...large operating company with huge financial success and annual revenue. With that in mind this company has the ability to implement several different kinds of organizational structures and departments. The best approach to starting the idea of cutting expenses and increasing revenue would be to become more centralized than in the past, but not 100% centralized at this point. This new structure would create two to three new divisions under Scott; a farm supplies purchasing department which would include a salaried manager, or a manager and two supervisors, an analyst, three buyers, an expediting clerk that cross trains as an invoice clerk or an invoice clerk. The larger farm supplies purchasing department would fully handle the purchasing of farm supplies. Taking the power away from the local managers and the product managers would give them the ability to have a deeper view of the organization. For example, the company could consolidate shipments of supplies to save transportation costs. Effective communicate between new departments, management, and subordinates is crucial to make this new venture effectively run. The smaller elevator operations purchasing department would oversee the decisions made by local managers, but would not do any...
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...chapter 9. Evaluating new production and sourcing locations 9.1 Labor costs in manufacturing industries in different countries Norway Belgium Switzerland West. Germany Denmark Finland France Austria Luxemburg Sweden Netherlands Ireland Italy USA Japan UK Spain East Germany Canada Greece Slovenia 43.64 38.59 37.14 36.05 35.08 33.76 33.31 33.20 33.09 32.88 32.75 29.62 27.40 22.95 22.86 22.21 21.87 21.11 21.01 16.44 13.18 South Korea Malta Portugal Czech Rep. Croatia Slovakia Estonia Hungary Poland Lithuania Latvia Turkey Russia Romania Belarus Bulgaria China Ukraine Modavia Georgia Phillippines 11.49 10.27 10.03 8.86 7.89 7.80 7.30 6.94 6.04 5.45 5.25 4.33 3.61 3.39 2.67 2.44 2.25 1.81 1.74 1.65 1.33 Data in EUR per hour, 2009 (adapted from Institut der Deutschen Wirtschaft, 2010) © 2012 R. Grünig/D. Morschett 9. Evaluating new production and sourcing locations 9.2 Total costs of Electrolux for products sourced in different regions Chest-freezers for US market USA China Washing machines for EU market Mexico Production Country = Logistics = Direct labour & overhead Western Europe China Eastern Europe Production Country = Materials & components (Electrolux, 2005) © 2012 R. Grünig/D. Morschett 9. Evaluating new production and sourcing locations 9.3 Components of procurement cost + + + + = Purchasing cost...
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...fit capable of delivering competitive advantage. 3.Become aware of the merits and risks of corporate strategies keyed to unrelated diversification. 4.Gain command of the analytical tools for evaluating a firm’s diversification strategy. ’ When to Diversity A firm should consider diversifying when: • It can expand into businesses whose technologies and products complement its present business. • Its resources and capabilities can be used as valuable competitive assets in other businesses. • Costs can be reduced by cross-business sharing or transfer of resources and capabilities. • Transferring a strong brand name to the products of other businesses helps drive up sales and profits of those businesses. Testing Whether Diversification Will Add Value The Attractiveness Test: • Are the industry’s returns on investment as good or better than present business(es)? The Cost of Entry Test: • Is the cost of overcoming entry barriers so great that profitability is too long delayed? The Better-Off Test: • How much synergy will be gained by diversifying into the industry? • Note: Synergy (1+1=3) is realized when financial benefits of operating in two businesses will be greater than the sum of the separate individual business. Strategies For Entering New Businesses Diversifying into New...
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...the same size has taken. This data obviously does not guarantee the performance of equal measure, but it sure provide a baseline of the possibilities. Review available records and determine the effort applied to achieve similar activities. You can interview the people who were there in case of lack of some records. This, of course, assumes a few things (a) your association has been archiving real records on recent activities and that you will follow a comparatively similar development lifecycle, utilize a comparable advancement strategy, utilize comparative instruments, and utilize a group with comparable aptitudes and experience for the new project. Algorithmic methodologies: This method often suffices for young organizations who do not have historical experience and data since they have not started collecting it yet or because the project is new or very different in one or more essential aspects. These models are experienced and...
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...Case report: Venture Capitalist evaluations of potential Venture opportunities What are the main requirements that these four VC look for when evaluating a new venture opportunity? These VCs have analyzed and come to realize that the most important factor when evaluating a new venture is that there is an opportunity in a large market which is growing. VCs always ask and want to know where a company will be in the next 3-5 years. Usually, for a company to be successfully starting-up, they will have a constant revenue of a minimum of 100 million with a market potential of going up to 500 million dollars. This is for company’s with non-software based companies. When it comes to software based companies, investment can be lower in size. The market size is very important for venture capitalists. They want the size of the markets to range between 500 million and 1 billion dollars to have enough potential to be interesting and worth taking the risk. Venture Capitalists also primarily look for a key factor that seperates a company and its product apart from others. These factors can range from an advance in technology/ design/ engineering to having a tool that people are used to, a list of consumer’s in specific sectors, but scientific related start-ups are usually kept away from because consumers in general wait for new creations to be tested and aware of them before generating big amounts of interest. Investors don’t only want a good idea with specific advantages to make...
