Nucor Steel Case Study

There are many competitive forces that are affecting Nucor Corporation. Some of the primary ones are the market size, number of rivals, and pace of technological change. The market size is shrinking because of the increase in competing international steel companies. The number of rivals in America is declining due to higher labor costs than in foreign countries. There is a very fast pace of technology in the steel industry and it seems that the company, that obtains the newest technology, flourishes. This is due to the difficulty in lower costs of steel production. Better technology is one of the only ways to decrease costs because labor is pretty much at a set cost and all that is left is the cost of iron and making the steel. If a company can get its hands on a new technology that allows it to under price its competitors then it has a big advantage in the steel industry. Nucor’s main rivals in the steel industry are AK Steel Holding Corporation, Mittal Steel Company, and U. S. Steel. The five forces for the steel industry are the buyers, substitutes, suppliers, threat of new entrants, and rivals. The buyers have a fairly strong power on the steel producers. This is because of the low switching cost between competitors. Unless a contract is signed between a steel company and its buyer, there is little cost to the buyer if it wants to switch to a different steel company. There are not very many substitutes for steel, as steel is a commodity, so the substitute power is weak. Steel is a one of a kind item in that it is very strong and very versatile in its use. It is used in buildings, automobiles, bridges, garage door openers, and many other everyday objects. Suppliers also have a weak power in the steel industry. The suppliers are supplying iron to steel companies. Iron is very common and many companies sell it. Also, steel companies frequently integrate backwards and provide their own iron to their steel mills. The threat of new entrants is very weak due to high entry barriers and the current struggling competitors. The rival power is moderate to strong because there are a fair number of steelmaking companies. Also steel dumping occurs, but I will be talking about that later. According to this analysis, Nucor is in a three star industry, so it seems to have an okay chance at surviving. It is not the best industry to be in, but Nucor still has been able to flourish due to its organizational philosophy and technological innovation. 2) The driving forces behind the steel industry are industry growth rate, globalization, technological change and manufacturing process innovation, exit of major firms, and frequent change in cost. The steel industry is falling. There is a declining demand for steel and many companies have already gone bankrupt or are on the verge of going bankrupt. Some of these companies are Bethlehem Steel and Ling-Temco-Vought. The steel industry is very difficult to compete in because more steel is being produced than there is demand for it. Globalization is also a problem for the steel industry in America. Due to globalization it is getting easier for competing companies to send their products to other countries. This causes a problem for companies like Nucor because America has strict labor laws. In other countries labor is exploited and workers are paid very little, while in America, companies must pay their workers a minimum wage. One good thing that America does do is provide tariffs on incoming steel products to help American companies better compete with the international companies. Some countries are subsidiaries to the steel companies in their countries. This means that the governments have a vested interest in the company and want it to succeed. The companies can then sell products, like steel, at a much lower price due to the incoming funding form the government. China has been accused of this and America has taken action to alert the World Trade Organization to settle the matter, but this is only one step to â€Å"leveling the playing field† with China. The technologies for making steel are constantly changing and this allows for more efficient and therefore cheaper steel products. It seems that the companies, who obtain these technologies, obtain a significant head start in the industry. Like I said before, many companies are going bankrupt and are leaving the exiting the industry. Since steel is a commodity it leads to very volatile prices and can change quite frequently due to demand. By looking at Exhibit 1, you can see how the average price per ton decreased form $425 per ton in 2000 to $354 per ton in 2001. This exhibit shows how many tons of steel Nucor sold during certain years from 1970 to 2006. It is interesting to see that Nucor’s net income was fairly low during the years of 2000-2002, but increased to $1,121. 5 million. This is because of Nucor’s many acquisitions during the low period. Just a few years later in 2004, the price of steel was back up to $595 per ton. These driving forces very easily impact the steel industry’s competitive structure in a bad way. These driving forces make it very difficult for steel companies to compete in this industry. 3)The prospects for future profitability of the U. S. steel makers are very unattractive. Unless America can successfully combat China’s enormously, inexpensive, production ability, I do not see any American steel company surviving. China just has too big of a production ability and has the workforce to do it cheaply. Nucor will have to expand in this industry in the United States to survive. If the WTO negotiations with China go well then American steel companies may have a chance in the steel industry. If they do, then America can increase tariffs on incoming steel products and give American steel companies a chance to survive. Future profitability looks grim for American steel companies because of what I described before. China has been accused of subsidizing its steel companies, therefore funding them to make it possible to â€Å"dump steel† which is the process of selling steel at prices below the cost of making it. China would do this because then it would eventually under price foreign competitors and run them out of business. This, supposedly, happened back in 2000-2001 and devastated the steel industry in America, causing many companies to go bankrupt or be bought by other companies. Nucor was lucky enough to have survived this fall out and acquired many steel plants at low prices. The steel industry did bounce back in 2005-2006 and this allowed Nucor to grow quite rapidly due to its previous acquisitions. If America can again survive the big Chinese power, then Nucor will succeed, but right now it looks bleak for the American steel industry. 4)Nucor has adopted a low-cost strategy based on four parts. These parts are acquisitions, technological innovation, plant innovation, and joint ventures. The acquisition part of the Nucor strategy is that it has acquired many different steel companies in 2000-2001, when the steel industry in America was suffering. Because of the low time in the steel industry, Nucor could purchase steel companies at lower prices than normal. This helped its low-cost strategy substantially because it allowed Nucor to grow yet still remain a low-cost steel producer. Exhibit 2 shows Nucor’s financials, and very accurately illustrates the hit Nucor took during the low period of 2000-2003. This was a perfect time for Nucor to buy other steel companies, as this was one of the only ways for it to grow. Nucor invested heavily in new technologies. Investing in new technologies is very important for steel companies to do, as it is very easy to reduce costs if the company has a foothold on a new technology. Nucor focused on the introduction of disruptive technologies to give it an advantage in the market as compared to its competitors in terms of product quality, cost per ton, and market share. One example of this is the Castrip process. This new process produced flat-rolled, carbon, and stainless steels in very thin gauges. It allowed Nucor to produce steel in fewer steps, and helped produce savings in its operating expenses, therefore increasing Nucor’s net income. The Castrip process needed lower-quality scrap steel, which decreased costs of the scrap steel, and required 90% less energy. Also this new process cut green house gases by 80%. Nucor also increased its capital investments on the newest machinery to provide more efficient steel plants. By providing its workforce with the best possible technology, Nucor was able to max out production yet still retain a safe working environment. The implementation of hard working plant managers, produced hardworking managers that are aggressive enough to implement methods to improve product quality while keeping costs low. Nucor’s last strategic part was its joint ventures. By investing in joint ventures, Nucor was able to grow internationally with out the full capital risk. Some examples of this were its joint ventures in Brazil, Australia, and Trinidad. The joint venture in Brazil was between Companhia Vale do Rio Doce and Nucor. The goal was to produce an environmentally friendly pig iron plant that used eucalyptus trees as fuel. The use of eucalyptus trees as fuel removed 2,400 pounds of carbon dioxide from the atmosphere for every one ton of pig iron produced. Another joint venture was three other companies in Australia. This plant used a new technology process called HIsmelt. This new process converted iron ore to pig iron at a lower cost and higher quality than previously known pig iron producing technologies. The Trinidad plant was acquired in 2007 and was originally in Louisiana. The plant was moved to Trinidad because of the constant supply of natural gas as fuel therefore lowering costs. This plant reduced scrap metal dependence by as much as 25%. It also allowed for a higher quality production of sheet steel. Nucor’s four-part strategy has lead to a competitive sustainable advantage as seen in exhibit 2 between the years of 2004-2006 when its net income soared to more than $1,757. 7 million. Nucor used a cost-based advantage to achieve its competitive sustainable advantage. )Nucor employed an organization philosophy consisting of decentralization, individually operated plants, a three layer structure, good compensation practices for its employees, and good employee relations. Nucor’s decentralized structure allowed for its employees to make quick decisions that did not have to go through all of the bureaucratic steps like that in a centralized company. A decentralized co mpany relied on higher quality employees that could analyze a situation and react quickly and successfully. The individually operated plants were akin to the decentralized company. Each plant was individually responsible for its profits. The three layers consisted of the executives at the headquarters located in South Carolina, the general managers that ran the plants and talked to the executives, and the hourly employees that did most of the labor at the plants. The general managers ran the plants individually form each other and were expected to reach, at least, a 25% return on its total assets. If a general manager failed this, the executives would interfere and had no hesitation in replacing an unsuccessful general manager. The individual plants allowed for team like competitions between plants to see who could be the best performer. Nucor was nonunion, but provided salaries based on competing plants’ salaries in the area. Nucor offered a generous compensation bonus to good work that differed for each worker. Hourly workers received bonuses if they produced more than the standard number of tons. Department managers earned annual bonuses depending on percentage of net income to dollars of assets. Nucor also had great employee relations. Nucor offered 401k plans by matching up to 25% of employees’ contributions. Medical and dental plans were very common for Nucor employees. There