...Creating Shared Value Wednesday, October 17, 1.15pm Moderator Dr. Robert S. Kaplan Marvin Bower Professor of Leadership, Emeritus, Harvard Business School Panellists Gustavo Hernandez Executive Vice President, Pemex Exploration & Production John W. Walsh Founder & President, COPD Foundation Michael Kavanaugh Director, Respiratory Boehringer Ingelheim Sikha Singh Director of OSM & HR, Executive Ship Management Creating Shared Value: A Short Overview Bob Kaplan Marvin Bower Professor of Leadership Development, Emeritus Copyright © President & Fellows of Harvard College Amanco: Triple Bottom-Line Reporting We must generate economic value while operating in a framework of ethics, eco-efficiency and with social responsibility to improve people's quality of life. Regions: South America MEXICO CENTRAL AMERICAN REGION (Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, Panama) BRAZIL COLOMBIA ANDINAR (Argentina, Ecuador, Peru, Venezuela) 3 Amanco’s Strategy Map 4 From CSR to Shared Value Shared Value Sustainability Corporate Social Responsibility 5 How Companies Create Shared Value Definition: Companies create shared value when they enhance their competitiveness while advancing economic and social conditions in the communities in which they operate Examples of creating shared value: (Amanco illustrates #’s 1 and 2.) 1. Introduce new products and markets to meet societal needs (nutrition, energy and water conservation...
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...Phat Trieu COB 487 Write-up #1: Article The Big Idea-Creating Shared Value Questions: Is there a linkage between business strategy and corporate social responsibility? Nowadays, many companies have put so much effort into improve their social and environmental consequences from their activities. However, some of them are succeeded and some are not nearly productive as they suppose to be. In my opinion, there are possible two reasons in which are due to the pitfall of their business to our society and the un-alignment between social responsibility and firm’s strategy. How can firms create shared value? According to the article, the notion of shared value means realizing what our community needs in terms of economical needs and defining our markets. Besides, thinking about the shared value definition does also mention about the harmful ways that business can bring to our community such as wasted energy or wasted materials from the production. Hence, many firm’s strategy has brought deep-down noticing the important notion of shared value in order to reduce harmful waste as much as they can. For example, the “fair-trade movement” has intend to improve the productivity/efficiency of farmers to produce higher quality product with low waste from its production. Is the competitiveness of a company and the health of the communities around it mutually dependent? In my opinion, the answer is not only mutually dependent but also they are interwinded. The view of business...
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...A stock is selling today for $40 per share. At the end of the year, it pays a dividend of $4 per share and sells for $48. a. What is the total rate of return on the stock? b. What are the dividend yield and percentage capital gain? Initial selling price 40 Dividend 4 Selling price of stock after dividend 48 a. Total rate of return 30.00% b. Dividend Yield 10.00% % capital gain 20.00% You purchase 100 shares of stock for $50 a share. The stock pays a $2 per share dividend at year-end. What is the rate of return on your investment for the end-of-year stock prices listed below? What is your real (inflation-adjusted) rate of return? Assume an inflation rate of 3%. Purchase value 100 shares 50 Rate of Return Real Rate of Return Dividend at end of year 2 a. 48 0% -2.91% Inflation 0.03 50 4% 0.97% 54 12% 8.74% Value to cover inflation part a 51.5 Ending value part a 50 ending value part b 52 Ending value part c 56 Here are stock market and Treasury bill percentage returns between 2006 and 2010: Year Stock market return T-bill return 2006 17.27 6.3 10.97 7.1040 50 2007 7.41 6.06 1.35 -2.5160 6.33 2008 -38.83 1.8 -40.63 -44.4960 1980 2009 29.7 0.9 28.8 24.9340 622 2010 19.36 0.52 18.84 14.9740 224 2883 a. What was the risk premium on common stock in each year? Year...