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...Entrepreneurial Vision-is a picture of the new world he or she wishes to create. * Picture into which the entrepreneur fits an understanding of why people will be better off, the source of the new value that will be created, and the relationship that will exist. Vision-is a mental image in that it is something the entrepreneur carries around in their head. * It is a very powerful tool for the management of the venture. * It provides a sense of direction by being the light at the end of the tunnel. * It helps the entrepreneur to define his or her goals. * It provides the entrepreneur with a sense of warmth and encouragement when the going gets tough. * It guides the generation of strategy for the venture. * It gives the venture a moral content and helps define social responsibilities. * It can be used to communicate what the entrepreneur wishes to achieve to other people. * It can be used to attract people to the venture and motivate them to support it. * It plays a crucial role in supporting the entrepreneur’s communication and leadership strategy. Communicating and Sharing Vision-the first stage must be to understand why other people will find the vision attractive. Approaches to Communicating Vision 1. I have a Dream-entrepreneurs are explicit about their vision. * They describe the better world just as they see. 2. Talking Specific Goals-entrepreneurs can break down their vision into a specific goals relating. ...
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...BPP Business School Finance Department Financing Entrepreneurial Initiatives Module Outline 1. Module Details It is a Level 7 (Master’s Level) elective module with 15 credits. As a pre-requisite students need to have taken Financial Statement Analysis or an equivalent Accounting course. There will be 10 sessions, 3 hours each every week. Tim Wiscarson will teach the course. 2. Aims and Objectives The course aims to provide students with a strong foundation in evaluating different business models and opportunities and understand the various ways unlisted companies can be built and listed. It is designed to expose the student to many different kinds of situations involving a critical evaluation of the business, for the purpose of determining its value and for seeking financing. It shows how the various financing and investment activities can have an impact on the structure, operations as well as the future of the business. 3. Syllabus 1. Outline The module aims to provide the students with an overview of analysis and valuation of different business models and entrepreneurial opportunities. It introduces different types and sources of financing and the various elements involved from both the management as well as the investor point. It aims to develop the students’ skills in addressing financing and investment issues within an entrepreneurial company and understand how to approach the market investors. As such it targets to enhance...
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...Product innovation means a new or improved product is created, and it is a source to make economic growth (Oxford Reference, 2013). For example, Suzuki Motor Corporation and Maruti Udyog Limited built a joint venture called Maruti-Suzuki in India. Although Maruti-Suzuki introduced Japanese technology to modernize the India automotive industry, the products was only affordable to a few rich and power people in India. The motor industry eventually was inefficient, low profitable and outmoded technology that they created a low-volume and high-cost motor car (Sangeeta, 2011). Therefore, product innovation of joint venture to meet the affordability and acceptability criteria of common people is also a challenge in emerging economies. In other words, how to design and create product innovation to meet local demand in mass markets is faced by joint venture in emerging...
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...of different ways especially if IFRS becomes a mandatory practice for the United States and thus, all accounting information changes would have to be retroactive. Depreciation and Fair Value One large difference between GAAP and IFRS is the aspect of component depreciation. According to Marie Leone from CFO.com, component depreciation means that companies must “recognize and depreciate equipment components separately if the components can be physically separated from the asset and have different useful lifespans” (Leone, 2010). This method of evaluating assets is required by IFRS but not by GAAP. While this practice is allowed to be conducted by GAAP it does not have the same requirement that IFRS does. Being able to evaluate all of the components for an asset would provide a more accurate figure for better or worse. This leads into how an asset can be valued. Both the IASB and FASB have agreed that streamlining the process of evaluating an asset at the measurement of “fair value” is for the best. Both entities have agreed...
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...6. Evaluating new markets 6.1 Criteria for evaluating new markets Criteria for evaluating the geographical market in general Criteria for evaluating industry markets inside the geographical market Key figures Key figures Development of population Development of GDP Development of GDP per capita Development of quantities in total and per sub-market Development of prices in total and per sub-market Development of market volume in total and per sub- market Legal restrictions for economic activities Possible legal forms Conditions for profit repatriation Conditions for sales (e.g. local production) Operations risks Society Political system Ethnic and religious groups Languages Demographic structure Cultural distance Political risks Market system Players Flows of products and services Flows of information Producers and traders Sub-markets National and international competitors Wholesalers and retailers Competitive intensity Infrastructure Customers Telecommunications infrastructure Health care system Link between customer segments and sub-markets; industry segments Demand similarity Traffic infrastructure Customer segments © 2012 R. Grünig/D. Morschett 6. Evaluating new markets 6.2 Process for evaluating new markets 1. Producing an initial list of potential new markets 2. Eliminating the less attractive markets = usual ...