was also a tuition reimbursement of up to $2,750 for any employee. For the children of employees, Nucor would provide a scholarship up to $2,750, which would encourage employees to stay until their went to college. As seen here, Nucor treated its employees very well to reduce employee turnover and attract the best employees. Nucor required a high human capital if it were going to use a decentralized structure. The high quality employees that Nucor attracted helped Nucor execute its low-cost strategy, and led to superior results. )Nucor’s leadership, great strategy, and execution were what led to why Nucor was so successful in the steel industry. The great leader that Nucor relied upon was Kenneth Iverson, who changed Nucor from a nuclear energy company into a steel company. As seen in the last question, the decentralized structure helped Nucor react t problems quickly due to the ability of employees to take t he authority to solving problems. To be a great company, you need all three. This was evident in the case of Nucor because it was turned around and became a very successful company in a very different and difficult industry than where it started. )The SWOT analysis of Nucor is as follows. The strengths of Nucor are its strong market position, historically based position, increased production capacity, and strong technological focus. Nucor had a strong market position that allowed it to flourish in the steel industry. The strong market position is shown by its ability to stay out of the red during hard times. This is seen in exhibit 1. Nucor continued to have a positive net income, even during the low period between 2000 and 2002, as seen in exhibit 1. Nucor’s historically based position has given it a long-standing presence that is known to most steel consumers. This has helped Nucor because it tells the consumers that Nucor has been able to provide quality steel year after year. As seen in exhibit 1, Nucor has increasingly produced steel starting at 207,000 tons in 1970 to 22,118,000 tons in 2006. This growth is enormous and not once did Nucor’s steel sales fall below its previous year. Nucor’s strong technological focus has allowed it to become a power in the steel industry. It used electric arc furnaces when they were a new technology and encouraged further innovation into the steel production methods. Some weaknesses of Nucor are that it is mainly located in America and that the steel industry is already very developed. The fact that Nucor is mainly in America limits its growth. Nucor cannot compete with international companies so it is best to stay in America, but that continues to limit its growth because Nucor can only sell so much steel in the United States. The steel industry is very developed due to the early demand for the high amounts of steel back when the steel industry started. Now demand has lessened and the developed companies are fighting to stay alive. Nucor’s opportunities are joint ventures and new technologies. Nucor has taken advantage of some of its joint ventures in Brazil and Australia. This is good because is allows for an expanded production line and further integration backwards. New technologies are a good way for Nucor to grow as it can decrease its costs and therefore increase its net income. This is a necessity for Nucor due to its â€Å"prison-like† existence in America. The threats on Nucor are foreign competitors and decreasing demand. Foreign competitors are growing in the developing nations like India and China. These nations are very large and China already produces one third of the steel in the world. Decreasing is also a problem, which is caused by the increasing amount of suppliers. Nucor’s distinct competencies are its highly successful strategy and high quality human, technology, and leadership capital. 8)My assessment of Nucor’s stock is that it has done the best out of its American competitors as shown in exhibit 3. Exhibit 3 is a comparison of the stocks of Mittal Steel (MT), U. S. Steel (X), AK Holding Steel Company (AKS), and of course Nucor Corporation (NUE). As shown, exhibit 3 shows these four stocks from 1999 to 2009. Mittal Steel did surpass Nucor during the years of 2007 and 2008, but currently Nucor is the highest. This is good because it shows the reaction to the recession, and it shows that Nucor bounced back the best. I personally would not purchase any steel stock because I believe that the growing steel industries in China and India will over power the American steel companies. However, if I had to invest in a steel company, it would in fact be Nucor. 9)Nucor needs to address the growing steel industry in Asia. Daniel DiMicco needs to do something to ensure that Nucor survives. I would recommend further investment in new steel technologies, and if it comes to it, Nucor may have to change industries again, like it did back in 1970. DiMicco may want to make sure that he is not â€Å"keeping all of Nucor’s eggs in one basket† by staying in the steel industry. Moving into the energy industry may be a smart move as there is a definite need for alternative energy. Nucor’s current, increasing net income could help invest in alternative energies that would help Nucor become sustainable. 10)The biggest recent event is the possibility of China potentially steel dumping, which would under price Nucor substantially. This would lead to the downfall of Nucor. Another current event is the new technology of producing â€Å"Green Steel† (http://news. n. msn. com/business/article. aspx? cp-documentid=1090378). This is a new technology that takes waste plastic and converts it into steel. Since plastic is mainly carbon, it is possible to produce steel from the waste plastic. This would solve the problem of what to do with the plastic that is no longer used and help produce cheap steel that also lowers emissions. Lower temperature is needed in this new process therefore reducing the energy needed. This new technology converts waste into very much needed, and useful steel. Nucor Steel Case Study There are many competitive forces that are affecting Nucor Corporation. Some of the primary ones are the market size, number of rivals, and pace of technological change. The market size is shrinking because of the increase in competing international steel companies. The number of rivals in America is declining due to higher labor costs than in foreign countries. There is a very fast pace of technology in the steel industry and it seems that the company, that obtains the newest technology, flourishes. This is due to the difficulty in lower costs of steel production. Better technology is one of the only ways to decrease costs because labor is pretty much at a set cost and all that is left is the cost of iron and making the steel. If a company can get its hands on a new technology that allows it to under price its competitors then it has a big advantage in the steel industry. Nucor’s main rivals in the steel industry are AK Steel Holding Corporation, Mittal Steel Company, and U. S. Steel. The five forces for the steel industry are the buyers, substitutes, suppliers, threat of new entrants, and rivals. The buyers have a fairly strong power on the steel producers. This is because of the low switching cost between competitors. Unless a contract is signed between a steel company and its buyer, there is little cost to the buyer if it wants to switch to a different steel company. There are not very many substitutes for steel, as steel is a commodity, so the substitute power is weak. Steel is a one of a kind item in that it is very strong and very versatile in its use. It is used in buildings, automobiles, bridges, garage door openers, and many other everyday objects. Suppliers also have a weak power in the steel industry. The suppliers are supplying iron to steel companies. Iron is very common and many companies sell it. Also, steel companies frequently integrate backwards and provide their own iron to their steel mills. The threat of new entrants is very weak due to high entry barriers and the current struggling competitors. The rival power is moderate to strong because there are a fair number of steelmaking companies. Also steel dumping occurs, but I will be talking about that later. According to this analysis, Nucor is in a three star industry, so it seems to have an okay chance at surviving. It is not the best industry to be in, but Nucor still has been able to flourish due to its organizational philosophy and technological innovation. 2) The driving forces behind the steel industry are industry growth rate, globalization, technological change and manufacturing process innovation, exit of major firms, and frequent change in cost. The steel industry is falling. There is a declining demand for steel and many companies have already gone bankrupt or are on the verge of going bankrupt. Some of these companies are Bethlehem Steel and Ling-Temco-Vought. The steel industry is very difficult to compete in because more steel is being produced than there is demand for it. Globalization is also a problem for the steel industry in America. Due to globalization it is getting easier for competing companies to send their products to other countries. This causes a problem for companies like Nucor because America has strict labor laws. In other countries labor is exploited and workers are paid very little, while in America, companies must pay their workers a minimum wage. One good thing that America does do is provide tariffs on incoming steel products to help American companies better compete with the international companies. Some countries are subsidiaries to the steel companies in their countries. This means that the governments have a vested interest in the company and want it to succeed. The companies can then sell products, like steel, at a much lower price due to the incoming funding form the government. China has been accused of this and America has taken action to alert the World Trade Organization to settle the matter, but this is only one step to â€Å"leveling the playing field† with China. The technologies for making steel are constantly changing and this allows for more efficient and therefore cheaper steel products. It seems that the companies, who obtain these technologies, obtain a significant head start in the industry. Like I said before, many companies are going bankrupt and are leaving the exiting the industry. Since steel is a commodity it leads to very volatile prices and can change quite frequently due to demand. By looking at Exhibit 1, you can see how the average price per ton decreased form $425 per ton in 2000 to $354 per ton in 2001. This exhibit shows how many tons of steel Nucor sold during certain years from 1970 to 2006. It is interesting to see that Nucor’s net income was fairly low during the years of 2000-2002, but increased to $1,121. 5 million. This is because of Nucor’s many acquisitions during the low period. Just a few years later in 2004, the price of steel was back up to $595 per ton. These driving forces very easily impact the steel industry’s competitive structure in a bad way. These driving forces make it very difficult for steel companies to compete in this industry. 3)The prospects for future profitability of the U. S. steel makers are very unattractive. Unless America can successfully combat China’s enormously, inexpensive, production ability, I do not see any American steel company surviving. China just has too big of a production ability and has the workforce to do it cheaply. Nucor will have to expand in this industry in the United States to survive. If the WTO negotiations with China go well then American steel companies may have a chance in the steel industry. If they do, then America can increase tariffs on incoming steel products and give American steel companies a chance to survive. Future profitability looks grim for American steel companies because of what I described before. China has been accused of subsidizing its steel companies, therefore funding them to make it possible to â€Å"dump steel† which is the process of selling steel at prices below the cost of making it. China would do this because then it would eventually under price foreign competitors and run them out of business. This, supposedly, happened back in 2000-2001 and devastated the steel industry in America, causing many companies to go bankrupt or be bought by other companies. Nucor was lucky enough to have survived this fall out and acquired many steel plants at low prices. The steel industry did bounce back in 2005-2006 and this allowed Nucor to grow quite rapidly due to its previous acquisitions. If America can again survive the big Chinese power, then Nucor will succeed, but right now it looks bleak for the American steel industry. 