International Operation Strategy of Eucerin: SWOT

International Operation Strategy of Eucerin: SWOT Chapter 1 Introduction 1.1 Research Background The use of cosmetics was over thousands of years. The earliest archaeological evidence can be traced back to some royalty in Ancient Egypt times, where the Ancient Egyptians mixed perfume, sandalwood incense and aromatherapy products with oil applied to human bodies for pilgrimages or as an antiseptic. The Ancient Greeks and Romans also used cosmetics containing often lead and mercury. In the West, the popularization of cosmetics usage began in the 17th century and was originally intended to cover face scars of female patients healed from smallpox. In the19th Century, Queen Victoria once declared publicly that the use of makeup was â€Å"improper, vulgar, and acceptable only for use by actors†. Nevertheless, by the Second World War, cosmetics have been widely used in the West (except Nazi Germany). Today, the worldwide market size for Beauty and Personal Care Industry (BPC Industry) has increased 36% during 2005-2010 and reached USD 382.3 billion last year.Despite the significant influence of global economic recession in the year of 2009, BPC industry still showed stable and continuous growth in certain regions with emerging markets, particularly in Asia Pacific and Latin America. It is forecasted that these two dynamic regions will drive the BPC future global sales and become equally the joint largest market (with Western Europe) by 2014. Figure 1 and 2 below shows the global and regional market value of BPC industry during 2005 to 2010. Cosmetics industry, also called Personal Care Products Industry, Cosmetics and Toiletries Industry, Health and Beauty Industry, or Beauty and Personal Care Industry in this paper, in which companies manufacture and/or market personal care products such as creams, lotions, perfumes or makeup, covers a fully 13 key sub-sectors (Fig. 3). Recent reports show that Skin Care is the largest sector in the BPC industry (Fig. 4). It is predicted that in 2014, Skin Care, together with Hair Care, Colour Cosmetics and Fragrances sector will become the principle contributors to global BPC sales value growth due to the booming market in Asia Pacific. In Asia Pacific region, China represents today one of the most important and attractive BPC markets in the world due to its huge population, the increasing purchasing power of consumer and a better awareness of fashion among the younger generation. According to National Bureau of Statistics of China, the retail value of Chinese BPC products reached RMB 133.24 billion (proximately USD 20.51 billion) in 2010 with a 11.4% nominal growth compared to 2009. The total Chinese BPC market value is expected to reach as much as RMB 206 billion (proximately USD 31.7 billion) by 2014. However, in spite of this rising trend, industry players talked about that the increasing costs such as rental, labour, logistic and advertisement has given heavy pressure on cosmetics companies particularly those who had poorer brand equity were losing their profit margin. 1.2 Research Motivation Funded by Dr. Lifschà ¼tz in 1900, Eucerin ® is now Germanys largest and worlds 4th leading dermo-cosmetics brand in pharmacy segment in Skin Care industry. Belonging to famous German Group Beiersdorf AG, Eucerin sees itself as a â€Å"dermatologist-recommended skin care brand† that provides reliable, high quality and effective dermo-cosmetic products and expertise. Currently, Eucerin provides skin care products that are catalogued in 4 major lines: Face Care, Sensitive Skin Care, Dry Skin Care (medical products) and Sun Protection. Each line contains quite a few sub-lines that are assorted either by skin types / products functions (pure, dry, very dry, problematic, sensitive skin, etc.) or by products application places of the skin (face, body, deodorant, hair, etc.). While Eucerin firstly entered into Asian BPC markets in 1991 and quickly built its brand awareness and popularity among the world of pharmacy skin care products in Thailand, Vietnam, Singapore and Malaysia, in China, however, it has being constantly a big â€Å"missing piece† to complete its global share of market. As Chinas BPC market size is currently rated in the 3rd position after the US and Japan and is still possessing enormous growth potential (12% market growth is expected during 2011 to 2014), and the Skin Care segment is the primary driver for BPC market, it is for Eucerins greatest interest and challenge how to exceed existing international and local skin care competitors to complete its global entire territory. 1.3 Research Scope and Objectives The purpose of this study is therefore attempting to assess and analyse the international operation strategy of Eucerin. Through the SWOT analysis, identify and highlight the key internal and external factors of corporate ongoing strategic planning, gaining an in-depth understanding of the companys strategic operational issues, critical success factors, emerging market opportunities and future marketing challenges and trends. The research scope covers issues including the study of BPC and dermo-cosmetics industry: market sales, market share, Chinese cosmetic market regulations, marketing strategy of Eucerin: marketing segmentations, positioning, and Chinese consumer behaviours. 1.4 Research Process and Chapter Structure The process of this research is approximately composed eight stages summarized as figure 6 underneath. By the case study of Eucerin a Beiersdorf owned dermo-cosmetics brand of BPC Industry, through the literature review, SWOT and critical success factors analysis, attempting to analyse, assess and obtain an embedded understanding of the companys strategic operational issues and its future marketing challenges and trends in Chinese BPC market. Chapter 2 Literature Review 2.1 Beauty and Personal Care Industry The global Beauty and Personal Care market (BPC market), also called Cosmetics and Toiletries market has generated total revenues of US$ 382.3 billion in 2010, representing a compound annual growth rate (CAGR) of 36% for the period 2005-2010. By comparison, markets of Asia Pacific, Western Europe and North America brought out 70% of global BPC market in 2010 (Fig. 8). Most interestingly, both Western Europe and North Americas BPC markets has witnessed the economic recession, showed a negative growth in 2009 and decelerated performance afterward, while markets in Asia Pacific and Latin America, sales growth continue and for the first time the BPC market of Asia Pacific region (mainly referable to China) overtook the first position of global BPC market (Fig. 9). 2.1.1 Market Segmentation and Differentiations BPC products cover all daily personal care cosmetics such as makeup, nail polishes, hair sprays, hair colours, creams, lotions, perfumes, deodorants, shower and bath gel, bath salts, and lots of other product types. The market can be sorted into a completed 13 key sub-sectors scope as we have mentioned earlier (Fig. 10). Skin Care segment is the leading category that generates 22% of worldwide BPC market due to Asia Pacifics booming sales, the rising demand of anti-age products also conducts the segment as the key contributors to global BPC market over the forecast period. Global skin care brands can be also sorted by their marketing positioning into six classes: professional brands, luxury/premium, pharmacy/dermo-cosmetics (cosmeceuticals), organic/natural brands, direct-selling and mass market products. Each segment targets different consumers according to their purchasing power, quality requests or specific needs, etc. Key competitors of each class are listed below: Professional skin care brands (distributed mainly by beauty salons, spas): Sothys Paris, Lexli, RVB, Sparitual, Lotusdream, etc. Premium skin care brands(distributed mainly by department stores, perfumeries), : Shiseido, Està ©e Lauder, Lancà ´me (LOrà ©al Group), Clinique (Està ©e Lauder Group), Kanebo (Kao Group), Chanel, Christian Dior (LVMH Group), SK-II (PG Group), Yves Saint Laurent (LOrà ©al Group), etc. Pharmacy/dermo-cosmetics brands(distributed mainly by pharmacies, drugstores or via dermatologists recommendations): Vichy (LOrà ©al Group), La Roche-Posay (LOrà ©al Group), Boots, Eucerin (Beiersdorf Group), Johnsons, Avà ¨ne (Pierre Fabre SA), Caudalie, Lierac, ROC (Johnson Johnson), Nuxe, Galenic, etc. Organic/natural brands(distributed mainly by speciality stores, natural food stores): Yves Rocher, The Body Shop (LOrà ©al Group), LOccitane Direct-selling brands: Avon (USA), Natura (Brazil), Mary Kay (USA), Oriflame (Luxembourg), Artistry (Amway corp. USA), DHC (Japan), Nu Skin (USA) Mass market brands(distributed mainly by supermarkets, hypermarkets): LOrà ©al Paris, Nivea (Beiersdorf Group), Garnier (LOrà ©al Group), Olay (PG Group), Neutrogena (Johnson Johnson), Ponds (Unilever Group), Vaseline (Unilever Group) Eucerin ® is catalogued in the pharmacy/dermo-cosmetics brand of skin care industry as its products can be only purchased in pharmacies or drugstores. 