partially offset one another in an all-U.S. portfolio, so also movements in U.S. and non-U.S. stocks cancel out each other somewhat. 3. Will increasing integration of national capital markets reduce the benefits of international diversifications? ANSWER. Despite increasing integration of national capital markets, they still don't march in lock step. Some economies and, hence, their markets will do better than others at any given time, so having stakes in several countries still spreads risks. Nonetheless, increasing integration...
Words: 6684 - Pages: 27
... and Yale (BA). Snow is Professor of Business Administration at Pennsylvania State University and a frequent lecturer in executive development programs throughout the world. Summary of the Book Contents The book differs from other book since it is about providing strategy formation that counters specific questions of problem at a more specific level where compared to others that provides strategy formation at a generic level. The book discussed that the sources for competitive advantage are market share and synergy. In addition, the strategies for competitive have been derived into 8 generic competitive strategies which are a collective from 4 strategies for gaining market share and 4 strategies for pursuing synergistic diversification. However, the writers made a disclaimer that the aforementioned strategies may not be...
Words: 1839 - Pages: 8
...in pursuing this objective, varies economic hypothesis and strategies have been developed and applied within different countries. Among these strategies, exportled growth has gained its popular among economists and policy makers due to the success of this policy in many new developed countries in the late 20 th century, especially the miracle growth of the 4 Tigers of South East Asian and China. The idea that trade can be the engine of economic growth states that promotion of the export sector is the best way to achieve economic growth. This hypothesis is verified to be valid through many economic data thorough history and also there are many explanations as to why exports are a crucial way to obtain growth. Firstly, the economy of scale argument of the new trade theory is that domestic markets severely limit the scope for sales of a domestically produced product, and that by allowing exports, country could hugely increase the potential market for domestic goods. This expand in market size can lead to increasing returns if domestic industries could obtain optimal production scale. The bigger economies of scale achieved from exporting lead to increased capacity utilization, which results in greater product variety and productivity gains....
Words: 1796 - Pages: 8
...romances are now one of the challenges that organizations of all sizes have to address. How they address them varies from organization to organization. Some businesses and organizations strictly prohibit them in any form or fashion, while others prohibit them when the participants are in certain roles within the organization. Some companies have chosen not to address the issue at all and others are using a more formal method of documenting and mitigating the risk they feel these relationships pose. One of the methods of documenting, and potentially mitigating, this risk is known as a consensual relationship agreement or CRA. In the text that follows I will argue for the use of CRA’s in the workplace. Secondly, I will present a counter argument for the use of CRA’s. Then we will then look at the ethical principles involved in the use of CRA’s. Lastly I will present another option that may be available for addresses these consensual relationships. First, let’s look at what brought about the need for CRA’s. On June 28th, 1914 Gavrilo Princip, of Sarajevo, assassinated the Archduke and heir to the throne of Austria, Franz Ferdinand (Collins, 2008, p. 9). Thirty-seven days later World War I began, and with it, so did what some see as the beginnings of women entering the workplace. The Munitions of War Act of 1915 moved twenty-one percent of Britain’s wives, sisters, mothers and daughters into the workforce (Woolacott, 1994, p. 17). Factory workers became soldiers and the women...
Words: 1499 - Pages: 6
...GRADING SHEET TEMPLATE GROUP PRESENTATIONS INTL 1101 Prof. Brodsky Small elements: * Is the presentation 20-25 minutes (roughly)? * Do we notice full group involvement - do all members present? Do all members appear engaged? * Clear presentation style – powerpoint, pictures, etc. [Power point not required] * Are we clear on the direction of the presentation throughout? * Is this 1 presentation? Or 4 mini-presentations strung together? Large elements: * Does the group hone in on a policy-relevant issue related to the lecture subject? (i.e. is the presentation too broad?) * Is this issue well researched? * Does the group evaluate the issue? Does the group make an argument? * Does the group offer a counter argument for context? * Does the group offer policy relevant recommendations or critiques? * Does the group link their presentation to the readings for this lecture? * And/or to the course themes in general? * Does the group raise discussion questions for the class that spark debate? What is the problem? The Ukraine crisis appears to be a potential turning point in Euro-Atlantic security. Having come as a surprise to many, some senior Western officials and politicians have talked of a changed European security landscape, and that the crisis both creates new security realities for the twenty first century and demands a significant response from NATO. At the same time, however, the crisis is the...