4)Nucor has adopted a low-cost strategy based on four parts. These parts are acquisitions, technological innovation, plant innovation, and joint ventures. The acquisition part of the Nucor strategy is that it has acquired many different steel companies in 2000-2001, when the steel industry in America was suffering. Because of the low time in the steel industry, Nucor could purchase steel companies at lower prices than normal. This helped its low-cost strategy substantially because it allowed Nucor to grow yet still remain a low-cost steel producer. Exhibit 2 shows Nucor’s financials, and very accurately illustrates the hit Nucor took during the low period of 2000-2003. This was a perfect time for Nucor to buy other steel companies, as this was one of the only ways for it to grow. Nucor invested heavily in new technologies. Investing in new technologies is very important for steel companies to do, as it is very easy to reduce costs if the company has a foothold on a new technology. Nucor focused on the introduction of disruptive technologies to give it an advantage in the market as compared to its competitors in terms of product quality, cost per ton, and market share. One example of this is the Castrip process. This new process produced flat-rolled, carbon, and stainless steels in very thin gauges. It allowed Nucor to produce steel in fewer steps, and helped produce savings in its operating expenses, therefore increasing Nucor’s net income. The Castrip process needed lower-quality scrap steel, which decreased costs of the scrap steel, and required 90% less energy. Also this new process cut green house gases by 80%. Nucor also increased its capital investments on the newest machinery to provide more efficient steel plants. By providing its workforce with the best possible technology, Nucor was able to max out production yet still retain a safe working environment. The implementation of hard working plant managers, produced hardworking managers that are aggressive enough to implement methods to improve product quality while keeping costs low. Nucor’s last strategic part was its joint ventures. By investing in joint ventures, Nucor was able to grow internationally with out the full capital risk. Some examples of this were its joint ventures in Brazil, Australia, and Trinidad. The joint venture in Brazil was between Companhia Vale do Rio Doce and Nucor. The goal was to produce an environmentally friendly pig iron plant that used eucalyptus trees as fuel. The use of eucalyptus trees as fuel removed 2,400 pounds of carbon dioxide from the atmosphere for every one ton of pig iron produced. Another joint venture was three other companies in Australia. This plant used a new technology process called HIsmelt. This new process converted iron ore to pig iron at a lower cost and higher quality than previously known pig iron producing technologies. The Trinidad plant was acquired in 2007 and was originally in Louisiana. The plant was moved to Trinidad because of the constant supply of natural gas as fuel therefore lowering costs. This plant reduced scrap metal dependence by as much as 25%. It also allowed for a higher quality production of sheet steel. Nucor’s four-part strategy has lead to a competitive sustainable advantage as seen in exhibit 2 between the years of 2004-2006 when its net income soared to more than $1,757. 7 million. Nucor used a cost-based advantage to achieve its competitive sustainable advantage. )Nucor employed an organization philosophy consisting of decentralization, individually operated plants, a three layer structure, good compensation practices for its employees, and good employee relations. Nucor’s decentralized structure allowed for its employees to make quick decisions that did not have to go through all of the bureaucratic steps like that in a centralized company. A decentralized co mpany relied on higher quality employees that could analyze a situation and react quickly and successfully. The individually operated plants were akin to the decentralized company. Each plant was individually responsible for its profits. The three layers consisted of the executives at the headquarters located in South Carolina, the general managers that ran the plants and talked to the executives, and the hourly employees that did most of the labor at the plants. The general managers ran the plants individually form each other and were expected to reach, at least, a 25% return on its total assets. If a general manager failed this, the executives would interfere and had no hesitation in replacing an unsuccessful general manager. The individual plants allowed for team like competitions between plants to see who could be the best performer. Nucor was nonunion, but provided salaries based on competing plants’ salaries in the area. Nucor offered a generous compensation bonus to good work that differed for each worker. Hourly workers received bonuses if they produced more than the standard number of tons. Department managers earned annual bonuses depending on percentage of net income to dollars of assets. Nucor also had great employee relations. Nucor offered 401k plans by matching up to 25% of employees’ contributions. Medical and dental plans were very common for Nucor employees. There was also a tuition reimbursement of up to $2,750 for any employee. For the children of employees, Nucor would provide a scholarship up to $2,750, which would encourage employees to stay until their went to college. As seen here, Nucor treated its employees very well to reduce employee turnover and attract the best employees. Nucor required a high human capital if it were going to use a decentralized structure. The high quality employees that Nucor attracted helped Nucor execute its low-cost strategy, and led to superior results. )Nucor’s leadership, great strategy, and execution were what led to why Nucor was so successful in the steel industry. The great leader that Nucor relied upon was Kenneth Iverson, who changed Nucor from a nuclear energy company into a steel company. As seen in the last question, the decentralized structure helped Nucor react t problems quickly due to the ability of employees to take t he authority to solving problems. To be a great company, you need all three. This was evident in the case of Nucor because it was turned around and became a very successful company in a very different and difficult industry than where it started. )The SWOT analysis of Nucor is as follows. The strengths of Nucor are its strong market position, historically based position, increased production capacity, and strong technological focus. Nucor had a strong market position that allowed it to flourish in the steel industry. The strong market position is shown by its ability to stay out of the red during hard times. This is seen in exhibit 1. Nucor continued to have a positive net income, even during the low period between 2000 and 2002, as seen in exhibit 1. Nucor’s historically based position has given it a long-standing presence that is known to most steel consumers. This has helped Nucor because it tells the consumers that Nucor has been able to provide quality steel year after year. As seen in exhibit 1, Nucor has increasingly produced steel starting at 207,000 tons in 1970 to 22,118,000 tons in 2006. This growth is enormous and not once did Nucor’s steel sales fall below its previous year. Nucor’s strong technological focus has allowed it to become a power in the steel industry. It used electric arc furnaces when they were a new technology and encouraged further innovation into the steel production methods. Some weaknesses of Nucor are that it is mainly located in America and that the steel industry is already very developed. The fact that Nucor is mainly in America limits its growth. Nucor cannot compete with international companies so it is best to stay in America, but that continues to limit its growth because Nucor can only sell so much steel in the United States. The steel industry is very developed due to the early demand for the high amounts of steel back when the steel industry started. Now demand has lessened and the developed companies are fighting to stay alive. Nucor’s opportunities are joint ventures and new technologies. Nucor has taken advantage of some of its joint ventures in Brazil and Australia. This is good because is allows for an expanded production line and further integration backwards. New technologies are a good way for Nucor to grow as it can decrease its costs and therefore increase its net income. This is a necessity for Nucor due to its â€Å"prison-like† existence in America. The threats on Nucor are foreign competitors and decreasing demand. Foreign competitors are growing in the developing nations like India and China. These nations are very large and China already produces one third of the steel in the world. Decreasing is also a problem, which is caused by the increasing amount of suppliers. Nucor’s distinct competencies are its highly successful strategy and high quality human, technology, and leadership capital. 8)My assessment of Nucor’s stock is that it has done the best out of its American competitors as shown in exhibit 3. Exhibit 3 is a comparison of the stocks of Mittal Steel (MT), U. S. Steel (X), AK Holding Steel Company (AKS), and of course Nucor Corporation (NUE). As shown, exhibit 3 shows these four stocks from 1999 to 2009. Mittal Steel did surpass Nucor during the years of 2007 and 2008, but currently Nucor is the highest. This is good because it shows the reaction to the recession, and it shows that Nucor bounced back the best. I personally would not purchase any steel stock because I believe that the growing steel industries in China and India will over power the American steel companies. However, if I had to invest in a steel company, it would in fact be Nucor. 9)Nucor needs to address the growing steel industry in Asia. Daniel DiMicco needs to do something to ensure that Nucor survives. I would recommend further investment in new steel technologies, and if it comes to it, Nucor may have to change industries again, like it did back in 1970. DiMicco may want to make sure that he is not â€Å"keeping all of Nucor’s eggs in one basket† by staying in the steel industry. Moving into the energy industry may be a smart move as there is a definite need for alternative energy. Nucor’s current, increasing net income could help invest in alternative energies that would help Nucor become sustainable. 10)The biggest recent event is the possibility of China potentially steel dumping, which would under price Nucor substantially. This would lead to the downfall of Nucor. Another current event is the new technology of producing â€Å"Green Steel† (http://news. n. msn. com/business/article. aspx? cp-documentid=1090378). This is a new technology that takes waste plastic and converts it into steel. Since plastic is mainly carbon, it is possible to produce steel from the waste plastic. This would solve the problem of what to do with the plastic that is no longer used and help produce cheap steel that also lowers emissions. Lower temperature is needed in this new process therefore reducing the energy needed. This new technology converts waste into very much needed, and useful steel.