2.1.2 Skin Care Industry in Western Europe For BPC industry and consumers, it has been tough in the past couple of years. However, the latest data showed that Skin Care was the only category managing to sustain an average of positive 4% growth during the economic downturn.Comprising 23% of global BPC sales in 2010, it remained the most valuable category during 2005-2010. Despite the growth of Skin Care sector slightly slowed down due to the decreased consumptions on non-essential purchases, the global sales of Skin Care sector was still largely focused in mature Western countries. Anti-age cosmeceuticals were considered and predicted as the star performer for Skin Care market for the future couple of years while the premium and luxury products performed the worst and were pushed toward the category of super premium or â€Å"masstige†skincare for a better performance and the growth in both anti-age and premium was accelerated by the high demand in Asia Pacific. Comparing to Skin Care, global Hand Care sales showed a sli ght yet stable growth and the reason was believed to be linked directly with consumers threaten perception of swine flu. In Western Europe, while recent data showed a gradual result of an average 4% Skin Care sales growth in UK, Netherlands and Germany during 2009 2010, key markets such as France, Italy and Spain reflected an average of -2% in term of sales growth, resulting an overall 2% growth drop in Skin Care segment in Western Europe (Fig. 11 and Table 1). While the Skin Care sales growth in western European slowed down in recent years, anti-age sub-category maintained an outstanding growth reflecting the desire for a younger looking appearance from the consumers. Table 1 Skin Care in Key Western European Countries (2005-2010) Crossing the overall BPC Western European market, in 2010, the top 10 Skin Care brands which share 26.2% of the market are belonging to 7 companies: Beiersdorf AG, LOrà ©al Group, Procter Gamble Co., Clarins SA, Yves Rocher SA, Està ©e Lauder Cos Inc, and Henkel AG Co., in which 4 brands are categorised into mass market class (Nivea, LOrà ©al Paris, Oolay and Garnier), 3 in premium/luxary (Clarins, Clinique and Lancà ´me), 2 in pharmacy/dermo-cosmetics (Vichy and Diadermine), and Yves Rocher is classified into natural/organic brands. On the other hand, in terms of company shares in Western European Skin Care market where up to nearly 58.6% market shares are held by the top 10 BPC companies, their products are crossing over all cosmetics classifications and sales distribution channels except the direct-selling category (Appendix 1 2). In relation to consumers behaviour toward BPC market in Western Europe, four fundamental trends characterized by Lee (2010)that impact global BPC market across all categories may sum up this market trend: the ageing population, agelessness pursuance, advances of technology and intensive awareness of health and wellness. The Ageing Population The global population is becoming older. Comparing to Japan who has the oldest population in the world with nearly 23% over the age of 65 in 2010, the median age in Western Europe today is just over 40. Japan has the differentiation of being the largest Skin Care consumer on a per capita basis. In 2010, it accounted for 22% of global skin care sales with USD 19.3 billion and this may referable to its huge older consumers, high disposable incomes and the great interest in combination of health and beauty. Agelessness Pursuance The pursuance of younger looking is highly associated with increased life-pan and the development of technologies. People take greater care of their appearances in order to reflect their interior youthfulness. In result, for example, the high demands for cosmetic minimally-invasive treatment (including Botox, laser skin resurfacing, soft tissue fillers, etc.) that intending for skin firming and elasticity made up 11.6 million procedures in 2010 with 110% growth during 2000 2010 in the US and was expecting to reach totally USD 17.6 billion in 2015. Advances of Technology Skin Care companies and manufactures today are able to sell their products with higher prices thanks to the aggressive introductions of technologically advanced formulations. Consumers in Western Europe may willing to pay up to EUR 20, EUR 40 or even EUR 300 on a product that claims benefits such as firming or wrinkle reduction and contains innovative whatsoever ingredients, while a product that only provides a single basic function may not be able to sold even it only charges EUR 10. High Awareness of Health and Wellness The concerns about health and product safety among consumers in Western Europe have massively increased during the past couple of years due to the aging population and the age-related illnesses. Consumers are becoming more and more careful about what they put on their skins and the detrimental effects of chemicals. In result, this will lead to a strong interest in finding cosmeceuticals with a balance of natural, organic ingredients and effective functions. 2.1.3 Skin Care Industry in China Table 2 BPC Market by categories in China (2009-2010) BPC market in emerging countries such the BRICs (Brazil, Russia, India and China) has shown enormous growth in the past couple of years. In China, BPC market showed strong resilience of 10% sales growth, reaching RMB 145.5 billion (proximately USD 22.4 billion) under the global recession impact in 2009 and continuously increased in 2010. While the growth rate in sectors such as deodorants, fragrances and mens grooming products were less well performed comparing to 2009, skin care, hair care and premium cosmetics were the most dynamic sectors in 2010 (Table 2 and Fig. 12). Comprising 6% of global BPC market value in 2010, Chinas BPC sales is expected to have a relative resilience to the global recession and reach as much as RMB 206 billion (proximately USD 31.7 billion) by 2014. Crossing the overall Skin Care market in China, interestingly, while 9 out of top 10 skin Care brands in Japan all belong to Japanese local BPC manufacturers, the top 10 brands who share 51.5% of Chinas Skin Care market in 2010 are from 4 foreign countries: Mary Kay (US), Artistry (US), Longligi (China) and Avon (US) are categorized into direct-selling channel; Olay (US), LOrà ©al Paris (France) and Nivea (Germany) belongs to mass market class; and Shiseido (Japan), Lancà ´me (France) and Chcà ©do (China) are classified into premium/luxary sector. There are no pharmacy/dermo-cosmetics brands in top 10 and the best performer Vichy (France) only shares 2.1% followed by La Roche-Posays (France) 0.4% in the market. 2.2 Cosmetics Market Regulation in China While China represents today one of the most important and attractive BPC markets in the world, however, its complex cosmetic regulatory system with rapid amendments make the BPC business full of difficulties. The Ministry of Health (MOH) of China has promulgated the â€Å"Regulations on Cosmetics Hygiene Supervision† on 13 November 1989 and the regulation was effective on 1 January 1990.According to it, a foreign cosmetic company (either a manufacturer or brand owner) with a valid business registration licenseis required to obtain two licenses under the cosmetic regulatory system in China the Hygiene License and the China Inspection Quarantine (CIQ) Labeling Certificate. i. Hygiene License Issued by the State Food and Drugs Administration (SFDA), the Hygiene License is concerning of cosmetic products and ingredients monitoring and supervision. Foreign companies holding Chinese business registration licenses with 3 classified cosmetic products listing below are requested to apply for an Import Hygiene License before their products are allowed to be distributed and placed on the China market (the pre-market approval): â€Å"Special-use cosmetics†, which 8 different sorts of products are included: hair dyeing, hair perm, hair-growth, deodorant, depilation, body shaping (including slimming and breast enlarging), sun cream and spot removing. Non special-use cosmetics† including ordinary BPC products such as skin care, hair, fragrance and manicure/pedicure products that are not belonged to special-use cosmetic category. â€Å"New ingredient†, meaning ingredients that are not listed on the â€Å"Inventory of Existing Cosmetic Ingredients in China (IECIC)†. There are several documents including the product ingredients list, product quality standard, product testing report and packaging are needed for Hygiene License application. A full list of application documents is attached in the appendix 4. ii. The China Inspection Quarantine (CIQ) Labeling Certificate Issued by the General Administration of Quality Supervision, Inspection and Quarantine (AQSIQ), the CIQ Labeling Certificate is concerning of imported products packaging supervision. A full list of application documents is attached in the appendix 4. Foreign BPC companies are required to a Chinese legal reporting representative throughout the SFDA Hygiene Licenses application process. Moreover, as the official language of China is simplified Chinese, all mandatory information should be in simplified Chinese including the full product ingredients list shown on cosmetic labeling. According to Pisacane (2009), the Managing Partner from Great Way Advisory, after submitting all requested documents to the SFDA, the whole application process will take 4 5 months for â€Å"non special-use cosmetics† and 8 9 months for â€Å"special-use cosmetics† to obtain the final certificate as the SFDA review and evaluate imported cosmetics only 6 times a year. In terms of cosmetics import tariffs, the current import tariff bound rate for imported BPC products is about 10% basically but it depends also on the country of origin and the product category which the import tariffs can reach as much as 150%, plus 17% VAT (value added tax) a nd 5% 30% CT (consume tax). 