Assignment #3: Foreign Market Entry and Diversification NAME Professor BUS 499, (5/13/2012) 1. Identify and discuss the trends in the global beer markets. In markets where beer consumption is often tied to disposable income, there has been significant growth in the global beer market that is comparable to the overall economic recovery in that region. “The international beer market staged something of a recovery in 2010 with global beer consumption increasing by 2.4%. This marks a dramatic improvement on the 0.5% growth seen in 2009, but is still well below the 5%+ growth rates seen earlier in the decade” ("Global Beer Trends Report 2011", 2011).
Blaine Kitchenware represents 10% of the U.S market share of the industry (market = $2.3bn) but is also present in foreign market. The company’s recent strategy moves include increasing its presence on the foreign market, growing its beverage preparation appliance segment and competing in higher-end segment with higher price point. Despite the company’s profitability (net income of $53.6m on revenue of $342m), the company lacks of organic growth and all of its recent growth is due to acquisition. When comparing the ROE of the industry, one can observe that Blaine Kitchenware (11%) is significantly below the average (25.9%). In recent years, the company increased its number of outstanding share to finance its acquisitions, which raised the payout ratio to more than 50% in 2006.
Mrinalini Ranjan March 31st 2015 Yellow Tail Wine Case Write-Up The US wine market in the 90’s had relatively slow growth and was intensely competitive, fragmented and regulated. After the dotcom boom in the late 1990s, there was a 60% increase in the production of wine, leading to an oversupply of wine (by about 15-20%) and growing import competition, despite the fact that the majority of Americans continued to be beer drinkers. Over 6500 brands were competing in this saturated market, making it fairly hard for a new entrant to break in and create a brand for itself. This was compounded by the fact that distributers were mainly purchasing wine from large-scale, full-line vineyards to take advantage of economies of scale. Under these market conditions, all varieties of wine with a range of price points were available in the US.
Krispy Kreme has tampered with its financial statements ranging from 2000 to 2004 when they could not make its revenue targets to satisfy Wall Street. We found many discrepancies from the years after analyzing the income and the balance sheet statements in Exhibit 1. The balance sheet and the income statement had undergone major changes, particularly in years 2003 and 2004. While examining the balance sheet, we noticed the cash account nearly tripled from 2001 to 2004, total equity exceeded debt hence the reason for the low debt to equity ratio. The income statement’s total revenues doubled in two years due to their unusual growth.
Main factors that contributed to this trend are the increased smoking bans and consumers’ perception of moist smokeless tobacco as less risky than cigarettes for health. In 1997-1998 UST was one of the most profitable US companies with a five-year return on capital of 92.1% that was about 20% higher than the 2nd ranked firm. Financial figures for the 11-year period from 1988 to 1998 show a continuous increase in sales, earnings and cash flow with CAGR of 9%, 11% and 12% respectively (HBR 2001). To have a deeper insight in UST business risks and assessment, SWOT analysis (McGee et al. 2010) is provided below.
Ratio Analysis From 2006 to 2007 Britvic’s net profit rose by 0.3% while gross profit fell by 1.05%, therefore production cost was reduced, which can be due to the deal with C&C (Magners cider maker) and the acquisition of Ballygowan water which brought a cost saving of €14m. Over the past 5 years, 2010 achieved one of its highest gross profit 55.3% and net profit was never so high at 7%. The deal with C&C also made Britvic’s share prices raise and it reached its highest price (399p) over 2 years period. As many companies, Britvic in 2008 was also affected by the global economic crisis and in that year gross profit fell by nearly 8% but net profit was not affected as much. Britvic’s pubs trade was also affected by the recession, company shares fell to its low in 5 years, reaching 222.25 p, a difference of 165p comparing with previous year.
This study emphasizes a point of a societal shift of Americans being more health conscious and not consuming as much carbonated beverages as in years past. The alternative drink market is in the midst of an expansion. The worldwide sales have grown 13% annually from 2005 to 2007. The pace of growth is much slower due to the overall global economic slowdown; however it is still projected to reach $53.5B by 2014. The retail price for an alternative drink is 50-75% higher then
a. Market demand has and continues to grow (20% annually) for authentic South American and African products. b. Feˊnix del Surs’ bargaining position has eroded due to increased competition (11 major competitors instead of 5). c. Aggressive competition (dealers, specialty stores, amateurs, and internet) has reduced gross margins. d. Authentic product sourcing has become more difficult (political situations and government “national significance”).
The financial institutions’ capital erodes and, at the same time, lending standards and margins tighten. Both effects cause fire-sales, pushing down prices and tightening funding even further (Brunnermeier and Pedersen, 2005). Notwithstanding the fact that Northern Rock was initially set up as a regionally based institution, the Bank had experienced a rapid growth during the decade before its crisis mid 2007. Northern Rock’s total assets had grown from 17.4 billion pounds to 113.5 billion pounds by June 2007, making it the 5th largest bank in the UK by mortgage assets. The funding of these assets caused a dramatic change in the composition of Northern Rock’s liabilities.
What are the mondavi’s strategic alternatives? From Exbit 2, we can see that the total case volume in Q1 and Q2 in FY2002 declined 15% and 5%, respectively, from the same time in FY 2001. Meanwhile, the total net revenue of all brands in these two periods time also declined 15 % and 7%, respectively, from those in FY 2001. For Mondavi, this trend could be explained by the competition of rival companies of premium wine, large-volume producers entering the premium wine category, and global alcoholic beverage companies who were entering the category through acquisitions. The reason that these multiple types of beverage companies aggressively entering the premium wine category is the increase of market opportunity and consumer behavior change towards purchases of higher quality wines.