Nike Inc

Kim Ford, the portfolio manager, outstanding performance of the fund. In order to evaluate Nikkei as a viable choice, Kim has to calculate the cost of capital for the company and make sure assumptions are a direct function from the estimates. The cost of capital calculation or WAC helps to see if an investment is worthwhile to undertake. However, the assumptions made to calculate WAC, in this case, are the underlying problem because some of the assumptions made are incorrect. Analysis Nikkei held a meeting to discuss company performance at 2011 end of fiscal year.In the meeting, management discussed their strategy to improve revenues and net income by developing more athletic shoe products in the misplaced segment of selling shoes at $70-$90 a pair. The company also planned to increase sales for its apparel line, which it had performed really well lately. Management was also concern in the drop of market share from 48%, in 1997, to 42% in 2000. Nikkei was also committed to make an ef fort in controlling company expenses more diligently. Yet, Nine's investment value was not clear to Kim Ford. Analysts' reports had mixed recommendations about the value of the company.Some analysts were recommending buying the stock and some others were recommending holding the stock. Different recommendations were based on the company's declining performance and the proposed strategies to improve the same. Weakening revenues and net income since 1997 are displayed in their firm's consolidated statement showing an improvement in the later years as well. Therefore, Ford had to run her own calculations. Kim Ford performed a discounted cash flow forecast that resulted in a 12% discount rate with an overvalued estimate for Nikkei at the current share price.Ford also performed a quick sensitivity analysis that showed Nikkei was undervalued. Ford figured the best way to make a choice about Nikkei is by calculating the cost of capital cause Nikkei is financed through equity and debt. Ford asked her assistant, Johanna Cohen, to estimate Nine's cost of capital. WAC is the cost of capital for a firm as a whole and can be interpreted as the required return on the overall firm (Ross, Westfield & Jordan, 2010). Some of the assumptions made by Johanna Cohen in calculating the cost of capital are incorrect.As stated before, the correct assumptions are necessary in order to make the right choice. Johanna used the book values for equity and debt. While book values are acceptable values for debt at times, book values for equity are not. Book values may be important from an accounting point of view but market values are forward looking. Therefore, Johanna should have calculated the equity market value. The debt market value calculated by Johanna is also slightly incorrect. Johanna did not include Redeemable Preferred Stock in her calculation.Consequently, Cone's To figure out the cost of equity Johanna used CAMP, a widely used method. CAMP tells what to expect in regards to fut ure returns on a share of stock. Johanna did right by using this method; however, her calculations include an average for six years on Betas and it should be an average for five years, since the 6th year is not finished. In addition, the 5. 74% rate on 20- year treasury bonds is sufficient to use as the risk-free rate. The geometric mean for current equity risk premiums is more representative to use.Under the cost of debt calculation, Johanna missed a simpler way to calculate the cost of debt. â€Å"The cost of debt is simply the interest rate the firm must pay on new borrowing. For example, if the firm already has bonds outstanding, then the yield to maturity on those bonds is the market required rate on the firm's debt† (Ross et al, 2010). Johanna could have simply calculated the YET on Nine's bonds. Since some of Cone's assumptions are incorrect, the cost of capital calculation does not reflect an accurate result. Nike Inc Kim Ford, the portfolio manager, outstanding performance of the fund. In order to evaluate Nikkei as a viable choice, Kim has to calculate the cost of capital for the company and make sure assumptions are a direct function from the estimates. The cost of capital calculation or WAC helps to see if an investment is worthwhile to undertake. However, the assumptions made to calculate WAC, in this case, are the underlying problem because some of the assumptions made are incorrect. Analysis Nikkei held a meeting to discuss company performance at 2011 end of fiscal year.In the meeting, management discussed their strategy to improve revenues and net income by developing more athletic shoe products in the misplaced segment of selling shoes at $70-$90 a pair. The company also planned to increase sales for its apparel line, which it had performed really well lately. Management was also concern in the drop of market share from 48%, in 1997, to 42% in 2000. Nikkei was also committed to make an ef fort in controlling company expenses more diligently. Yet, Nine's investment value was not clear to Kim Ford. Analysts' reports had mixed recommendations about the value of the company.Some analysts were recommending buying the stock and some others were recommending holding the stock. Different recommendations were based on the company's declining performance and the proposed strategies to improve the same. Weakening revenues and net income since 1997 are displayed in their firm's consolidated statement showing an improvement in the later years as well. Therefore, Ford had to run her own calculations. Kim Ford performed a discounted cash flow forecast that resulted in a 12% discount rate with an overvalued estimate for Nikkei at the current share price.Ford also performed a quick sensitivity analysis that showed Nikkei was undervalued. Ford figured the best way to make a choice about Nikkei is by calculating the cost of capital cause Nikkei is financed through equity and debt. Ford asked her assistant, Johanna Cohen, to estimate Nine's cost of capital. WAC is the cost of capital for a firm as a whole and can be interpreted as the required return on the overall firm (Ross, Westfield & Jordan, 2010). Some of the assumptions made by Johanna Cohen in calculating the cost of capital are incorrect.As stated before, the correct assumptions are necessary in order to make the right choice. Johanna used the book values for equity and debt. While book values are acceptable values for debt at times, book values for equity are not. Book values may be important from an accounting point of view but market values are forward looking. Therefore, Johanna should have calculated the equity market value. The debt market value calculated by Johanna is also slightly incorrect. Johanna did not include Redeemable Preferred Stock in her calculation.Consequently, Cone's To figure out the cost of equity Johanna used CAMP, a widely used method. CAMP tells what to expect in regards to fut ure returns on a share of stock. Johanna did right by using this method; however, her calculations include an average for six years on Betas and it should be an average for five years, since the 6th year is not finished. In addition, the 5. 74% rate on 20- year treasury bonds is sufficient to use as the risk-free rate. The geometric mean for current equity risk premiums is more representative to use.Under the cost of debt calculation, Johanna missed a simpler way to calculate the cost of debt. â€Å"The cost of debt is simply the interest rate the firm must pay on new borrowing. For example, if the firm already has bonds outstanding, then the yield to maturity on those bonds is the market required rate on the firm's debt† (Ross et al, 2010). Johanna could have simply calculated the YET on Nine's bonds. Since some of Cone's assumptions are incorrect, the cost of capital calculation does not reflect an accurate result.

Project Network Design Essay

The best network design to ensure the security of Corporation Techs internal access while retaining public Web site availability consists of several layers of defense in order to protect the corporation’s data and provide accessibility to employees and the public. The private-public network edge is considered particularly vulnerable to intrusions, because the Internet is a publicly accessible network and falls under the management purview of multiple network operators. For these reasons, the Internet is considered an untrusted network. So are wireless LANs, which-without the proper security measures in place-can be hijacked from outside the corporation when radio signals penetrate interior walls and spill outdoors. The network infrastructure is the first line of defense between the Internet and public facing web servers. Firewalls provide the first line of defense in network security infrastructures. They accomplish this by comparing corporate policies about users’ netw ork access rights to the connection information surrounding each access attempt. User policies and connection information must match up, or the firewall does not grant access to network resources; this helps avert break-ins. Network firewalls keep communications between internal network segments in check so that internal employees cannot access network and data resources that corporate policy dictates are off-limits to them. By partitioning the corporate intranet with firewalls, departments within an organization are offered additional defenses against threats originating from other departments. In computer networks, a DMZ (demilitarized zone) is a computer host or small network inserted as a â€Å"neutral zone† between a company’s private network and the outside public network. It prevents outside users from getting direct access to a server that has company data. A DMZ is an optional and more secure approach to a firewall and effectively acts as a proxy server as well. Security is the  heart of internetworking. The world has moved from an Internet of implicit trust to an Internet of pervasive distrust. In network security, no packet can be trusted; all packets must earn that trust through a network device’s ability to inspect and enforce policy. Clear text (unencrypted data) services represent a great weakness in networks. Clear text services transmit all information or packets, including user names and passwords, in unencrypted format. Services such as file transfer protocol (FTP), email, telnet and basic HTTP authentication all transmit communications in clear text. A hacker with a sniffer could easily capture user names and passwords from the network without anyone’s knowledge and gain administrator access to the system. Clear text services should be avoided; instead secure services that encrypt communications, such as Secure Shell (SSH) and Secure Socket Layer (SSL), should be used. The use of routers and switches will allow for network segmentation and help defend against sniffing Corporation Tech may want to have their own web or email server that is accessible to Internet users without having to go to the expense and complexity of building a DMZ or other network for the sole purpose of hosting these services. At the same time they may want to host their own server instead of outsourcing to an ISP (Internet Service Provider) or hosting company. Corporation Tech can use NAT (Network Address Translation) to direct inbound traffic that matches pre-defined protocols to a specific server on the internal or private LAN. This would allow Corporation Tech to have a single fixed public IP address to the Internet and use private IP addresses for the web and email server on the LAN. Network Diagram and Vulnerabilities Network infrastructure using Class C network address 192.168.1.0. The Main Servers using Virtual Machine software was configured with a static IP address of 192.168.50.1. This server controls DHCP, DNS and Active Directory. The Web Server is located outside the network in the DMZ. Internal network is configured on separate VLAN’s to separate department traffic and manage data access. Cisco Internal firewall was installed and configured to manage the internal network on the LAN. The Cisco firewall 2 implemented to manage remote traffic entering the LAN. This provides layered  security to the network. Several ports have been identified as vulnerabilities in the Corporation Techs network that allowed information to be transferred via clear text and as such they have been closed. Additional ports that could be used for gaming, streaming and Peer to Peer have been blocked or closed to reduce unauthorized access to the network. All ports known to be used for malicious purposes have been closed as a matter of best practices. All standard ports that do not have specific applications requiring access have been closed. The ports listed below are standard ports that have been blocked to minimize unauthorized packet transfer of clear text: Port 21 – FTP Port 23 -Telnet Port 110 – POP3 Port 80 – Basic HTTP Hardening Practices Develop a baseline Close all unused Ports Redirect traffic to secure ports example HTTPS (443) or higher Configure Firewall to allow or deny secure traffic Install IDS and IPS Review monitor logs on the network and compare to baseline for any intrusions Policies Develop and Implement network Acceptable User policy (AUP) which must be signed before using the network Assign Permissions and Rights Password Policy must be in place on all devices and enforce End Users must be trained about the different threats faced on the network Back Up must be done weekly and notify users Maintain Bandwidth speed and monitor peak hours Network Security realignment done using Class C network address 192.168.1.0. The Servers was configured on network address 192.168.1.216 static and 192.168.1.218 for simplicity. DHCP, DNS and Active Directory were install and configured on one of the server. The second server was use for the Application. Both PC’s were also configured on the same network address 192.168.1.0 for easy management on the switch. The switch was configured with 192.168.1.200 static IP address. Router network address was changed to  avoid conflicting addresses and easy management. Cisco Internal firewall 1 was installed and configured to manage the internal network on the LAN. The Cisco firewall 2 implemented to manage remote traffic entering the LAN. This provides layered security to the network. References Cisco. (n.d.). (Cicso) Retrieved 10 26, 2014, from Cisco ASA 5500-X Series Next-Generation Firewalls: http://www.cisco.com/c/en/us/products/security/asa-5500-series-next-generation-firewalls/index.html HP Support document – HP Support Center. (n.d.). Retrieved October 10, 2014, from http://h20565.www2.hp.com/portal/site/hpsc/template.PAGE/public/kb/docDisplay/?sp4ts.oid=412144&spf_p.tpst=kbDocDisplay&spf_p.prp_kbDocDisplay=wsrp-navigationalState%3DdocId%253Demr_na-c02480766-2%257CdocLocale%253D%257CcalledBy%253D&javax.portlet.begCacheTok=com.vignette.cachetoken&javax.portlet.endCacheTok=com.vignette.cachetoken HP Support document – HP Support Center. (n.d.). Retrieved October 10, 2014, from http://h20566.www2.hp.com/portal/site/hpsc/template.PAGE/public/kb/docDisplay?docId=bps53634&ac.admitted=1413144875821.876444892.199480143 Network Access Control. (n.d.). Retrieved 10 26, 2014, from Wikipedia: http://en.wikipedia.org/wiki/Network_Access_Control Pascucci, M. (2013, Au gust 06). Security Management at the Speed of Business. Retrieved October 25, 2014, from algosec.com: http://blog.algosec.com/2013/08/the-ideal-network-security-perimeter-design-part-1-of-3.html Vaughan-Nichols, S. (2013, January 30). How to fix the UPnP security holes | ZDNet. Retrieved from http://www.zdnet.com/how-to-fix-the-upnp-security-holes-7000010584/ Wodrich, M. (2009, November 10). Vulnerability in Web Services on Devices (WSD) API – Security Research & Defense – Site Home – TechNet Blogs. Retrieved from http://blogs.technet.com/b/srd/archive/2009/11/10/vulnerability-in-web-services-on-devices-wsd-api.aspx