2.3 Chinese Consumers Behaviour Comprising 34% market share in Chinas BPC market in 2010, the skin care sector is worth USD 9.9 billion, growing at a rate above the GDPand will continue to dominate the BPC industry sales for future couple of years. While more and more people in China move from the lower class into the middle class, they are able and willing to spend more money on personal beauty care products. However, despite the fast rise in personal wealth, the development in Chinese BPC market sales growth which is greatly linked to better richness can be very fluctuating due to the countrys strong consumer saving level. Moreover, in terms of the growth of Chinas BPC sub-categories is rather unequal, for example, sector such as skin care (sales value USD 9.9 billions) is reaching mainstream status in 2010 while others such as fragrances (sales value USD 0.58 billions) and sun care (sales value USD 0.48 billions) remain niche segments. Despite these, there are still obvious areas where Chinese consumers are will ing to spend their money generously such as Premium Baby Care (21% sales growth 2009-10), Premium Skin Care (+19%) or Premium Colour Cosmetics (+15%). Chinese consumer behaviour and their knowledge, attitude, use and response to Skin Care products that reflects in their spending patterns are very much linked with Chinese Culture. Grubow(2008)characterises several beauty trends from the view points of Chinese consumers that intensively influence Skin Care market trends in China: desire for status-improving products, medicinal ingredients welcome, respect for skin care regimes, openness to professional advices and demand for luxury packaging.    Desire for Status-Improving Products Tracking back to ancient Chinese culture, giving a fair, even, pale and fragile quality skin look is quite associated with beauty as it implicated being in a aristocratic social stature. The standard of beauty does not actually change much. Today, Chinese women want a fair, flawless, radiance and translucent skin tone which is considered as wealthy and healthy, meanwhile, browner or darker skin is linked with rural and toiling for money. In result, Chinese women are interested in whitening-orientated products (but bleaching ones which do not give an appearance of evenness and a glow skin tone). Interestingly, a recent survey made by Asia Market Intelligence found that around two-thirds Chinese men also prefer fairer skin and are opened to male skin whiteners. This cultural ideal attracts to every class of people, from the mass to ultra luxury channels, and leading brands such as Olay, Shiseido, Nivea and Avon are offering whitening products not only for facial skin but body in Chinese Skin Care market. Another Chinese beauty trend in terms of status-improving is the skin concentration products which cover for examples facial masks, patches and eyes and chest treatment. Mask treatment is considered luxury as it used to be applied only in a spa treatment which required time and money. This â€Å"DIY approach† with masks containing rich textures or high-tech functions appeals to Chinese consumers and makes them feel unique and luxurious. Again, this pattern taps into the sense of status-enhancing.   Medicinal Ingredients Welcome Traditional Chinese herbal medicine impact strongly on many parts of Chinese day to day life and skin care products are no exception. Chinese consumers believe that some special ingredients provide a better benefit of healing and this is highly linked with the Chinese medicinal practices history. Taking examples of burdock, ginseng and green tea extract which contain antioxidants for skin nourishment; these natural ingredients are popular and famous among both younger and older generations because they are believed to be more inartificial and safer than other ingredients.   Respect for Skin Care Regimes Similar as Japanese skin care rituals that a full Japanese daily ritualistic process contains up to 9 separate steps, Chinese women also respect skin care order. They like to arrange their cosmetics on the dressing table and enjoy the skin care rituals consisting separate steps.While Western Consumers are appealed by products with two-in-one or multiple functions such as Neutrogenas 2-in-1 Cleansing Gel (cleansing and mask), Vichys Puretà © Thermale 3-in-1 One Step Cleanser (cleansing, toning and eye makeup remover) or Olays Total Effects, in China, women purchase Neutrogenas Deep Clean Makeup Remover, Cleanser, Blackhead Eliminating Patch and Soothing Mask or Olays Renewal Lightening Toner, Moisturizer, Lotion and Eye Cream.   Openness to professional advices Though the development of beauty and health care speciality drug stores such as Watsons, Mannings and Sasa in China is far behind the pharmacies in France or Japan or the drug stores in Germany, in principal cities of China, the specialty drug stores has witnessed an enormous sales growth during the past decade. Watsons, for instance, had only 80 outlets back in 2005. But last year, it has opened its 700th outlet in China, making it as the leading beauty and health care speciality drug store in Chinas BPC market.This is not just about the locations or its competitive prices policy that attract lots of consumers; the evidence that each Watsons outlet is equipped with counsellors and pharmacists who provide products advices and recommendations is also one of the key reasons that drive consumers into shops. Consumers in China trust and appreciate the advices of skin care from these shop assistances. It is therefore not difficult to interpret that with this advices-welcoming concept, direct-selling brands such as Mary Kay, Artistry and Avon who always come with sales counsellors and host frequently cosmetics seminars and makeup workshops appeal intensively Chinese consumers attention. (In 2010, 4 out of top 10 Skin care brands are categorized as direct-selling channel.) Demand for Luxury Packaging As consumers from emerging countries tend to search for higher cost-effectiveness products, in China, a cosmeceutical product with a luxury packaging is very much appreciated by Chinese consumers as it gives again the sense of status-enhancing. Packaging like heavy glass container appears more attraction for consumers than a plastic container even if it contains better ingredients or product volume. In addition, Trout (2011)suggests that when developing a new product range at different pricing and customer targeting, the design of packaging helps companies to define a â€Å"new† brand image and extend the attraction to wider potential consumers. 2.4 International Operation Strategy 2.4.1 Operation Strategy Strategy, originally derived from Greek word â€Å"strategos†, was firstly used in the military term and then in the management of business. Drucker(1954)proposed that strategy is â€Å"to analyse the current situation, including the inquiring of companys existing or should-be resources, and if necessary, change the situation.† Strategy was was also suggested by Chandler(1962) that â€Å"determines the base of corporations long-term objectives and taken actions, resources and configuration standards to achieve these targets.† In Andrew(1971)s The Concept of Corporate Strategy book, proposed that strategy is â€Å"the scheme of targets development and major policies and plans for the purpose of achieving specific objectives to describe the companys current and future business.† Glueck(1976)considered strategy â€Å"is a unified, coordinated, broad and integrated plan to reach the basic objectives of the organization†. The definition of strategy was a lso given by Porter (1985), â€Å"strategy is the response to external opportunities and threats, and internal strengths and weaknesses, in order to achieve competitive advantages†. In 1990, Ansoffdefined strategy as â€Å"a set of criteria to lead the organizational behaviour for the decision-making.† Kaplan and Norton(1990) described strategy is â€Å"a set of assumptions of cause and effect†. Porter(1996) again explained that strategy is â€Å"to conduct a selection among activities, enabling the organizational competitiveness while creating the sustainability and differences of the market†. There are various ways and results in strategic planning according to organizational goals and objectives that classify strategic management into different frameworks. Scholars attempt to conclude strategies in practice that are partly summarized underneath. However, there is so far no better or the most appropriate classifications or concepts. It is though agreed that a model which can be applicable to organizations would be capable to recognise and assess their chosen strategy content. Ansoff (1965)s Product-Market Growth Matrix (Table 3). Based on two basic aspects (product and market), a four-product-market portfolio is created that corresponds with corporations marketing strategy: Market penetration strategy is based on the present products portfolio, attempting to increase the market share. Market development strategy is to find and develop a new potential market basing on present products. Product development strategy is to create or bring new products in order to replace companys existing products Diversification strategy is to develop new products for new potential market. Porter (1980) characterized three general types of strategies into a category scheme that can be used to achieve and continue business competitive advantages: cost leadership strategy, differentiation strategy and segmentation strategy (Table 4). David (1986, 1995, 2010), has formed a modern Strategy-Formulation Analytical Framework that assisted strategies generate and evaluate feasible alternatives for the purpose of choosing a specific course of action. Strategies can be recognized, assessed and chosen by this framework which contains three stages including: the input, matching and decision (Table 5). 