Facts In 1983, GEICO announced plans to purchase several million shares of its outstanding common stock for $60 per share. Among GEICO’s largest stockholders was Berkshire Hathaway, Inc., an investment company. Executives of the two companies decided that Berkshire would tender approximately 350,000 if its GEICO shares in the stock buyback plan, which would allow Berkshire to treat the transaction as a proportionate redemption. In a proportionate redemption, the percentage equity interest of on company in a second company is maintained at the level that existed immediately before the transaction. For federal taxation purposes, the proceeds received by the investor company in a proportionate redemption are taxed as dividends by applying the effective intercorporate dividend tax rate.
RECOMMENDATION CONSIDERATIONS strategic position high quality computer manufacturer in terms of precision, dependability, flexibility, and ease of operation must be maintained consistent level of quality in the marketplace despite Konig’s invitation to bid with specifications that included machine dependability at a reasonable price. It is imperative that Computron win the contract bid as Konig makes up 80% of German sales and has the potential to generate up to $4 million in additional business over the next 2 years. Newly built plant productivity is dependent upon winning this bid with Konig. Reduce the European tariff which would return Computron’s profitability margins back to 33.3% in the near future. Digitex and Ruhr should not competitors quality of their products.
Banking laws, tariffs, internal-improvement legislation, and the granting of public land to railroads are only the most obvious of the economic regulations enforced in the nineteenth century by both the federal government and the states. Americans saw no contradiction between government activities of this type and the free enterprise philosophy, for such laws were intended to release human energy and thus increase the area in which freedom could operate. These tariffs stimulated industry and created new jobs, railroad grants opened up new regions for development. Public had fear of the industrial giants reflected concern about monopoly. If standard Oil dominated oil refining, it might raise prices inordinately at vast cost to consumers.
With doing so, Morgan had created the first billion dollar company in the world, in which the company had held a $1.4 Billion capitalization. The U.S. Steel Company’s main goal was to get greater economies of scale, reduce costs of construction, have greater distribution, and expand its products. The company was also used to compete in a global scale with Germany and England, which would allow for more competition for products and goods. Many critics were stating that U.S. Steel was trying to monopolize the market by trying to take control of everything steel from the railroads to common nails used in construction and also tried to take over the building of ships, bridges, and general construction in the cities. When 1901 came around the business of U.S. Steel had dropped and with this Schwab, who was a
By comparing the operating ratios of CSX, Conrail and Norfolk, provided in Exhibit 1 of the case text, it is evident that CSX and Norfolk have low operating expenses as compared to Conrail which means they have higher operating margin and hence are more efficient. One could argue that CSX and Norfolk are able to realize these higher operating efficiencies due to synergies between diversified businesses each of them own. This can be seen by comparing Conrail, CSX and Norfolk’s compounded average growth rate of the component of revenue coming from railways (See Exhibit 5 Case Text) which is found to be higher for Conrail out of the three (See Exhibit A of Report) and so Norfolk and CSX can benefit from potential synergy in railways division by acquiring Conrail. CSX and Norfolk are also significantly less levered and can issue more
This was of obvious importance because they had more citizens to defend their side of the war. The North’s population totaled to a rounded estimation of 22 million people, while the South only had the quivering 9 million. Another important advantage of the Union included the fact that they had 70% of the nation’s railroads. This was hugely beneficial because railroad, at the time, was the fastest means of transportation. This transportation could have easily included people, but more importantly: weapons.
Point #2: Tariffs protect American jobs and wages. (Points: 13) I find this position to be valid. Protective tariffs are designed to raise the retail price of imported products so that domestic goods are more competitively priced (Nickels, McHugh & McHugh, 2008, p. 76). Therefore, if products are competitively priced then the consumer will be more likely to purchase domestic products instead of imports. Since consumers will be more likely to support American vendors, this will keep the American businesses running and not force them to cut costs to compete with imports.
From 1974-1978 all the major firms saw increased sales and net income but as time progresses and the market stops growing the firms that have best positioned themselves will begin to dominate the competition. An indicator firm success can be found in looking at firm Return On Sales (ROS). ROS = Net Income/Sales Revenue, it is a measure of firm efficiency and firms with higher ROS are demonstrating an ability to control costs and/or charge a higher price for their product(s) as opposed to competition. Lower ROS firms have lower income in relation to revenue and increasing net income is harder. In 1978 Emerson (Beaird-Poulan) and Electrolux (Husqvarna) are the industry leaders in ROS at 7.9%.
I feel like the price was a little high given the status of PacifiCorp, but then again PacifiCorp was the leading producer and distributor of low-cost energy to millions of customers across 6 states, and they were exactly what Berkshire Hathaway was looking to invest in, and at the time I believe that Buffet was getting anxious to invest in something to keep up his promise of a 24% annual growth rate, so maybe the bid price could have been a little higher. 3) How did Berkshire’s offer measure up against the company’s valuation implied by the multiples for comparable firms? In Exhibit 10 it shows that PacifiCorp’s book value was above the mean and median of comparable firms so the company’s business financials were in order, but also in Exhibit 9 it shows that PacifiCorp had a large amount of debt compared to other regulated Energy Firms. Buffet believes
My Recommendation: Whelan should manufacture Varex in Continental Europe. Supporting Arguments: • The price negotiations with the continental Europe partners has been done successfully and is likely to have a salubrious effect on net income. • The strategic objectives of the company are likely to be achieved by locating the manufacturing facility in Europe since Europe remains the largest market as well as the fastest market for the company's products and the market is growing faster than the US market. • A strong move to remove double taxation in the Europe. • Europe headquarters in Switzerland has $200 million in cash, which can gainfully be used to set up the manufacturing facility.