Marketing - Public Relationship Assignment Example | Topics and Well Written Essays - 2250 words

Marketing - Public Relationship - Assignment Example There are just too many and varied implications which need to be taken care of, and which shall be solved in an amicable way if proper addressing of the needs and requirements are ascertained. The times have changed and so have the values which have engulfed the global consumers as these retailers have ruled the roost for way too long now. Now is the time to make a difference – as this change will eventually bring in the much-needed sanity that has been missing in action for a long time. This paper discusses the basis of public relationships that have come up with the passage of time and how these have played their due roles in aligning responsibilities and debates of ethical marketing, and so on. One must understand that the world of today has not been based on a fair trade principle. Even though there is a good amount of talk on this subject, the fact of the matter is that there still are many shortcomings that one can witness within the related ranks. In essence, promulgation of the ethical debate has been marred by profits which are being usurped by the investors, agents of global capitalism regimes, stakeholders and top management concerns of these organizations. In order to produce goods, the role of labour is indeed very essential (Peterson 2007). This is because the labours have a definitive role to play within the work manifestations, no matter which avenue of the trade they are involved within. This has called for a better understanding of the subject of public relations when one discusses the tangent of growth and development within the business of global retailing, which has been widespread for all the right reasons. Much emphasis has been placed on the fact that t hings should be done the right way because employing slave labour does not do justice with the global retailers and their mage is also affected in a very negative way.  Ã‚  

Contemporary art and Def jam Essay Example | Topics and Well Written Essays - 1750 words

Contemporary art and Def jam - Essay Example The essay "Contemporary art and Def jam" discusses one such new art form, a variant of poetry reading known as def jam. As civilization progressed, so did art as it branched out into other forms, such as the performance arts of song, dance, and theater. The objective is the same, which is to show an artist's ideas through his or her body of work, to highlight creativity and expression known as aesthetics. As language developed, so did the transmission of ideas through the printed word as in literary art works of short stories, epics, novels, and essays although some kinds of primitive art form still exist in the form of the verbal arts, like poem recitation or the telling of a story by a professional storyteller directly to audiences. There are practically no limits to the form an art can take, constrained perhaps only by the creative imagination of an artist. The two basic art forms are visual and performance art; both possess characteristics of being mimetic, meaning it mimics something found in the real world as its representation. Modern society has witnessed newer art forms due to an advent of advanced technologies like the ability to record sound and images through audio and visual techniques like in video disks.Def jam is also known as def poetry jam or def poetry slam; it is a variant of poetry readings that were so popular in previous centuries, even as part of religious rites in the form of prayers, hymns, and incantations. Poetry reading is rather sedate in that the audience is expected. to stay silent during the entire reading performance, appreciative of the poet's actual physical presence. Like the other art forms of jazz, hip-hop and rap music, it derived primarily from the black American community as a subtle form of political protest. Many blacks still feel that the aims of the Civil Right Movement were not achieved despit e an abolition of slavery after the end of Civil War; discrimination still exists in many forms, both overt and subvert in education, politics, housing, employment, health care, society, etc. Def jam is classified as performance art as it is an interactive form of poetry reading; the audience is not expected to stay silent, but rather try to show its appreciation by the intensity of audience reaction. It no longer considers poetry reading as private art (Novak 40) but rather as a public performance. The sing-song tone is similar to that of rap or hip-hop music, with rhyming insults, suggestive comments, and innuendos very common. This is the main attraction of def jam, because although its message is basically the same, that of a silent political protest and making a substantive statement, its continued popularity since its inception two or three decades ago is its unconventional way a message is delivered. Although def jam owes its provenance to the protest movement, the current ve rsions delve on a variety of topics. No topic is sacred or off limits, as the saying, anything goes in it; the more controversial, challenging, or unusual the topic of the poem is, the more an audience shows its appreciation for the sheer talent exhibited by the artist-poet, complete with all props, actions, gestures, appropriate dress, tone of delivery, and volume of voice but the message is a constant attraction. It is the essence of def

Security Analysis and Portfolio Management Essay - 2

Security Analysis and Portfolio Management - Essay Example Based on the same concept, the following paper aims at establishing the value of stocks from capitalized companies, Exxon and Berkshire, in a given portfolio. The analysis of the two stocks in this paper is achieved through a methodology section, results, and a concluding remark. In order to accomplish the main objective of this paper, two firms with capitalized stocks were selected: Exxon and Berkshire. The stocks of Exxon and Berkshire were the main data to be used in analysis and discussions. 10-years (from 2003 to 2013) of monthly stock price history for both Exxon and Berkshire were obtained from Yahoo Finance. Time series of monthly returns were then obtained from the time series of the monthly stock prices. On the basis of the time series of monthly returns, annualized mean return, standard deviation and correlation of the stocks were calculated. In addition, the analysis also calculated the weights on the minimum variance portfolio that consisted of the stocks from Exxon and Berkshire. Data and results were presented using tables and graphs. The data and results were used in carrying out the analysis and drawing up the conclusion. The 10-years of monthly stock price history for both Exxon and Berkshire obtained from Yahoo Finance are included in Excel file attached. From the monthly stock prices, the monthly returns were established. The results of the monthly returns established from the monthly stock prices are illustrated in Figs. 1 and 2 through the use of a time series graph. In addition to obtaining the returns and illustrating them in the above graphs, the calculated annualized mean return, standard deviation, and correlation of the stocks are illustrated in the following tables. From the above table, the E(R) monthly for Exxon Mobil Corporation is larger than the E(R) monthly for Berkshire Hathaway Incorporation, that is, 1.11% against 0.79%. However, on the

Global Operations and Policies Research Paper Example | Topics and Well Written Essays - 1500 words