2.4.2 SWOT Analysis Originally developed by Albert Humphrey in his research project based upon the US Fortune 500 companies during 1960s to 1970s, SWOT analysis is a strategic planning method that specifies the corporate objective and identifies the favourable or unfavourable internal and external factors to accomplish this objective. It defines, analyses and evaluates corporate internal Strengths and Weaknesses and its external Opportunities and Threats that helps the organisation to determine the operational problem and the strategic decision making. A SWOT analysis result matrix was presented by Weihrich(1982) using strategies matching approach to develop relevant future coping strategies (Table 6). The procedures of SWOT analysis are often associated with corporate strategic planning process that can be combined into following steps: Conducting the description of business environment; Identifying and validating all affecting external factors; Predicting and assessing the future changes of external factors; Reviewing the internal strengths and weaknesses; Framing a feasible strategic planning by using SWOT analysis; and Conducting strategic choices and decision making. According to Weihrichs SWOT Analysis Result Matrix (in step five), a result of 22 strategies is hereby described as follows: SO Strategy: in accordance with the Maxi-Maxi principle, to consolidate strengths and improve opportunities. The direction of business development can be for example, (1) focusing on the growth of one single product, technique or market; (2) discovering new market for alternative selling channels; (3) developing new product using organizational resources; or (4) creating a new product life circle for customers to identify with aiming at winning the competitive market. It is the best operational strategy for business development and profits making with a closed coordination of corporate internal resources and external environment. WO Strategy: in accordance with the Mini-Maxi principle, to improve organizational weaknesses and manage opportunities. The result of Mini-Maxi strategic planning can be (1) unrelated diversification; (2) joint venture; (3) strategic alliance; or (4) consortium. ST Strategy: in accordance with the Maxi-Mini principle, to reinforce corporate self-strengths and cope with threats. Examples for strategic decision making can be (1) horizontal integration: integrating business of the same level to reduce competitors; (2) vertical integration: integrating upstream/downstream firms to avoid external threats; or (3) using related diversification improve business synergy.

Comparing Good vs. Evil in Sherlock Holmes and Dracula Essay -- compar

Good vs. Evil in Sherlock Holmes vs. Dracula It is all too often that literary critics read literature and then sift it into good and bad pieces, critiquing its value or mediocrity. However, it needs to be pointed out that this onerous task of "analyzing literature" for literary devices need not be the basis for placing value and worth on literature. Additionally, it is a great misunderstanding in society's education system that students need to learn what makes a good book solely by its use of literary devices. It's about time students read books for recreation and be able to express in their own words why the books are great or not so great. Most importantly, the lessons each book teaches students must be learned individually. People cannot be told what the book is trying to communicate, they must learn it for themselves. This is what makes books noteworthy, and this is why Sherlock Holmes vs. Dracula by Loren D. Estleman is an extraordinary book. It is a book people can enjoy for entertainment motives rather than for its devices of sound, syntax, and omniscient point of view. Through the story of good versus evil, Estleman entertains the readers of The Adventure of the Sanguinary Count (the other title) to make a great novel. In SHVD*, there are two protagonists: Sherlock Holmes, the famous detective residing at 221B Baker StreetÝ; and Dracula, the notorious count of Transylvania. To put aside all presumptions, ostensible facts, and popular stereotypes, it is necessary to examine who represents good and who represents evil. That is quite obvious. Aha! For those who agreed to that last sentence, sham... ...Jacqueline Roehl, "Sometimes a book is just a book." Notes *SHVD is referring to the title of the book in order to save paper space. ÝKudos to those who knew that. Woe and shame to those who didn't, obviously you aren't an English Literature "expert" are you?, or you would have known that. If you do not consider someone who sells his soul to the devil as evil, you really scare me, so do everyone a favor and read something good like the Bible.  §I submit that good and evil cannot co-exist if the interest of one hinders upon the interest of the other. *If your friends say this, it's time to get new friends or check your hearing. Do you say this? †¢This is merely an example. If it makes you feel better, fill in your own example. Nevertheless, you get the point.

Geely Auto Financial Report Analysis

Geely Auto Financial Report Analysis 1. 0 Executive Summary This report discusses the details of the Geely Automobile Company and an analysis of its financial statements in the past 5 years. The purpose of the report is an application of the knowledge learnt from the Financial Statement Analysis course, and tries to give recommendations. Rather than giving simple suggestions like buy, sell or hold the stocks, it is hoped that by analyzing the financial statements, the data can provide support for the recommendations such as the future profit and loss of Geely.As one of the four largest independent private automobile manufacturers in China, Geely Auto has been expanding rapidly. The sale of Geely has increased from 200 units in 1998 to 329. 100 units in 2009. In addition, in 2010, the purchase of Volvo greatly increases the reputation of Geely. Although the acquisition just happened few months ago, it is believed that it will beneficial to increase the market share. Further SWOT analy sis shows that, the well-established sales network and the emphasis on R&D capabilities will have a positive effect on the future growth of Geely.Moreover, the external environment such as the continuous growth in Chinese market and government policy support shows a promising future for Geely. However, there are also threats exist outside the market and weaknesses inside Geely. It is really hard to give any suggestions by simply analyzing the industry and outside environment. Therefore, the report mainly focuses on the analysis of the financial statements. Analysis includes the capital structure and solvency, liquidity, operating performance and profitability, and cash flow statements.By using common-size analysis, ratio analysis and trend analysis, taking the rapid expansion in recent 5 years into consideration. Though some results turn out to be either not satisfactory or below industry average, the overall performance of Geely is quite good. Geely was using its money effectively and investing the money in the right place in the past 5 years. It is recommended to buy Geely Stocks, with the potential growth in their production and profitability. It is quite pessimistic that the earnings of Geely is going to increase and therefore the stock price in future. . 0 Introduction Geely Automobile Holdings is a Chinese automaker and is with BYD, Chery, and Great Wall, one of the four largest independent private automobile manufacturers in China. Geely is now headquartered in Hangzhou, Zhejiang, and operates six car assembly and power-train manufacturing plants in China that are located in Lanzhou (Gansu province), Linhai (Zhejiang province), Luqiao (Zhejiang province), Ningbo (Zhejiang province), Shanghai and Xiangtan (Hunan province). These facilities enable a production capacity of approximately 300,000 cars per year. 2. Brief History Geely (Jili, meaning â€Å"auspicious, lucky†) was founded in 1986 as a manufacturer of refrigerators, and then moved to manu facturing decoration materials in 1989, and by 1992, motorcycle parts. In 1994, Geely began manufacturing motorcycles. By 1996, Geely had produced over 200,000 motorcycles and scooters. Automobile production started in 1998. Geely began exporting its first cars in 2003. Geely had its IPO on the Hong Kong Stock Exchange in 2004. Purchase of Volvo Geely was reported to have approached Ford in mid-2008 about a possible takeover of Volvo Cars.On October 28, 2009, Geely was named as the preferred buyer of Volvo Cars by Ford. On December 23, 2009, Ford confirmed that all substantive commercial terms for the sale to Geely had been settled. A definitive agreement was signed on March 28, 2010 worth $1. 