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...The role of the financial manager has in maximizing shareholders value is key to the achieving the goals of the shareholders. The financial manager performs double duty working toward achieving profits for the company and optimizing the shareholders value. The flexibility of having the ability to hear viewpoints from different angles to achieve the goals of both the shareholders and the company’s manager. Today’s financial manager must have the skills and strength to evaluate and assess risks to help their company maintain a competitive edge. The responsible of the financial manager in maximizing shareholders and use real-time financial information to take advantage of the latest opportunity to capitalize on an investment. According to the text the financial managers works to achieve the goals of shareholders because shareholders are the owners of the company that employs the financial manager. This can give rise to conflict when a manager makes decision because of the needed to make decisions based on shareholders approval and what is best for the company ongoing success. Sometimes the goals of shareholders can tempt the financial manager to make unethical decision in managers attempt to maximize the goals of the shareholder value. Other times companies will have a disregard of shareholders values and not only disregard reducing expenses but foster an environment where financial abuse takes place from renting luxury cars to doing business at the most expensive...
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...Balance sheet: stockholder's section ACC/545 March 09, 2015 Brooke Call Balance Sheet: stockholder's section Treasury stock Treasury stock is the portion of the shares that a company keeps in their own treasury. Companies acquire treasury stock for the following reasons (1) to offset the dilution from the issuance of stock, (2) to provide shares to meet stock- based compensation, (3) to combat a hostile takeover, (4) to increase earnings per share and to reduce future cash dividends. There are two methods to account for treasury stock, (1) the cost method, which records the treasury stock account at cost of shares reacquired and (2) Par value method which records the treasury stock account at the par value of shares reacquired. Treasury stock is location on the balance sheet. Example of cost method journal entry Purchases 200 shares of treasury stock for 25 a share Treasury stock (cost) 200x $25 5,000 Cash 5,000 Retained earnings The capital that is generated as profit by an organizations business transactions has to be accounted for, management has one of two choices: either pay a cash dividend to their shareholders or retain the earnings to reinvest in the business. Once management makes the decision to retain earnings the earnings have to be accounted for on the balance sheet under shareholder equity. This entry into shareholder equity allows the shareholder to see the historical record of...
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...Question 1: Pan-Europa must strengthen the right hand side of the balance sheet now that the price war is over. Summary of the financial figures in Table Exhibit 2 show that the gross sales are almost stagnant over the 3-year period, earnings per share have steadily declined during the same time period, and the market value of shareholder’s equity is at the moment lower than its actual book value. Furthermore, the net income is also down over this 3-year period, and this is where Pan-Europa needs to focus its efforts (capital projects should assist in this effort). Earnings per share, dividends, and shareholders’ equity all fuelled by increase in net income will become critically important to the company and its shareholders in this coming year. Increase in net income would in turn strengthen the shareholders’ equity, earnings per share and dividends, and this would discourage buying shares by those considering a hostile takeover. Trudi Lauf as a proponent of reducing leverage on the balance sheet and understanding the shareholders anxiety should lead the way of Pan-Europa. ___________________________________________________________________________ Question 2: There are three NPV – NPV at Corp WACC (10,5%), NPV at minimum ROR and equivalent annuity. Ranking all projects against each of this category provides slightly different results. However, I used NPV at Corp WACC (10,5%) as this includes the most recent estimated weighted-average cost of capital for Pan-Europa. The results...
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...stockholder sell for cash rather thanBlockbuster stock? Ans. Many Cityvision stockholder sell for cash rather than Blockbuster stock because – In cash transaction acquiring shareholders take all the risk that theexpected synergy value embedded in the acquisition premium will notmaterialize, where as when we deal is stock the risk is spread andshared with the acquired shareholders too.In a cash deal it is pretty clear who is acquirer and who is acquired,when it comes to stocks and the stock value can change at any time.A really confident acquirer will tend to pay for the acquisition by cashand the markets historically have been rewarding this confidence byresponding through rise in share value, a stock buy out could (almostcertainly) take the opposite direction if they sense that the stock isovervalued. In about 75% of the cases, the stock value of acquirer hastaken a dip soon after the deal is announced. The cash buyout also makes sure that its shareholders do not give up any merger gains to theacquired companies shareholders.The more sensitive the acquired companies compensation is tochanges in acquirer’s stock, the less favorable the response from themarket. There are many tools and frameworks that one can use toarrive at the SVAR (Shareholder value at risk) and then make adecision on the best mode.In conclusion I would say that this is not an easy decision , there areseveral macroeconomic factors that drive this and also this shouldcome out as a result of your strategic...