Global Operations and Policies - Research Paper Example Table of Contents Introduction 4 Sony: A brief overview 5 Global Operations of Sony 6 Political activity 7 Strategies of Sony 8 References 10 Introduction With the sluggish growth of economy, international expansion of business and investment in foreign soil has become the most essential strategy for the survival and growth of a company. There are many companies that have witnessed faster growth in the international market. However for most of the companies international presence acts as the value accelerator for the company. The brand name and brand value of a company gets hugely augmented. Some of the other benefits of international presence are overall rapid growth, diversification of the income stream, higher return on investment and also the reinvestment rate gets increased. The companies with international presence can be segmented into 4 groups. They are International companies, Multinational companies, Global companies, transnational companies. However in the context of the p roject only the company which belongs to transnational segment will be chosen. Among the mentioned category Sony has been chosen as the organization. Sony has all the characteristics of a transnational corporation and also has a global presence. Now in order to begin the project a brief introduction of Sony is presented below. Sony: A brief overview The origin of Sony dates back to 1946 when Masaru Ibuka started the first electronics outlet in a damaged departmental store in Tokyo. Sony Corporation or what is commonly known as Sony is a Japanese electronics company which was renamed in the year 1958 (Yahoo Finance, n.d.). The company is presently headquartered at Konan Minato, Tokyo, Japan. The company was founded by Masaru Ibuka Akio Morita in the year 1946. Sony Corporation is indulged in the electronics segment and also the parent company of the Sony group. The group has four main operating groups namely Sony music, Sony pictures, Sony electronics, online business and other finan cial services (Bloomberg, n.d.). However each of the individual group focuses on different products and services. For example the electronic segment mainly focuses on the products which are related to audio-video outputs, and also products related to information technology. However the most important products of the company include video games (play station), semiconductors, consumer electronics (sound box, television, and music system), computer hardware (DVD writer), telecom equipment and media and entertainment (Company Database, n.d.). Apart from this some of the visible brands of the company are Sony VAIO, Sony Cyber shot, Sony BRAVIA, Sony Play Station and various other brands. From the time of its incorporation the company has successfully achieved new heights in the business market. The company is presently ranked at 73rd position in the global fortune 500 edition of 2011. Currently the company has an overall turnover of $ 6.39 trillion. The global slogan of the company is à ¢â‚¬ËœLike no other’. And ‘Make Believe’. The company mainly faces competition from the established players of the market. Hence the major competitors of the company are LG, Samsung, Sharp, Philips, Mutsushita and some other local established player. However the competitors can also be classified according to the business category. The next half of the project will highlight on the global operation of the

The role of slavery the global economy today Essay

The role of slavery the global economy today - Essay Example ng labor at really low cost or free of service in some cases and incur little expenses simply in the form of food which is not even provided daily and in most cases provided to them only once in a day despite the excess work they are being forced to carry out. Slavery in the Middle East countries for example is in the form of domestic work at home. These individuals who are rich because of oil money mistreat these domestic workers by making them work unfairly long hours from early morning even before day break to late at night. They have extensive homes with very few workers to provide care for cleaning, washing, doing dishes, ironing, cooking and feeding their pets in addition to taking care of their children. Very many people live in one house and they are also very fond of entertaining guests. All this work which should in the real sense be provided by over six workers with the aid of machines is left for one individual and they are not given food. The usage of expense money for the masters is therefore reduced as they do not have to purchase the machines to make work easier or pay excessive electricity bills or provide monetary payment for the domestic worker (Pattisson, 2015). Forced labor is an eminent issue in some of the European nations such as France, Netherlands, Germany, Italy, Poland and Spain among others and the government has contributed greatly to it and is doing nothing to stop it. The tough immigration and labor laws have made many immigrants lack better employment opportunities making them become slaves through being forced into labor. They are exploited with little pay while the owners of the industries and factories where they work in (as that are where majority work), enjoys the increased productivity with minimal expenses of wages and salaries being incurred (Kelly, 2013). Many work also for long hours without any extra pay once their official shifts end which is illegal but the law does not take that into consideration. The fact that the

UCCs Effect On International Commerce Essay Example | Topics and Well Written Essays - 750 words

UCCs Effect On International Commerce - Essay Example The third article provides for the transactions in commercial papers such as negotiable instruments and promissory notes (Hinkelman & Shippey, 2004). The other provisions are also important in trade since they provide guidelines on issues such as bulk transfers, secured transactions and dealings in investment securities such as stocks and bonds. The UCC applies to national trade, but would have positive effects if applied to international commerce. The UCC is designed for quick references on laws regarding formation of business contracts, expert analysis of the impact of various commercial transactions and easy handling of court decisions regarding disputes emanating from trade (Hinkelman & Shippey, 2004). The first effect of UCC on international commerce is facilitation of international transactions in the sale of goods. UCC will ensure that cross-border merchants have faith in sale of goods contracts due to the uniformity in the regulatory laws. The increase in foreign direct inves tments and growth in technology has led to emergency of new type of business transactions that require a uniform form of contractual agreements and legal protection (Hinkelman & Shippey, 2004). For instance, technology has allowed companies to sell digital products across national borders and multinational companies to list their stocks in different national stock exchange markets. In this case, uniform commercial code would be helpful in fostering international commerce (Hinkelman & Shippey, 2004). Uniform commercial code in the international commerce would be useful in curbing instances of international economic crimes such as money laundering and dumping. The UCC would be capable of offering legal guidelines that address issues relating to diversion of cargo in the high seas, counterfeiting and fraudulent insurance claims that are common in maritime trade. UCC will be useful in global tendering processes (Hinkelman & Shippey, 2004). The provisions will be important in ensuring un iformity of global tenders such as government tenders. This will ensure that contracting parties receive high quality services due to good faith requirements and transparency of the process (Hinkelman & Shippey, 2004). UCC will ease the international transfer of funds through creating uniform requirements in bank collections, settlements of financial securities and fund transfers among the international trade participants. UCC will create legal performance obligation to transactions involving a secured party. The code of business will guide the transfers of dematerialized securities. In this case, the final investors in the investment securities will have adequate security entitlement and right to receive any dividends accruing from their ownership of the security. Article 8 decomposes the security rights thus creditors are protected from the possibility of the investor of transferring such stake without informing the creditor who has some interest in the concerned security (Hinkelm an & Shippey, 2004). The impact of securing the transactions is to provide a relief to the lender through a security interest in the collateral and an assurance in the default by the borrowing party. In most states, the secured transactions use personal property, fixtures and intangible property as the collateral in the case of default. This code will facilitate bankruptcy settlements thus facilitating international trade transactions (Hinkelman & Shippey, 2004). Articles 5 of the UCC provide guidelines on the issuance of letters of credit by financial institutions. The letters of credit

Finance Essay Example | Topics and Well Written Essays - 2250 words - 4

Finance - Essay Example ralian dollar, as well as the interest rates as apparent in the situation of the housing market, and the unemployment situation in the mining industry. Lastly, this paper looks at the current efforts to regulate the financial markets. The sources of data include article from online versions of major newspapers such as the Australian, as well as articles from global financial institutions such as the World Bank and Overseas Development Institute. Other legitimate sources such as the website of the Australian government have been utilized. The bulk of the sources include academic journals such as Financial Management, McKinsey Quarterly, Cambridge Journal of Economics, etc., that tackle the issue of global financial crisis, from databases such as Business Source Premier, Oxford Journals and ABI Inform. The invisible hand view of the economy, as explored in the book â€Å"Economics† by Samuelson and Nordhaus, will fail to exist under two conditions: when there is imperfect competition and imperfect information, and when there are market externalities. The failure in major financial markets exists because of either of these conditions. Prior to the financial crisis, the financial markets such as stocks, bonds and mutual funds markets are considered markets where the invisible hand operates. The stock market has always been referred to as an efficient market by economists. According to Brealey, Myers and Marcus, â€Å"the competition [in this market] to find misvalued stocks is intense. So when new information comes out, investors rush to take advantage of it and thereby eliminate any profit opportunities (2004, 165).† An efficient market, according to Samuelson and Nordhaus in their book â€Å"Economics† is defined as â€Å"one where all new information is quickly understood by market participants and becomes immediately incorporated into the market prices (2004, 534).† This characteristic of the stock market as an efficient market is attributed to the availability of

Planning Lessons and Assessment in Schools Essay

Planning Lessons and Assessment in Schools - Essay Example The teacher then introduced the lesson of the day by mentioning that it would be a buildup of the previous lesson. The lesson of that day involved learning how to balance basic chemistry equations. The teacher began by introducing basic, acidic, and neutral compound. He then gave basic examples of a base, acid, and a neutral compound. Interestingly, he had an example of each of the compounds in class. A lemon represented an acidic compound, ash represented basic compound whereas water represented a neutral compound. Students were asked to name other similar compounds and at least a quarter of the class responded with accurate results. The teacher then went ahead to demonstrate on the blackboard how to balance the equations. Once he gave five simple examples, he asked the students to volunteer to go to the board and balance an equation. Each student who was able to balance the equations was given an orange. It was interesting to note the profound interest in which the students were re sponding to learning. The interest was actually boosted by the gifts for the students who got the equations correct. Near the end of the lesson, the teacher divided the class into four groups of five students each. He then requested the students to discuss what they had learned in class concerning balancing of equations as well as further examples of each compound. Each group was required to come up with three examples of each compound as well as three examples of balanced equations. The teacher collected the results and told them that the results would be discussed in the next lesson. Lesson planning is one of the fundamental aspect of any teacher. This is because the structure of the lesson determines the effectiveness of the learning process. When making such a plan, it is imperative for the teacher to understand the lesson objectives and most importantly, the strengths and weaknesses of the students. This way, it will be possible to articulate the lesson to benefit the students maximally. It is also important to understand each student so that the needs of every student can be incorporated in the lesson plan (Satterly, 1989). However, it is particularly necessary to classify the student depending on their learning abilities. This is because the bright students are more often than not sidelined in the learning process at the expense of the slow learners. For example, I realized that the teacher was concentrating more on the slow learners in the hope that they will catch up with the rest of the class. Assessment in Schools   A lesson is not complete with the full assessment of the realization of the objectives of the lesson. During the lesson, I noted that the teacher used various teaching and assessments methods. Most importantly, she ensured that the assessment activities are explicitly related to the stated learning objectives. Once the students had completed the given assessment activity, she took some time to reflect upon the results. When the learnin g objectives were not adequately achieved, the teacher revisited the lesson in a different manner. This allowed those students who had not comprehended adequately to gain more understanding of the topic discussed. In order to achieve this, the teacher used various assessment methods. One of them was quizzes. The teacher ordered the pupils to close their books and asked them some questions on what she had taught that day. Most pupils who had