8 billion, and the deal was completed on August 2, 2010. Management * Executive directors: Mr. Li Shu Fu, Mr. Gui Sheng Yue, Mr. Yang Jian, Mr. Ang, Siu Lun, Mr. Yin Da Qing, Mr. Liu Jin Liang, Mr. Zhao Jie, Dr. Zhao Fuquan * Non-Executive Directors:Mr. Xu Gang * Independent Non-executive Dire ctors: Mr.Song Lin, Mr. Lee Cheuk Yin, Mr. Yeung Sau Hung * Senior Management: Mr. Zhang Peng, Mr. Cheung Chung Yan Products * Xiali TJ7300-based * 1998  Ã¢â‚¬â€ HQ/Haoqing/Haoqing SRV * 2000  Ã¢â‚¬â€ MR/Merrie * 2002  Ã¢â‚¬â€ MR/Uliou/MS * 2004  Ã¢â‚¬â€ PU/Rural Nanny/Urban Nanny * 2002  Ã¢â‚¬â€ BL/Beauty Leopard/BO * Daewoo-designed * 2005  Ã¢â‚¬â€ CK/Freedom Cruiser * 2006  Ã¢â‚¬â€ MK/LG/KingKong * 2006  Ã¢â‚¬â€ FC/Vision * 2008  Ã¢â‚¬â€ Geely China Dragon Major activities and achievements * Geely’s JI-6360 model was certified by the government making Geely the first private company qualified to be producing automobiles in China. First Chinese automaker present at the Frankfurt Motor Show in September 2005. * First Chinese car maker to display at the US Detroit auto show. Winning the Special Contribution Grand Prize for Invention and Creation for its Blow-out Monitoring and Brake System (â€Å"BMBS†), a unique safety system independently d eveloped by Geely. * In Peru, Uruguay and Venezuela, Geely has already started to sell its products. Geely has also entered the Bangladeshi, Cuba, New Zealand, Pakistani, Romanian, Turkish and South African car markets. Figure 1; Development in sales, source: Geely annual report 1998-2009 3. Financial Analysis In the following sections Geely’s capital structure, solvency and liquidity, profitability and cash flow will be discussed. 3. 1 Analysis of Capital Structure Geely automobile Holdings Limited Analysis of Capital Structure| HK$'000| 2005| 2006| 2007| 2008| 2009| L-Tdebt| –| –| –| 87000| 1318000| Deferred taxation| –| –| –| 8018| 37727| other L-T liabilities| –| 682838| 309274| 0| 1442153| Total L-T liabilities| –| 682838| 309274| 95018| 2797880| Current liabilities| 54548| 227198| 5273470| 76378| 8907789| Total liabilities| 54548| 910036| 5582744| 171396| 11705669| %| 6%| 46%| 68%| 3%| 62%| | | | | | common shareho lder's equity| 798080| 1030157| 2441440| 4197862| 6375613| minority interests| 9013| 19769| 211760| 584619| 720907| Total equity capital| 798080| 1049926| 2653200| 4782481| 7096520| %| 94%| 54%| 32%| 97%| 38%| | | | | | | Total liabilities and equity| 852628| 1959962| 8235944| 4953877| 18802189| | 100%| 100%| 100%| 100%| 100%| These consolidated financial statements have been prepared in accordance with Hong Kong Financial Reporting Standards (â€Å"HKFRSs†) ————————————————-From common-size analysis, we know leverage rate of Geely is stable for year 2006 and 2007, declines sharply for year 2008, and then rebounds strongly to 62% in year 2009. Then look at the absolute value, it's not difficult to find out a great rise in both liability and equity capital. In 2009, the total liability is more than a trilion. Referring to its investment and operation in recent years, we think Geely is trading on the equity, which indicates it is using equity capital as a borrowing base in a desire to reap excess returns.This can be confirmed by its step-by-step acquisition of many assembly line and investment on new factories financed by bond and bank borrowing, which is conversely based on increasing equity (stock price stimulated by expansion). Those investments are revalued and taken into asset as a new backup. 3. 2 Solvency Analysis Geely Automobile Holdings Limited Solvency Ratios| HK$'000| 2005| 2006| 2007| 2008| 2009| D/E ratio| 0. 07 | 0. 88 | 2. 29 | 0. 04 | 1. 84 | Interest coverage ratio| –| 7. 66 | 10. 11 | 16. 06 | 15. 46 | S-T D/E| –| 0. 22 | 2. 16 | 0. 02 | 1. 0 | | The computation for Year 2009 is shown here:| D/E ratio= Total liabilities / Shareholder's equity = 2,797,880 / 6,375,613| Interest coverage ratio= EBIT / Interest Expense = 1,657686 / 107,226| S-T D/E= Long-term liabilities / Shareholder's Equity = 8,907,789 / 6,375,613 | | The computation for EBIT is shown below:| HK$'000| 2005| 2006| 2007| 2008| 2009| Net Profit| 115377| 214149| 318100| 866053| 1319028| Interest expense| –| 32390 | 35103 | 60952 | 107226 | Taxation| –| 1585 | 1673 | 51869 | 231432| EBIT| 115377| 248124| 354876| 978874| 1657686|Since the ratio of debt to equity capital is relatively high, we need to take a further look of its financial condition. Before assessing long-term solvency we want to be satisfied about the near-term fiancial survival of Geely. Unfortunately, Geely's short term debt to equity ratio is 1. 40, quite high in the most recent year. Although it can raise capital from HK listed market, equity is apparently not enough to make up its shortage of capital in short term. According to NOTE, Geely has discounted notes receivable to banks in exchange for cash with recourse in the ordinary course of business.Therefore, the risk resulting from its speeding expansion not only depends on its own performance, bu t its customers' financial distress. Interest coverage ratio is satisfactory, which means payment of the interest liability Geely has incurred on its long-term borrowing is in a less pressure. 3. 2 Analysis of Liquidity Geely Automobile Holdings Limited Analysis of Liquidity| | HK$'000| 2005| 2006| 2007| 2008| 2009| Industry norm| Accounts Receivable Turnover| 1. 91 | 0. 95 | 1. 99 | 1. 51 | 2. 29 | 19. 47| Acid-test ratio| 1. 13 | 0. 68 | 10. 44 | 0. 71 | 1. 19 | | Inventory turnover| 15. 9 | 11. 10 | 8. 36 | 136. 70 | 393. 17 | 31. 79| | | | | | | | The computations are as follows:| | Accounts Receivable Turnover = Net sales / Average accounts receivable| | Acid-test ratio = Cash and equivalents + Marketable securities + Accounts receivable / Current liabilities| | Inventory turnover = Cost of goods sold / Average Inventory| | The selected accouts used in computation are here:| | HK$'000| 2005| 2006| 2007| 2008| 2009| | Sales revenue| 101411| 127006| 137209| 4289037| 14069225| | C OGS| 90649| 110036| 121251| 3637752| 11528489| | Inventory | 5703| 9910| 14498| 26611| 29322| | urrent asset| 67212| 280681| 884331| 5110552| 12219411| | current liability| 54548| 227198| 79559| 5273470| 8907789| | Trade and other receivables| 44840| 59065| 65443| 2840255| 6144929| | Dividend receivable| 8220| 74840| 3560| –| –| | Accounts receivable| 53060| 133905| 69003| 2840255| 6144929| | cash ; cash equivalents| 8449| 20972| 761684| 889408| 4498155| | Marketable security| | | | | | | The accounts receivable turnover is much worse than industry average. However, an increase of accounts receivable may due to rise in sales or difficulty in collecting quite timely.Referring to NOTE, we know that receivables are guaranteed by established banks in the PRC and have maturities of six months or less. So the likelihood of timely collection is in less question. The inventory turnover is exaggeratedly higher than industry level, especially after its installment of P-SCM suppl y chain management system, which integrates ordering, producing, selling, and distributing. So we can conclude that Geely is doing excellence in inventory management and is enjoying a growth in market demand of its products 3. Analysis of Operating Activities To be able to make a comprehensive analysis of Geely’s activities, both the income statement and the balance sheet have been restated in appendix A and B, such that it is possible to identify operating and non-operating income, assets and liabilities. Assumptions regarding classifications are also available in the appendixes. Figure 2: illustration of revenue and operating income, Source Geely annual report 2007 -2009 Figure 2 illustrates how dramatic the development in especially revenue has been the last three years.Net sales are up by almost 200 percent from 2008 to 2009, while only a 60 percent increase in volume is reported in the annual report. Mainly the large growth is a result of full consolidation of the Groups manufacturing Operations. Moreover, the acquisition of â€Å"Drivetrain Systems† at June 30th 2009 generated extra revenue the last half year of 2009. Further the notes reveal that 95 percent of sales are within China in 2010, in 2009 it was only 81 percent. A decline in export can in a future growth perspective be a concern.Geely have improved profit margin over the last three years (18 percent In 2009), while the operating margin have been rather volatile (Appendix 1). This is caused by large income/expences from â€Å"share of results of associated companies†. It is expected that this account will be less important in the future as some associates now are fully consolidated. A large increase in distribution and selling expenses in 2009 (increase more than 200 percent) is worth to note. It raises questions as can Geely manage all the new acquisitions without getting less effective and the level of earnings quality.No extraordinary or unusual are identified in the fi nancial statement. It is a good sign since these accounts often are subject to earnings management. Comprehensive income is nicely increasing and no unusual increase in unrealized gains/losses of currency is identified. 