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...execute a share-transfer agreement wherein Schwartz transferred 2% of his American Scale share to Coyle. * Coyle then owned 51%; Schwartz owned 49% Coyle is majority shareholder and it was specifically stated in the argument. * August 25, 1988: Both agreed upon a buy-sell agreement that they titled, “Stockholder’s Cross-Purchase Agreement” * The agreement provided for the repurchase of a shareholder’s stock in the event of death, disability, or voluntary withdrawal of that shareholder. * Specifically: * It stated that if Coyle or Schwartz died or otherwise attempted to dispose of his shares, the other shareholder would have the right to purchase those shares. * Also, the agreement gave the majority shareholder an option to purchase all of the minority shareholder’s stock at any time upon a 60-day written notice. * As of August 25, 1988, the fair market value of each share was $250 after a stock-valuation method was completed. * Case states: “UNLESS ALTERED AS HEREIN PROVIDED, for the purpose of determining the purchase price to be paid for the stock of a Stockholder, the fair market value of each share of stock shall be, as of August 25, 1988, $250.” * “The stockholder’s shall redetermine the value of the stock within 60 days following the end of EACH fiscal year. If the stockholders fail to make the required annual redetermination of value for a particular year, the last previously recorded value...
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...The goal is to determine which option does the most good by using utilitarianism theory. In Option A, shareholders will receive identical numbers of New-Kleen (NK) shares in lieu of TideeKleen (TK) shares. The value of an NK share will be around $50 in comparison to TK’s share, which is presently being traded at $30. Shareholders, such as Halo Fund, will obviously benefit by gaining more return. Moreover, NK will be operating with new machinery and making use of green initiatives, which could result in a higher profit margin. Since newer and younger employees of NK will benefit, the company will be able to cover their benefits and pensions from the profits generated. The aggregate utility among shareholders and new employees would be high. However, there is a large amount of unhappiness as well. It is most likely that TK will go bankrupt, and the creditors's interests would not be satisfied since they can only get little money back. In addition, TK would continue using old machines and employing older workers. Even though TK will take care of the benefits, pensions and other compensation owed the workers in those old facilities, there are still problems that the company must face. First, exposed to toxic substances and knowing the health threats they are under, older workers would not be as motivated and effective as expected, thus lowering the productivity of the company and reducing profits substantially. Secondly, continuing to use the old facilities will lead to increasing...
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...|FIN |Genentech |5/02/2011 | | |Discussion Questions |Key Players / People | |Why is Roche seeking to acquire the 44% of Genentech it does not own? From Roche’s point of view, what are the advantages of owning 100% of Genentech? What are the |Arthur Levinson- Gen’’s Chairman and CEO | |risks? Can Roche finance this deal? |Franz Humer – Chairman of Roche | | | | |Reasons for acquisition (100% ownership): | | |The old model that had served both companies since 1990 so well was beginning to show signs of wear | ...
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...Forecasting and Valuation Analysis Our group is going to use Discounted Discount Method to calculate the value of per share about Medtronic, and we assume that the terminal year is the 6th year. Assumptions According to the 10-K, we can easily get the basic information (shown in the form below), and by using the function of equity value equal to dividend divide require cost of equity(r) minus growth rate and the assumption of the constant growth rate, we can calculate the growth rate to be 15.17%.And we also assume the number of shares outstanding to be constant in the next 6 years. | |2012 |2011 |2010 | |Number of shares outstanding |1053.9 |1077.4 |1106.3 | |Dividend to shareholders | $1,021.00 | $969.00 | $907.00 | |EPS | $3.43 | $2.87 | $2.80 | | ROE |21.14% |19.39% |21.18% | |DPS | $0.97 | $0.90 | $0.82 | |Net earing | $3,617.00 | $3,096.00 | $3,099.00 ...