Infectious Disease and Health Protection Agency Essay Example for Free

Infectious Disease and Health Protection Agency Essay The guidance is divided into sections as follows: Section 1Introduces infection control and explains notification; Section 2deals with general infection control procedures; Section 3gives guidance on the management of outbreaks; Section 4describes specific infectious diseases; Section 5contact numbers and sources of information; Section 6contains additional detailed information and a table of diseases; Section 7contains risk assessments relevant to infection control; Section 8 research sources, references and useful web sites Further information is available from the Food Safety Adviser at Leicestershire County Council and from the Health Protection Agency – East Midlands South. Contact numbers are listed in Section 5. The aim of this document is to provide simple advice on the actions needed in the majority of situations likely to be encountered in social care settings. It is written in everyday language and presented so that individual subject areas can be easily copied for use as a single sheet. 1. 1 HOW ARE INFECTIONS TRANSMITTED? 1. 2 INFECTION CONTROL GUIDANCE Infection control forms part of our everyday lives, usually in the form of common sense and basic hygiene procedures. Where large numbers of people come in contact with each other, the risk of spreading infection increases. This is particularly so where people are in close contact and share eating and living accommodation. It is important to have guidelines to protect service users, staff and visitors. Adopting these guidelines and standard infection control practices will minimise the spread of infectious diseases to everyone. External Factors If you or someone in your immediate family has a â€Å"Notifiable Disease† such as Measles (see 1. 3) or infection such as Impetigo, diarrhoea, vomiting or Scabies, please inform your line manager before coming to work. If you regularly visit people in hospital please be aware of the potential risk of cross infection to yourself and the person you are visiting. Above all when dealing with service users and their families we must all remember we are dealing with people. There will be personal issues of privacy and sensitivity, which we must handle with tact and discretion at all times. What are Infection Control Practices? Infection control practices are ways that everyone (staff, service users volunteers) can prevent the transmission of infection from one person to another. They are practices which should be routinely adopted, at all times with every individual, on every occasion, regardless of whether or not that person is known to have an infection. 1. 2 INFECTION CONTROL GUIDANCE – cont. include: 1. 3 NOTIFICATION OF INFECTIOUS DISEASES A number of infectious diseases are statutorily notifiable under The Public Health (Control of Disease) Act 1984 and The Public Health (Infectious Diseases) Regulations 1988. There are three main reasons for such notification. So that control measures can be taken To monitor preventative programmes For surveillance of infectious diseases in order to monitor levels of infectious diseases and to detect outbreaks so that effective control measures can be taken. All doctors diagnosing or suspecting a case of any of the infectious diseases listed overleaf have a legal duty to report it to the Proper Officer of the Local Authority, who is usually the Consultant in Communicable Disease Control based at the Health Protection Agency. Notification should be made at the time of clinical diagnosis and should not be delayed until laboratory confirmation is received. Infections marked (T) should be notified by telephone to the Consultant in Communicable Disease Control (see Section 5) and confirmed by completion of a written notification form. 1. 3 NOTIFICATION OF INFECTIOUS DISEASES – cont. Notifiable Diseases Acute encephalitis Paratyphoid(T) Acute poliomyelitisPlague(T) AnthraxRabies(T) Cholera(T)Relapsing Fever(T) Diphtheria(T)Rubella Dysentry(T)Scarlet Fever Food poisoning orSmall Pox suspected food poisoning LeprosyTetanus LeptospirosisTuberculosis MalariaTyphoid fever(T) MeaslesTyphus fever(T) Meningitis * (T)Viral haemorrhagic fever(T) Meningococcal septicaemia(T)Viral hepatitis ** (without meningitis) MumpsWhooping cough Opthalmia neonatorumYellow fever * meningococcal, pneumococcal, haemophilus influenzae, viral, other specified, unspecified ** Hepatitis A, Hepatitis B Hepatitis C, other (T)Please notify the Consultant in Communicable Disease Control or person on call for the Health Protection Agency by telephone. Other specific diseases are designated by the Reporting of Injuries, Diseases and Dangerous Occurrences Regulations 1995 as â€Å"Reportable Occupational Diseases† e. g. Legionellosis. Please contact the Health Safety Team for further information (see section 5 for details). 1. 3 NOTIFICATION OF INFECTIOUS DISEASES – cont. Notification of suspected outbreaks An outbreak is defined as two or more cases of a condition related in time and location with suspicion of transmission. Prompt investigation of an outbreak and introduction of control measures depends upon early communication. Suspicion of any association between cases should prompt contact with the Health Protection Agency. 1. 4 IMMUNISATION COSHH requires that if a risk assessment shows there to be a risk of exposure to biological agents for which vaccines exist, then these should be offered if the employee is not already immune. In practice, with Social Care Services, this generally amounts to care staff within the Mental Health and Learning Disabilities Services being offered Hepatitis B vaccination. Care home managers, after assessing risks, may also offer ‘flu vaccination to staff and individual cases may indicate the need for immunisation in certain circumstances. The pros and cons of immunisation/non-immunisation should be explained when making the offer of immunisation. The Health Safety at Work Act 1974 requires that employees are not charged for protective measures such as immunisation. A few GPs will make vaccinations available free to Social Care workers but they are not obliged to do so and can charge at their discretion. Departmental funding for the provision of vaccine, through Occupational Health, is restricted and so it is vital that only those to whom it is essential to provide immunisation are offered this service. The majority of staff will have received immunisation from childhood and have received the appropriate booster doses e. g. Tetanus, Rubella, Measles and Polio. However, it is important for the immunisation state of staff to be checked e. g. women of childbearing age should be protected against Rubella. Good practice and common sense should indicate that the immunisation state of staff is checked and appropriate action taken. If there is a potential risk of infection, change of work rotas or areas of responsibility can sometimes avoid the risk of contamination. Vaccination is not always the only course of action and in some cases staff may not agree to be vaccinated. 1. 4. 1 IMMUNISATION SCHEDULE Vaccine Age Notes D/T/P and Hib Polio 1st dose at 2 months 2nd dose at 3 months 3rd dose at 4 months Primary Course Measles / Mumps / Rubella (MMR) 12 – 15 months Can be given at any age over 12 months Booster DT and Polio, MMR second dose 3 – 5 years Three years after completion of primary course BCG 10 – 14 years or infancy Only offered to certain high risk groups after an initial risk assessment Booster Tetanus, Diphtheria and Polio 13 – 18 years Children should therefore have received the following vaccines: By 6 months:3 doses of DTP, Hib and Polio By 15 months:Measles / Mumps / Rubella By school entry:4th DT and Polio; second dose of Measles / Mumps / Rubella Between 10 14 years:BCG (certain high risk groups only) Before leaving school:5th Polio and Tetanus Diphtheria (Td) Adults should receive the following vaccines: Women sero-negative Rubella For Rubella: Previously un-immunisedPolio, Tetanus, Diphtheria Individuals: Individuals in high Hepatitis B, Hepatitis A, Influenza risk groups:Pneumonococcal vaccine 1. 5 EXCLUSION FROM WORK The following table gives advice on the minimum period of exclusions from work for staff members suffering from infectious disease (cases) or in contact with a case of infection in their own homes (home contacts). Advice on work exclusions can be sought from CCDC (Consultant in Communicable Disease Control) / HPN (Health Protection Nurse) / CICN (Community Infection Control Nurse) / EHO (Environmental Health Officer) or GP (General Practitioner) Minimum exclusion period Disease Period of Infectivity Case Home contact Chickenpox Infectious for 1-2 days before the onset of symptoms and 6 days after rash appears or until lesions are crusted (if longer) 6 days from onset of rash None. Non-immune pregnant women should seek medical advice Conjunctivitis Until 48 hours after treatment Until discharge stops None Erythema infectiosum (slapped cheek syndrome) 4 days before and until 4 days after the onset of the rash Until clinically well None. Pregnant women should seek medical advice Gastroenteritis (including salmonellosis and shigellosis) As long as organism is present in stools, but mainly while diarrhoea lasts Until clinically well and 48 hours without diarrhoea or vomiting. CCDC or EHO may advise a longer period of exclusion CCDC or EHO will advise on local policy Glandular fever When symptomatic Until clinically well None Giardia lamblia While diarrhoea is present Until 48 hours after first normal stool None Hand, foot and mouth disease As long as active ulcers are present 1 week or until open lesions are healed None Hepatitis A The incubation period is 15-50 days, average 28-30 days. Maximum infectivity occurs during the latter half of the incubation period and continues until 7 days after jaundice appears 1 week after onset of jaundice None – immunisation may be advised (through GP) HIV/AIDS For life None None 1. 5 EXCLUSION FROM WORK – cont. Minimum exclusion period Disease Period of infectivity Case Home contact Measles Up to 4 days before and until 4 days after the rash appears 4 days from the onset of the rash None Meningitis Varies with organism Until clinical recovery None Mumps Greatest infectivity from 2 days before the onset of symptoms to 4 days after symptoms appear 4 days from the onset of the rash None Rubella (German measles) 1 week before and until 5 days after the onset of the rash 4 days from the onset of the rash None Streptococcal sore throat and Scarlet fever As long as the organism is present in the throat, usually up to 48 hours after antibiotic is started Until clinically improved (usually 48 hours after antibiotic is started) None Shingles Until after the last of the lesions are dry Until all lesions are dry – minimum 6 days from the onset of the rash None Tuberculosis Depends on part infected. Patients with open TB usually become non-infectious after 2 weeks of treatment In the case of open TB, until cleared by TB clinic. No exclusion necessary in other situations Will require medical follow-up Threadworm As long as eggs present on perianal skin None but requires treatment Treatment is necessary Typhoid fever As long as case harbours the organism Seek advice from CCDC Seek advice from CCDC Whooping cough 1 week before and until 3 weeks after onset of cough (or 5 days after the start of antibiotic treatment) Until clinically well, but check with CCDC None 1. 5 EXCLUSION FROM WORK – cont. SKIN CONDITIONS Minimum exclusion period Disease Period of infectivity Case Home contact Impetigo As long as purulent lesions are present Until skin has healed or 48 hours after treatment started None. Avoid sharing towels Head lice As long as lice or live eggs are present Exclude until treated Exclude until treated Ringworm 1. Tinea capitis (head) 2. Tinea corporis (body) 3. Tinea pedis (athlete’s foot) As long as active lesions are present As long as active lesions are present As long as active lesions are present Exclusion not always necessary until an epidemic is suspected None None None None None Scabies Until mites and eggs have been destroyed Until day after treatment is given None (GP should treat family) Verrucae (plantar warts) As long as wart is present None (warts should be covered with waterproof dressing for swimming and barefoot activities) None