3. 4 Analysis of Return on Common Equity This analysis show that the drivers behind the increasing return to common equity is mainly due to heavy increase in asset turnover and an equal percentage increase in leverage. The adjusted profit margin has unfortunately been declining heavily over the period.Geely is therefore relying on Non-operating activities to reach the growth in ROCE. From a shareholder perspective is an increase in ROCE due to leverage not sustainable. However it must be noticed that it was only last year the increase in leverage was heavy, while the increase in asset turnover has been for longer. From a financial point of view it can be argued that taking up debt while it is cheap, since the interest rate is currently low, is in the long run better for the shareholders, if the alternative was to finance expansion with more expensive equity.What is critical is if Geely is strong enough to turnaround their adjusted profit margin to keep growing healthy. 3. 5 Cash Flow Analysis It is useful to construct a summary of cash inflows and outflows by major categories because we can evaluate a firm's sources and uses of cash from operating, investing and financing activities directly. Geely Automobile Holdings LimitedSummary of cash inflows and outflowsYear ended 31 Dec 200X| HK$'000| 2005| 2006| 2007| 2008| 2009| Total|Operating activities| (7636)| (31858)| (17747)| 550977 | 948805 | 1442541| Investing activities| 5064| (660806)| 247079 | (274542)| (1305946)| (1989151)| Financing activities| 9452| 704988 | 542943 | (148711)| 3966382 | 5075054| Increase( decrease) in cash| 6880| 12324 | 772275 | 127724 | 3609241 | 4528444| Year 2009 cash reinvestment ratio = (operating cashflow-Dividends) / (Gross plant assets+investment+other assets+wo rking capital) = (948,805- 59,500)/[103+(293,697+97,788)+4,185,892+3,311,622) = 11. 27%|The summary of cash flow chart shows that during fiscal year 2005~2007 Geely experienced negative operating cash flow. Besides that it has used cash to finance increase in inventory and receivables, the ‘Share of results of associates' turnaround profits before tax from a positive position to a reverse one as it contributes more than 100% negatively before 2008 to Geely's profit after tax. This may be due to its stage of growth since total capital expenditures by its operating associates amounts to approximately RMB1 billion, which are mainly funded by the operational cash flow generated by associates.The insufficient operating cashflow part is made up by financing activities through issuing debt and securities and borrowing from banks. From fiscal year 2008 Geely was able to begin generate positive operating cashflow . However, positive operating cashflow may due to the decrease in its wor king capital. The cash flow statement shows that payables decreased significantly after 2008, which raises doubt on a possibility that Geely delayed payments to suppliers until its operating cash flow before adjustment of working capital become healthier.The major cash outlay is investing activities, corresponding to its funding for the research and development of new vehicle models, new engines and gearboxes, the construction and expansion of plants. Concerning financing activities, one point should be mentioned here is that Geely borrows with its receivables as collateral, the inflow of cash is reported as a financing activity in the cash flow statement. The second doubt come up when comparing with income statement.Earnings are significantly exceeding operating cashflow, this may be an indication of aggressive accounting choices, such as recognizing revenues too soon or delaying the recognition of expenses. Take a look at the free cash flow statement. From free cash flow to equity (FCFE) we know the cash flow availabel for distribution to common shareholders is sufficient. Along with its satisfactory reinvestment ratio, Geely proves that it is taking care of investors. Geely automobile Holdings LimitedFree cash flow statementYear ended 31 Dec 200X| | HK$'000| 2006| 2007| 2008| 2009|Net income| 214149| 305767| 866053| 1319028| Depreciation| 1403| 2282| 141053| 364598| intereset expense| 32390| 35103| 60952| 107226| net capital expenditure| 99304. 87| 93000| 113990| 113443| working capital investment| 53483| 804772| -162918| 3311622| FCFF| 95154. 13| -554620| 1116986| -1634213| Net borrowing| 716000| 330000| 1061000| 4300000| FCFE| 584837 | 219253 | 1497987 | 5135362 | net capital expenditure = approximate expenditure in RMB* rate of exchange prevailing at the balance sheet date| 4. 0 SWOT analysis of Geely Automobile Strengths 1.Continuously Increasing Revenue Geely’s gross profit margin has continued to grow over the past few years due to successful c ompany expansion and increasing market shares. The total sales for various kinds of Geely vehicles has accumulated to over 800,000 since 2001, and the Geely trademark has been recognized as a well-known mark in China. It has established over 200 sales service bases overseas, and performed SKD/CKD assembly production and sales in Ukraine, Russia and Indonesia and other countries. 2. Emphasis on Research ; Development CapabilitiesBy the end of 2009, Geely owns a total of 1,600 technology patents. Geely has a professional research and development team, the staff number of which exceeds 1,400, representing 12% of the total staff of the Group With its extensive investment in research and development, the group’s R;D team is capable of launching four to five new models every year, reflecting its leading position in R;D and technology innovation capabilities in China’s automobile sector. 3. Acquisition of Volvo and Enhanced Green TechnologyNew energy-powered vehicle is the la test trend and it will be the future of the world’s auto industry. Ford and Volvo have already invested millions of dollars over the past decade in terms of new energy technology. Acquiring Volvo may enhance Geely’s technology in new energy-powered vehicle area, help Geely take a step forward in competing with other homegrown brands, and pave the way for Geely to enter the global auto market. Weaknesses 1. Accounts Receivables Worse than Industry average Geely’s average turnover ratio of accounts receivables from 2005 to 2009 is 1. 3, which is substantially lower than the industry average, 19. 47. Although the previous analysis has shown less possibilities of payment collection problem, a low accounts receivable turnover ratio still indicates that there is an opportunity cost of holding receivables for a longer period of time. 2. Image of Lower-end Brand Although Geely has a well-established sales network and growing competence in core technology, it is hard for Geely to alter its lower-end brand image, since its original target market is low cost vehicle.But branding is about value and perceived quality, so price alone can never facilitate a victory. Enhancing quality and ensuring that its cars are on par with the global leading brands are still a major challenge for Geely. 3. Less Advanced Technology Despite the vast amount of investment in research and development, capital and talents for automobile core technology are limited, and it is hard for Geely to compete with the advanced technology of foreign automobile manufacturers. 4. Unsatisfactory Sales in Export Markets Motor vehicles sales in most parts of the world market remains fragile.As a result, Geely exports business could continue to face major challenges given the fierce competition and the short history of operation in its major export markets. Opportunities 1. Continuous Growth of China Sedan Market China's passenger vehicle market ended last year with a 59 percent year-on-ye ar sales increase to surpass the United States as the world's largest auto market for the first year. According to estimate of Goldman Sachs Global ECS research report, growth in China car market will be remained for the next 10 years and the industry GDP growth will be 11. % in 2010 and 10% in 2011. Goldman Sachs Global ECS research teams forecasts that China will further boost its No. 1 position in the car market with sales reaching 30 million units per year by 2020. 2. Government Policy Support In the past few years, the focus of Chinese government policies for automobile industry is to boost sustainable growth in the economy with auto industry as one of its pillars and to support domestic participants and industry consolidation. Threats 1.Fierce Competition from both Domestic and Foreign Brand The huge profit potential of China car market brings about fierce competition among both local and foreign automobile manufacturers. In the luxury automobile market, foreign manufacturers are in leader position due to their sophisticated technology and high brand recognition. While in lower end automobile market, local brands are strong competitors. 2. Possibility of Overcapacity in China Auto Market Some industrial experts concern that China's market may one day face vercapacity problems. A report from the official news portal of China's eastern Zhejiang province showed that, based on the production plan of China's 12 major auto manufacturers for the next five years, China's auto production would reach 32. 