It influences the extent to which the value created by an industry will be dispersed through direct competition. There were several signs of industry growth at the time as was USA’s economy; this led to a number of newly emerging discount stores trying to exploit the potential of high profit. This led to intense competition at the time and increasing rivalry for market share. Due to this industry concentration was low at the time. There was not one dominant player within the industry; they were more equally balanced thus increasing rivalry.
Following his clients investment requirements, Angus will advise Judy to purchase Allison Green and 900 Stony Walk because these two properties have the highest NPVs of the four investments, $734,290 and $699,520, respectively (see Exhibit 6: Financial Analysis). As seen in Exhibit 6, both Ivy Terrace and The Fowler Building have a slightly higher IRR; however, NPV is the best determinant of a projects projected value. By investing in two properties, as opposed to only one, Judy will be better diversified and may receive decreased management fees resulting from increased economies of scale. Also, these two particular properties, with one being a residential property and the other a commercial property, benefit from even greater diversification than if Judy had, for example, invested in Allison Green and Ivy Terrace. Since we are not provided any information regarding Judy’s risk tolerance, I assumed that she will be risk averse because this is her first time investing in real estate.
2. Should they try to get a price higher than $40 per ton to improve profits? Why, or why not? Yes, they should try to get a price higher than $40 per ton to maximize the profit. As the variable cost is too high as we increase the production.
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.
Buyer power tends to be higher if suppliers provide undifferentiated or standard products. 3. Porter's five forces model helps to determine both the nature of competition in an industry and the industry's profit potential. 4. If all of Porter's five competitive forces for an industry are weak (low), then established companies in the industry have the potential to raise prices and earn higher returns.
These expenditures could be spread over several years to minimize the overall cost of acquiring these technologies. An example of this occurred during the second round, where R&D expenses were extremely high which made investing in new technologies and features much more costly. A wise decision would be to wait until the costs are more stable, which would allow MobAir to reduce costs and maintain solid profits. Market Share MobAir is concentrated on creating a high market share percentage and maintaining it throughout its different rounds. Which was successfully accomplished by building many plants in U.S.A. and Asia, and producing the accurate amount to satisfy demand.
These benefits are often referred to as arising from synergy which accrues to the shareholders of the target as well as to those of the bidder. VF Corporation is offered something in excess of what they perceive to be the current value of those shares. In spite of the eurozone financial crisis, VF’s revenues rose by 20 per cent in constant dollar terms in Europe, while sales in Asia surged 43 per cent. This is the right time to take the Timberland to the next level, with expected 2011 revenues of $1.6bn, over half of which are generated internationally. For the full-year 2010, Timberland reported revenue of $1.4bn, an increase of 11.2% over the prior year and up 11.7% on a constant dollar basis.
The merger will create synergies which will make the combined entity more efficient than Norfolk. The operating ratio of Conrail was around 80% and that of CSX was 77 %. Norfolk had a better ratio of 73.5% * There was also a fear that if CSX does not acquire Conrail, Norfolk will go ahead and acquire it since Conrail was seen as a prized possession of the industry * The merger was estimated to generate an additional $370 million in annual operating income 2. Analyze the CSX’s structure for Conrail: a. Why did CSX make a two tiered offer?
The net present value for company “A” was $29,425.85with a IRR of 6% while company “B” had a NPV of $12,656.03 with an IRR of 13%. Company “B” has a lower NPV than Company “A” but the internal rate of return is 13% to only 6% for company “A”. So if I’m reading this correctly I would choose Company “A” due to NPV is significant higher. The higher rate of return would be a factor also because company “B” stands to make more money in the long run but we want our return on investment quicker. IRR is a percentage that will go with NPV most of the time but sometimes you get conflicting directions telling you to choose Company “A” over Company “B”.
There are several strengths in Wal-Mart raising capital by selling stock. Selling stock is less risky than debt financing and it allows the company to raise money without giving up the amount of control it would relinquish from merging with another company. Wal-Mart is already a publicly traded company, so it would be easy for them to issue more stock. Despite all the strengths there are to finance projects through selling stock, there are some weaknesses. The first weakness is that as more stocks are outstanding, the amount of dividends payable increases.