Words: 1819 - Pages: 8
...ntry Foreign Market Entry and Diversification Question # 1-Create an argument for diversification of your business that will be presented to the board of directors or business investors. A diversified company is no longer a single-business enterprise. A diversified company is a collection of different and individual businesses. This collection of businesses, whether related or unrelated, will cause the strategy- making and decision-making tasks for these collection and/ or groups of businesses to be even more complicated, important, and crucial than ever before (Thompson, Strickland, & Gamble, 2010). There is a greater need for strategy and decision making because the diversified company is venturing out into other [outside] industries. "But in a diversified company, the strategy -making challenge involves assessing multiple industry environments and developing a set of business strategies, one for each industry arena in which the diversified company operates" (Thompson, et al., 2010, p. 239). For these reasons alone, there needs to be extensive research and knowledge done into the arenas of anticipated diversifications. Diversification is a very important and vital move for any business or company. A business must only know the need to diversify. It must also be aware of when to diversify. As stated by Arthur Thompson, A.J. Strickland, and John Gamble (2010): So long as a company has its hands full trying to capitalize on profitable growth opportunities...
Words: 3214 - Pages: 13
...serves purely the interests of the larger parties and reproduces a two party system, rather than accounting for the minorities. It is suggested that FPTP creates voter apathy, over exaggerates votes for larger parties and excludes minorities, although, all of these arguments can be countered to some extent. In my opinion, general elections are an opportunity to ensure the will of the people is reflected in the government of the day and FPTP does not serve this purpose because it simply follows the tyranny of the majority. Firstly, FPTP encourages voter apathy, which is becoming a pressing issue in British politics, it does this because once a majority is formed in a constituency and the MP is officially elected- the rest of the votes are binned. This creates a disincentive to vote, perhaps because people voting for minority parties do not see the point and regard it as a waste of time, or out of disrespect for the system. Apathy was evidenced in the 2015 election, which had a turnout of 66.6%, a measly percentage compared to the Scottish Independence referendum turnout of 85%. However, there is no evidence to suggest that apathy is a direct result of the current electoral system, and therefore the validity of the argument is restricted. The reason for falling voter turnout could well be hapathy- people are content with the current political stance of the country and feel no obligation to vote in the next election. Furthermore, in...
Words: 1019 - Pages: 5
...Assignment 3: Foreign Market Entry and Diversification Strayer University BUS599 Create An Argument For Diversification Of Your Business That Will Be Presented To The Board Of Directors Or Business Investors. Diversification is going to be the key to the longevity of our label. Our smallest competitors, Simply Fashion and Cato, offer shoes and accessories; while our largest competitors, Lane Bryant and Avenue have begun to offer minimal exercise wear. “…diversifying entrants pose a bigger threat in increasing rivalry and challenging incumbents’ market share…” (Klein & Lien, 2009, p. 299). Right now, Lane Bryant is the leader in diversified product lines, although our competitors offer a variety of products in plus size fashion. Our company will improve on quality in order to become a threat to the competitors. If we do not diversify, we will quickly become irrelevant in the market, like our smaller competitors. If we plan to succeed and increase longevity we must diversify and improve upon what our competitors offer. Develop A Strategy For Diversification Indicating The Products And Industries For The Diversification And How Synergies May Be Gained From The Diversified Activity. As a way to increase popularity and customer base loyalty, marketing, research and development will work with designers and distributors on a costume accessories line for plus size women. Currently plus size women are hard pressed to find bracelets for the larger wrist, rings for...
Words: 1459 - Pages: 6
...This recommends helping the business unit executive for supply flow to make an argument for funding the yet unfunded supply flow project from alternative sources and to strengthen the executive’s position in doing so. Implementation of this exception-handling process will take place within 5 days of approval. As a result, the most important strategic goals of VWoA will still remain in focus and the new prioritization process will not have to be reopened. Thus, resistance and fighting against the new prioritization process can be prohibited and at the same time a potential conflict with the parent company due to impeding their globalization initiatives can be resolved. Consistency in the prioritization process of the enterprise’s IT projects and reduced costs will result from these actions. The implementation of the new IT project approval process led to the fact, that a SCM project with high importance to the global level of the organization did not get funding as it does not show significant value at VWoA level. Top-ranked NRG goals such as “build brand customer loyalty” or “improve vehicle value” are not addressed directly with this project, whereas stopping it would lead to a major setback for globalization initiatives of VW AG and would probably lead to a conflict with the parent company. The introduction of VW AG’s new strategy of global product diversification breeds new model introductions in the U.S. and Canadian markets, which emphasizes the need for effective and sophisticated...