5 million units in 2015, far exceeding the forecast of 22 million units in the blue book of China's automobile industry. If Overcapacity problems occur, serious overproduction capacity will lead to negative market competitiveness a loss in enterprise efficiency, factory stoppages and other problems. . 0 Analyses of management discussion and analyst’s opinion Appendix C summarizes some Analysts view of Geely. However, not all Analysts agree upon whether you should sell, hold or buy the stock. Several reasons are discussed in the respective reports; though all analysts agree that Geely is a healthy company with a stable revenue base, increasing volume and satisfactory margins. What analysts do not agree upon is whether Geely can maintain their growth potential and gain market share in both the domestic and export market.The penetration in the Chinese passenger car market is extremely low compared to USA and Europe (JP Morgan, 2010) and as the Chinese people are getting wealthier the market potential will increase the upcoming years. Loads of Automobile manufacturer will compete to gain market share and earn extraordinary profit. Credit Suisse and CIMB are representing the negative analysts who believe that domestic market competition will increase as the nearest competitors have invested heavily in the industry and developing of new brands (CIMB, 2010).Geely Management has not commented upon this in their report, but instead they emphas ize they have sufficient funds to cover investments and R&D expenses to facilitate their own growth. Additionally, Credit Suisse (2010) emphasize that every auto manufacturer in the Chinese market are currently investing in production facilities. Credit Suisse is therefore worried it will result in an oversupply and consequently make inventories to rice. To bring inventories down a price war on vehicles can arise. This will affect margins negatively.JP Morgan represents a positive analyst that strongly believe that the current acquisition of Volvo will result in synergy effects and a technology platform that no one else can imitate in the near future. Further JP Morgan is confident that the low penetration of vehicles in the domestic market will ensure future growth, and therefore recommends buying the stock. DBS, Deutche Bank and Yuanta are recommending holding the stock, since they believe there are too many uncertainties connected to Geely and the future. Especially they all emph asize the lack of a clear growth catalyst to outperform the market.Further, the acquisition of Volvo seems to have longer prospects before profiting than expected at first hand (CIMP, 2010). As expected Geely’s management discussion is very positive towards the future and leaves the shareholders with the impression of a highly growing company with a healthy economy and a clear defined strategy, although it is noticed that very little space is used to comment upon the current competition in the market. Instead Geely Management has chosen to focus at their new strategic platform and how they can develop brands and product lines into a competitive advantage (Geely, 2010).It can be interpreted as an indirectly method to cope with the market competition without discussing the situation in detail. Shareholders, however, must be aware of this matter when evaluating the business. Even though current revenue is increasing heavily one must consider how sustainable this growth rate is i n the future. It can be concluded that Geely Management are slightly taking a too positive approach towards the current market conditions, since these are not discussed in depth and analysts report emphasize different issues than Geely.This analysis facilitate that there are no universal answer to trading with stocks. We all wants to buy the stocks that are undervalued and sell the ones that are overvalued, and the answer you get depends on the method, forecast and strategic mindset of the analyst. Geely is without doubt a healthy company so the buy, held, sell decision lies within how you value the growth opportunities, how Geely can facilitate R&D and implement acquisitions and thereby benefit from synergies. 6. 0 RecommendationGeely have the recent years had an expansion strategy, and as a consequence a high level of investment. This has resulted in a higher leverage and that earnings significantly are exceeding cash flows. However this is also a natural picture of a company in a n expansion phase. It is found that Geely has satisfactory interest rate coverage even though leverage is increasing. Furthermore, accounts receivables is found worse than industry average, but good bank agreements make it easy for Geely to meet liquidity issues. Inventory turnover is also good, as the focus on SCM systems have proven its worth.This is moreover expressed in the increased asset turnover which partly is the driver behind the increasing ROCE. However it is important to note that the adjusted profit margin is declining. The overall performance shows increased revenue/earnings, but it is very difficult to determine the earnings quality since most of the rise is due to consolidation and acquisitions. The positive free cash flow and satisfactory reinvestment ratio shows that Geely are taking care of investors. SWOT analysis identifies possible business catalyst as R&D and the new acquisition of Volvo that could create synergy effect.It is our opinion that these business dr ivers are rather uncertain but is very likely to succeed and combined with Geelys current healthy financial situation; we are taking a positive approach towards Geely and recommends to buy the stock. 7. 0 Bibliography Geely Automile Holdings Annual report 2005-2009 Investment Reports: DBS (8. June2010) Hong Kong/ China Company Focus; Geely Automobiles Holding; DBS Vickers Securities; Analyst: Miu, Rachel Credit Suisse (12. July 2010) Asian Daily – Geely Auto; Credit Suisse Analysis; Analyst: HungBin Toh CIMB (28. Sep. 010) Geely Automiles Holding LTD; CIMB Reasearch; Analyst: Cheam, The Shen JP Morgan (26. Sep. 2010 ) Geely Automiles Holding LTD – Initiating Coverage, JP Morgan Asia Pacific Equity Research; Analyst: by Li, Frank Deutche Bank (26. Aug. 2010) Geely Automiles Holding LTD; Deutche Securities Asia LTD; Analyst: Ha, Vincent Yuanta (26. Aug. 2010) Geely Automiles Holding LTD; Yuata Research; Analyst: Wong, Johnny Websites: Reuters (http://www. reuters. com/fi nance/stocks/analyst? symbol=0175. HK) Appendix A: Restated income statement Appendix B: Restated Balance SheetAppendix C: Overview of Analysts opinion Source: Reuters (http://www. reuters. com/finance/stocks/analyst? symbol=0175. HK) ——————————————– [ 2 ]. Industry average figure reference: http:// www. stats. gov. cn [ 3 ]. Property, plant and equipment are depreciated on a straight-line basis at the following rates per [ 4 ]. Goldman Sachs, China: Automobiles, May 19, 2010 [ 5 ]. Business Monitor International, BMI China Auto’s Report 2010, November 2009 [ 6 ]. Global Times, China's Expanding Auto Production Triggers Overcapacity Concerns, July 19 2010

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Waterford Crystal a case analysis Essays - Waterford Wedgwood Waterford Crystal a case analysis Waterford Crystal HISTORY OF WATERFORD CRYSTAL Waterford Glass was started by two brothers, George and William Penrose, in 1783. It was the most notable of all Irish crystal companies. In 1799, the Penrose brothers sold Waterford Glass to the Gatchell family. The crystal industry was prosperous until 1825. Irish glass manufacturers began to slowly close due to high export duties, the economic depression, and a lack of capital. Waterford Glass was the last to close in 1851. It was reestablished nearly a century later by Charles Bacik and Bernard Fitzpatrick. In 1947, they set up a factory in Waterford, Ireland. A turning point in the company's history came in 1950 when Joe McGrath made a sizable investment in Waterford Glass. He invested the capital needed to convert the small crystal manufacturing company into one with the potential to become a major player in the crystal industry. This investment gave his family control for the next thirty-five years. Joe McGrath was committed to Ireland and providing jobs for his country. He wanted to reduce the country's high unemployment level. His focus for Waterford Glass was on growing the company through exports to the United States. In 1966, Joe McGrath's son, Paddy McGrath, took over management of Waterford Glass. Like his father, he was dedicated to Ireland and to providing employment opportunities for the Irish. McGrath's quest to provide more jobs for the Irish led him to diversify the company. By 1983, the company had acquired more than thirty non-core businesses. To reflect the expansion, management changed the company's name to Waterford Glass Group. In 1985, Paddy McGrath resigned as chairman of Waterford Glass. Concurrent with Paddy McGrath's resignation, Paddy Hayes was appointed chairman and CEO of Waterford Glass Group. He immediately began to sell off the non-core businesses in an effort to reduce the company's high debt level. Waterford Glass's debt was virtually eliminated with the issue of American Depository Shares (ADS) on the United States NASDAQ market. On November 28, 1986, Waterford Glass acquired Wedgwood, a two hundred year old manufacturer and marketer of fine bone china. Paddy Hayes was named the chairman and CEO of both companies and