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...a viable business opportunity for Josh, Hannah, and Matthew? 2) What market drivers should they research and be aware of? 3) What are the flaws in the current business strategy? 4) What type of financing should they use if they choose to go forward with this? 5) What types of distribution channels should they go into? 6) How can they improve their chances for success? 7) What is the next step? Answer Guide 1) What are the key factors in determining if this is a viable business opportunity for Josh, Hannah, and Matthew? Josh, Hanna, and Matthew have to determine if this is a viable opportunity for them. In particular, they need to decide if the expected income and level of independence (and other rewards of starting a new venture will outweigh the risk undertaken and significant amount of effort required. The case consists of little information regarding the leadership qualities of the three students (other than that Josh has acquired his MBA). Some self-analysis on their part will be required. As a group, they should use the Entrepreneurial Attractiveness (EA) Index:[1] EA = [pic] where Y = income, I = Independence, W = Work effort, R = Risk, and N = the number of years. wi are the weighting factors that can be adjusted based on their preferences. Further, the three must...
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...By Mashell Chapeyama PEST analysis Pest analysis is a way in which the organization evaluates how it would fare in the environment. With PEST the organization is evaluating critical factors that affect the organization. These factors are: political, economic, socio-cultural and political. This essay is going to discuss these four factors as they affect a company named Chipinge Banana Company, which is found in Zimbabwe. It is a company that specializes in growing and selling of Bananas. These bananas are sold in the country as well as other foreign markets, particularly Asia and Middle East. Political The political system is not stable. Usually there is uncertainty in relationship to land ownership. There is a threat that some farms may be taken by government for resettlement reason. Some countries do not want to do business with Zimbabwe because it has bad human rights record. Some workers may be displayed from work due to political violence. Currently, we are going towards elections which can turn to be violent. Zimbabwe has a very high taxation system in the world. One advantage is that Zimbabwe is part of free trade agreements such as comesa. Zimbabwe has many bilateral trade agreements with many countries. This means there are some favourable conditions in that we can sell some products to countries which trade well with Zimbabwe. Economic Zimbabwe has the advantage of using many currencies, including the pound, US dollars, the yen, the kwacha, and the rand...
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...turning the company into a national chain, but the other members of the team have some concerns. For an example, Ben is concerned about control losing control of the brand. Rick on the other hand has voiced that he is worried about losing his profits. The Strategy After evaluating the different Growth strategies the best strategy for the team is to continue on as a privately owned company. As a privately owned company while growth may be slower than the other options it is still possible. On the other hand, if the gentleman where to try and franchise the organization there is a very good chance they would lose control of the day to day operations of some units, which is an issue for Ben. While it is required for franchise owners to follow company-operating procedure developed by the parent company, ultimately the unit is owned by the franchisee and he or she going to make decisions for his or her shop that best fits their goals (Joseph, 2015). If the team decide to take the offer of the investor and start a joint venture, they will have to further split their profits which does not go over well with Rick. Other problems with starting a joint venture are liability and conflicts. When entering into a joint venture there is no separation between the partners and the business plus there is unlimited liability between for company debt and obligation (Carter, 2015). This means creditors can go after the partners personal property when pursuing a business debt and can go after the business’s...
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...Leeds Metropolitan University 4/30/2012 IFM PLC | Consultancy Report | Financial Analysis and assessing future options for the company | Mohamed Kamara and Iwi Ugiagbe-Green Jens Hagenbeck ID: 33269369 Executive Summary This consultancy report aims at the Board of Directors of IFM Plc a multinational company providing financial services and was being ordered by Finance Director Mrs. Diana Worth. It analyses and evaluates a prospective joint venture between a German subsidiary and EMF Plc, re-domiciling the parent company from France to Monaco and expanding into Asia. The financial analysis showed that a joint venture requires an €2 million investment, which could be funded by the shareholders offering a yield of return of 12%. Using the financial data provided and calculating the weighted average cost of capital and the Net Present Value, a WACC of 10% and a NPV of €2.051 million were the results, proving the worthiness of the investment into the joint venture. Before signing any agreements further research needs to be taken to evaluate non-financial aspects such as opportunity costs and other investments. The second part of the report deals with the re-domiciling of the parent company from France to Monaco. From a business perspective and logical point of view this step makes sense as a lot of business operations are being run in Monaco, but it could still damage the company’s image to move from France just for profit and also shareholders might...
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...minimum rate of return on a project a manager or company is willing to accept before starting a project, given its risk and the opportunity cost of forgoing other projects.[1]. A synonym seen in many contexts is minimum attractive rate of return. For example, suppose a manager knows that investing in a conservative project, such as a bond investment or another project with no risk, yields a known rate of return. When analyzing a new project, the manager may use the conservative project's rate of return as the MARR. The manager will only implement the new project if its anticipated return exceeds the MARR by at least the risk premium of the new project. The hurdle rate is usually determined by evaluating existing opportunities in operations expansion, rate of return for investments, and other factors deemed relevant by management. A risk premium can also be attached to the hurdle rate if management feels that specific opportunities inherently contain more risk than others that could be pursued with the same resources. A common method for evaluating a hurdle rate is to apply the discounted cash flow method to the project, which is used in net present value models. The hurdle rate determines how rapidly the value of the dollar decreases out in time, which, parenthetically, is a significant factor in determining the payback period for the capital project when discounting forecast savings and spending back to present-day terms. Most companies use a 12% hurdle rate, which is based...
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