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...Wal-Mart Integrative Management Exercise Cohort A, Learning Group 8: Shareholder Perspective 1) Why have Wal-Mart shares outperformed the market during the recent crisis recession? a. Investors expect that more people will shop at Walmart and therefore buy more shares b. Compared to the market (when many other areas are down) c. They have a business that performs well when other businesses are down d. Increased unemployment, more people buying groceries at Walmart e. Article on performance compared to Costco in the recession i. http://www.theophania.net/acct5331.tp1.pdf 2) What are the key drivers of Walmart shareholder value going forward? Walmart faces significant headwinds as the #1 retailer in the world. At revenues of 460B annually they’ve operated on very small margins and massive scale while continuing to grow. Their continued growth of net income will be essential to driving shareholder value. This becomes more challenging using the same approach they have in the past. If they fail to maintain their net income they’ll struggle to continue increasing their dividends and share buybacks which have provided a significant amount of value back to shareholders (over 100b). Going forward, Walmart will have to leverage their strengths in new areas. An effective Ecommerce strategy that connects online with their strengths in offline could be a significant sources of additional revenue and income. A successful strategy...
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...firm can make money back. Issuing stock or IPO is a famous way of getting huge amount of finance but in order to does so company need to pass certain regulation. Issuing a bond is also common among big firm since customer know that the odd of company going bankrupt is very low Discuss why each of the following may not be appropriate corporate goals? 1) Increase market share. Increase market share may be a good idea but it may harm the firm if it needs to spend money to do so like advertising or reducing cost so it can penetrate into the market. Especially where it is competitive industry which will require a lot more money. 2) Minimize costs. Minimize cost may gain company customer or more market share but doing so will reduce the firm profit and may hurt the firm brand image 3) Expand profit. Expanding profit should not be firm goal because firm cannot clarify which year they want to expand their profit, thus it should be every year. Investing more in the profit may be a good long term strategy but this will reduce a return to shareholder. However as a value investor I love this idea. Describe the difference between Corporation and Sole Proprietorship. [Hint: Please review our lecture notes slides and answer from four categories: Who owns the business? Are managers and owners separate? What is the owner’s liability? Are the owner & business taxed separately?] For cooperation the person who owns the most...
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...superstore concept in 1986 and has annua sales Revenues ($B)1 2007 2008 2009 2010 2011 2010 2011 Diluted Earnings Per Share 3 in the world in eCommerce sales. With 88,000 associates worldwide, Staples operates in 26 countries throughout North and South America, Europe, Asia and Australia, making it easy for businesses y r of all sizes and consumers. f The company is headquartered outside Boston. More information about Staples (Nasdaq: SPLS) is available at www.staples.com/media. Cash Flow Generation ($M) of $25 billion, ranking second f Operating Cash Flow 2007 As Adjusted 2007 2008 2009 2010 2011 2008 2009 2010 2011 Free Cash Flow Capita Expenditures 2007 2008 2009 2010 2011 Stores Open at Fiscal Year End 2007 Dividends Per Share 2008 2009 2010 2011 1 2 2008 revenues include $4.2 billion of revenues from Corporate Express for the period July 2008–January 2009. f 2008 revenue mix includes $2.3 billion of North American Delivery revenues and $1.9 billion of International revenues from Corporate Express for the period f f July 2008–January 2009. 3 – 2007 excludes a $38.0 million ($0.04 per share) charge related to the settlement of California wage and hour class action litigation. 2008 excludes $173.5 million f ($0.16 per share) of charges related to integration and restructuring associated with Corporate Express....
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...management and local politicians, Mittal announced that it would condition the second tier of its tender offer on receiving more than one-half of the Arcelor voting stock. However, the second tier offer would be at a slightly lower price than offered in the first tier. This was done to encourage Arcelor shareholders to participate in the first tier offering. If Mittal could gain a majority of voting shares it would be able to acquire the remaining shares through a backend merger. Moreover, Mittal sued to test the legality of Arcelor’s moving its recently acquired Dofasco operations into a trust to prevent Mittal from selling the operation to help finance the takeover. Mittal also attempted to rally large shareholder support against what were portrayed as Arcelor management’s self-serving maneuvers. Finally, Mittal continued efforts to appeal to shareholders by raising its bid from its initial 22 percent premium to the then current Arcelor share price to what amounted to a 93 percent premium and agreeing to eliminate its super-voting stock which had given the Mittal family shares that had ten times the voting rights of other shareholders. 2. Identify the takeover defenses employed by Arcelor? Explain why each was used. Answer: Initially, Guy Dolle attempted to gain support among local politicians and the press to come out against the proposed takeover by emphasizing potential...
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