Paddy Byrne was appointed CEO of Wedgwood. In 1989, the company's name was changed to Waterford Wedgwood. Three divisions were created as a result of this acquisition: the Waterford Crystal division, the Wedgwood division, and the Creative Tableware division. In 1989, Paddy Hayes resigned from his position as chairman and CEO of Waterford Wedgwood. Paddy Hayes was succeeded by Paddy Byrne as CEO of Waterford Wedgwood. Paddy Galvin was appointed as CEO of Waterford and Paddy Byrne continued as the CEO of Wedgwood. In 1990, the ownership of the company began to shift from Ireland. This was the result of an equity investment made by the Morgan Stanley/Fitzwilton consortium. On April 5, 1990, the workers at Waterford Wedgwood went on strike. The strike occurred when management took steps to reduce high labor costs. The strike lasted fourteen weeks causing significant problems for the local community. In December 1990, Waterford Wedgwood became two independent entities. Concurrent with the restructuring of the company, Paddy Byrne resigned. In September 1991, Waterford introduced a new brand of crystal called "Marquis by Waterford Crystal." THE CRYSTAL BUSINESS Today, the craftsmen of Waterford are supreme artists as they were in the 18th century. Having craft and design skills is the critical element in establishing and maintaining a competitive advantage. The combined skills of the craftsmen create the distinctive patterns known all over the world. The exceptional clarity of Waterford Crystal is achieved through several steps that have remained almost unchanged for over two centuries. Waterford products are manufactured by a strict process of mixing, blowing, cutting and polishing. Manufacturing crystal is very labor intensive. Labor costs are generally 50 to 55 percent of the manufacturing costs. Chemicals are mixed to create a unique formula that gives Waterford crystal its special sparkle and light refractive qualities. It is then heated to 1400 degrees centigrade in a natural gas fired furnace for at least 36 hours to produce molten crystal. A blower, using the traditional tools and techniques as in the 18th century, gathers a quantity of crystal from the furnace

Training and Development on the Rural Areas Electricity Company Essay

Training and Development on the Rural Areas Electricity Company - Essay Example ..Sign†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Date†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦.. Declaration by the Principal Name†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦..Sign†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦.Date†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦ DEDICATION This research project is dedicated to the creator, the almighty Jehovah God who gave me the gift of knowledge, courage, perseverance and good health throughout the period I have worked on this program. ACKNOWLEDGEMENT First is to thank God for giving me wisdom and courage of taking me through the entire process of developing the research project, for His Grace and guidance through my academic life. I want to acknowledge the patience and the steady advice and support of my supervisor. I would also like to offer individual thanks to my family and friends. ABSTRACT Rural Areas Electricity Company (RAECO) is an electricity company tasked with generating, transmitting, distributing, supplying electricity and desalination activities in Oman. The vision of Rural Areas Electricity Company involves providing cost effective electric power to all the remote areas in Oman. The missions of this company include supply of reliable electricity and potable water to customers at the lowest costs, provision of employment opportunities to Oman citizens and maintenance of environmental conservation standards in its operations. To this effect, the judicial training institute which has the mandate to promote effective training of judges, magistrates and judicial staff, has over the years conducted and continue to provide training to judges, magistrates and judicial staff to build their capacity to perform their functions effectively. To fulfill the vision and mission statements, Rural Areas Electricity Company has an obligation to endorse effective training and development of its employees. Over the years, RAECO has carried out traini ng and development programs of its employees of all layers. Despite the huge investing in training and development programs, challenges still there as shown by the constant electricity black outs, the delays in responding to customer requests and the constant need for upgrading the skills of the employees. This research study seeks to establish the impact on investing in employee training and development. The researcher used primary and secondary sources for the purposed of this researcher. The research findings showed that the training and development carried out by Rural Areas Electricity Company were insufficiently frequent. The research project further recommended that the details of training programs and the approach of delivery to be considered before undertaking a training and development program. Employee training and development offered by Rural Areas Electricity Company should lead to a deeper understanding of the objectives and goals of the employees and the frequency of external training programs should be increased to enhance employee performance at work for Rural Areas Electricity Company. DECLARATION ii DEDICATION iii ACKNOWLEDGEMENT iv ABSTRACT v LIST OF TABLES ix Table 1 showing Response rate 44 x Table 2 46 x showing Gender 46 x Table 3 showing experience in the organization 48 x Table 4 showing Knowledge of Training and Development 50 x Table 5 showing whether training program fulfils employee needs 51 x Table 6 indicating the effect of work efforts on work performance 53 x Table 7 showing response on whether the organization supported employee rights 55 x Table 8 showing response

Expert and pedagogical content knowledge Essay Example | Topics and Well Written Essays - 2750 words

Expert and pedagogical content knowledge - Essay Example One may gather this kind of knowledge through a training specific to that field through the assimilation of intense theoretical and practical assessment and methods. Pedagogical content knowledge was described by Shulman (1987a) as the combination of content and pedagogy into the comprehension of how certain topics, issues, or problems are structured, characterized and modified to the varied concerns and abilities of learners for instruction. This is the knowledge on how to teach the subject matter to beginners. Example of pedagogical content knowledge is the information on organizational framework that may serve as effective aid for individuals who want to learn the basics of organizational psychology. Basically, both expert and pedagogical knowledge is important in teaching. Without expert knowledge, the instructor would not have a strong foundation and would have low credibility for teaching a specific field. If he doesn't have the knowledge to teach the subject matter then, it would not also be effective. There had been a shift on the focus of learning from the teacher to the student (Angelo, 1997). Another distinction made was that teacher-centered mode of instruction is more content-driven while learner-centered instruction is learning process-driven (Cuseo, n.d.). Santrock (2003) came up with the principles of learner-centered instruction. One of his principles was goals of learning. He explains that goal setting helps student learning. This is in connection to motivation which can come from external factors such as the teachers and the environment and could also come from the person himself with his realization of important matters. Both of these will lead to the formation of a goal. When I was in the fourth grade, I was beginning to be aware of some of my classmates' academic excellence. I just thought of striving to make it to the honors list in order to know the feeling of being there. That was also when I got my first set of encyclopedia. I studied everyday reading every page of the encyclopedia. I was determined to perfect my tests and was actively participating in class. I became recognized in class and gained attention from my teachers. This started my participation in other extra-curricular activities. I got what I wanted and made it to the honors list. I became a consistent honor student until high school. That became my foundation and the experience itself acts as my present motivation. Using technology in the educational environment Classroom instruction has become easier and more efficient with the advent of technology. Present modes of teaching have utilized technology for audio and visual enhancement. For the visual aspect, instructors have used over-head projectors in the past and at present power point presentations are the most commonly used. Studies show that verbal instruction coupled with visual presentation yields more positive learning results as compared to receiving verbal instructions alone. This mode of presentation enables the instructor to prepare for the lecture in advance. This can also increase attention rates of students because of clear and organized lectures. These presentations can also be transferred, printed and uploaded to the internet so that the information can be