Words: 280 - Pages: 2
...managed its portfolio in its quest for growth and a sustained competitive advantage. Within the composition section of the essay is the issue of control versus the co-operation of Virgin and its business units. It then handles the four concepts of corporate strategy and how Virgin can and has used them to add value to its business units. The link between Virgins Corporate and Marketing strategy is then discussed before the other side of the argument is considered, looking at how Virgins corporate strategy destroyed rather than added value. Finally having synthesised the various diverse elements the essay concludes by using the knowledge gained to raise questions for Virgin about their future corporate strategy. The Virgin Group itself does not compete, it is only its Strategic Business Units that do. ‘Successful corporate strategy must grow out of and reinforce competitive strategy.’ (Porter, 1988) It is Virgins strategic business units and not the group as a whole that attempt to create and sustain competitive advantage. Diversification can come in two forms,...
Words: 2006 - Pages: 9
...AB3601 STRATEGIC MANAGEMENT Course Outline Semester 1 of the Academic Year 2015-2016 Course Coordinator: Assoc Prof Tsui-Auch Lai Si Course Instructor for Groups 2, 5 and 5: Wan Chew Yoong Office: S3-1C-80 Tel: 67905651 email: acywan@ntu.edu.sg Course Description and Objective The Strategic Management Course focuses on identifying and understanding the sources of superior firm performance. This course introduces theoretical concepts and frameworks useful for analyzing the external and internal environment of the firm, and guiding the formulation and execution of different types of strategies. Strategic issues are examined from the perspective of a chief executive or general manager, focusing on how one can formulate effective strategies and develop the necessary resources and capabilities to achieve sustainable competitive advantage in a global and volatile competitive environment. Learning Goals At the end of this Course, students should be able to: synthesize information to recognize the external opportunities and threats as well as the internal strengths and weaknesses that impact a firm’s competitive advantage. critically evaluate how a business, corporate and/or international strategy would lead to sustainable competitive advantage. analyze complex and dynamic interdependencies among strategic issues. identify ethical issues and exhibit informed ethical judgment when faced with an ethical decision. Learning and Teaching Methods This course is structured...
Words: 4166 - Pages: 17
...1) An Evaluation of Client Objectives and Constraints for the South Carolina State Pension Fund South Carolina State Pension Fund’s key objectives can be summarised below: Provide an asset pool sufficient to meet the long-term pensions and benefits liabilities Achieve a certain rate of return on the current pension assets for a given level of risk As a government pension plan, the fund has some understandable constraints, which are: Need to invest in mature and stable large companies Only a certain percentage of the fund could be invested in equities, meant to grow by +10% every year up to 40% The remainder (up to 60%) to be invested in bonds Their objective of achieving a certain rate of return is a necessary step to ensure the pension fund is able to meet its future pension liabilities. However, having unrealistic expectations can prove to be harmful where in their case a 1.5% discrepancy in expectations had led to a 120% increase in unfunded liability! The investment constraint of having a pension fund made up majority of bonds can prove to be problematic. While it is true that bonds provide a steady income in terms of coupon plus the opportunity for capital appreciation; the fact that bond prices are inversely proportional to interest rates prove to be a risk for pension funds. Indeed, that is the case for South Carolina pension fund where in April 1996 the fund has lost $400mln due to a rise in interest rates. Also their constraint of investing in...
Words: 3038 - Pages: 13
...usually know more than the buyers. However, it can be appreciated that these categories of takeover can allow a company to expand globally and to present more comprehensive product ranges, thereby allowing the possibility of increases in shareholder wealth. One of the main drivers behind the recent bid for Cadbury by Kraft was the access Cadbury has to many overseas markets, such as the rapidly developing economies of countries like India, Brazil and Mexico where Kraft had poor penetration. 3 Diversification. Both products and markets change and inevitably there is a greater risk that things will go wrong. Diversification has to be divided into two categories: ¤ Related diversification, including vertical integration (backward and forward), and horizontal diversification. Here, there is some connection between the activities of the businesses. ¤ Unrelated (conglomerate) diversification, where there is no commonality between the different businesses. Looking first at related diversification. Backward integration is where a business takes over a supplier; forward integration...
Words: 3171 - Pages: 13
...constitution. According to ‘just intent’ is said to be like having ‘restoration of peace and protection of the innocent’ as the final goal. Neither revenge and economic gain were said to be fairly served. The side responsible for starting the war did not have restoration of peace as its ultimate goal. Americans main motivation was to evade taxes as Englishmen as well as for the atrocities supposedly committed by the British. They believed that the British government was being unjust. It was believed that rebellion against authority was to be dictatorial that is when the case can be made that the American Revolution meets that standard....
Words: 676 - Pages: 3