Marks and Spencer Business and Financial Performance Analysis

Marks and Spencer Business and Financial Performance Analysis Marks and Spencer is a British retail giant specialised in apparel and food industry. The company had been in its business for more than hundred years and has the biggest market capitalisation in the retail industry. This research is conducted to measure and analyse the business and financial performance of the company. Business performance is measured in this study considering the opportunities and constraints in company macroeconomic and industry circumstances. Financial performance had been measured using ratios on profitability, liquidity, efficiency and leverage. There performance of MS is then compared with the financial performance of Next Group, the next biggest player in British retail industry. The study found that, although MS has many business successes over the years, it had been performing financially poorer than Next Group and needs emergency improvement in its liquidity. The study recommends Marks and Spencer to rethink its leverage strategy and exploit the benefit of debt as like Next Group. Chapter 1 Introduction 1.1 Study Background Marks and Spencer is one of the largest retailers in UK specialised in clothes and foods with a market capitalization of more than  £6400 million1. We have over 700 stores located throughout the UK and Republic of Ireland; this includes our largest store at Marble Arch, London. In addition, the company has over 300 stores worldwide, operating in more than 40 territories2. In 2010 the companys sales revenue from general merchandise was  £4.1 billion and  £4.3 billion from foods. Its nearest competitor Next, which has a market capitalisation of around  £4100 million1, had a turnover of  £3.41 million in 2010 with a market share of 8.3% in comparison to 11% by Marks and Spencer in general merchandise segment. This study is particularly concerned with the business and financial performances of Marks and Spencer which are compared with the performances of Next. 1.2 Study Objectives The prime objective of this research is to analyse and evaluate the key business and financial performances of British retail giant Marks Spencer from year 2007 to 2010. While achieving this objective the research will try to meet the following secondary objectives 1.2.1 Analyse the major business performances of the company over last three years: The study will examine the companys performances in major business areas including its growth, market share, competitive position in the whole macro environment and major strengths over its competitors. 1.2.2 Identify and analyse the measures key financial performances: The second objective of the study is to identify the measures of companys financial performances especially in profitability, liquidity, investment and leverage performances. Besides this operational performances in other areas would be identified and anlaysed under this objective. 1.2.3 Compare the performances against Next: The third objective of the study is to compare the financial performances of M S with the performances of Next, the nearest competitor in general retail section. 1.2.4 Identify the major problems of Marks Spencer in business and financial performances and provide recommendations: Finally the study will try to identify the major weaknesses of Marks Spencers based on the measures of business and financial performances. The research will also formulate 1.3 Study Scopes and Usefulness of the Study Scope of this research work is three years (2007-2010) business and financial performances of Marks and Spencer. The scope also includes financial performance of Next for the same period. The findings of the study can be useful information for investors. The method used by the study can be a guide for the business and financial analysts. 1.4 Research Structure The research paper is structured in line with the sequence of objectives. The first chapter includes the rationale and objectives of the study. Then relevant literatures and theoretical issues are discussed in chapter two. The third chapter will present the methods of conducting this research work. Companys business performances and financial performances would be presented consecutively in chapter four and five. In chapter six Marks and Spencers performance will be compared with Nexts performance and areas of improvement for M S would be identified. Finally in chapter six recommendations would be provided with final remarks. Chapter 2 Literature Review 2.1 Introduction As discussed earlier, this research work is concerned with the business and financial performance of Marks and Spencer. This chapter will narrate an overview of the business operation of the company. This chapter will also review the techniques of measuring business and financial performance especially using qualitative and quantitative techniques along with brief interpretation of the performance measures. 2.2 Marks and Spencer: An Overview Marks and Spencer is a FTSE 100 company with the largest revenue base of more than  £8 billion as a retailer. It is headquartered in City of Westminster, London having operation in more than 40 countries. The following section provides a brief discussion on companys history, main line of business, geographical spread, summary of financial performances, its corporate social responsibility and the management. 2.2.1 Corporate History Marks and Spencer was established in 1884 by Michael Marks and Thomas Spencer3. The company had a policy of selling only British-made goods which made it popular in early 20th century. It started its apparel brand St Michael in 1928 and in 1950 St Margaret label was introduced for woman clothing. The company started its international expansion in 1970s by putting its step in central Europe and Ireland. During its hundred years of lifetime the company became the pioneer in quality management, customer relationships, health and safety and energy efficiency. The companys performance briefly slumped during the first decade of new millennium. However, the company is back to profit and growth in 2010 under the strong leadership of Marc Bolland who joined the company as CEO in May 2010. 2.2.2 Core UK Businesses M Ss core UK businesses include general merchandise and foods. It is largest clothing retailer including womenswear, lingerie and menswear and kidswear. Last year the companys turnover in general merchandise was  £4.1 billion which constituted an stunning 11% of the overall market share. Marks and Spencer is also the leading provider of high quality food, selling everything from fresh produce and groceries, to partly-prepared meals and ready meals and an award winning range of wines. Turnover from foods was  £4.3 billion in 2010 with a modest market share of 3%. 2.2.3 Sales Channel Customers shop with MS in many ways in stores, online or over the phone (MS Annual Report, 2010). The company has 690 stores across the UK. Its shops are located in convenient locations from high streets to retail parks, train stations to airports. Over the past four years the company has transformed these stores into bright and contemporary destinations with a range of hospitality options. The company also sells online which it calls MS Direct. MS Direct is a platform for improving customer convenience and service including via its website and newly launched Shop Your Way facility. The company aims to achieve £500m in sales through MS Direct by 2010/11. 2.2.4 International Business MS has 320 owned and franchised stores in 41 countries. The companys mix of ownership models and countries enabled it to perform well over the past year even when individual markets were weak. In 2010 its international turnover was  £949 million which is more than 15% of its overall revenue. 2.2.5 Recent Business and Financial Performances In 2010 the companys sales were up by 3.2% despite recessionary pressure. The overall gross margin was 41.2% with sales revenue  £9.3 billion. The company significantly improved its cost by saving  £145 million. The company reduced its capital expenditure cash outflow and generated a cash inflow of  £412m after tax and dividend. However, the companys market share was slightly down from 4.3% to 3.9%. Average visit to MS shops had been estimated around 21 million and average mystery shopper score was found to be stunning 89% in 2010. 2.2.6 About Next: The Nearest Competitor NEXT is the second largest UK based retailer offering clothing, footwear, accessories and home products. It distributes through three main channels: NEXT Retail, a chain of more than 500 stores in the UK and Eire, NEXT Directory, a home shopping catalogue and website with nearly 3 million active customers, and NEXT International, with more than 180 stores around the world. In 2010 the company had overall revenue of  £3.4 with a profit after tax of  £400 million. 2.3 Techniques of Measuring Business Performances A companys business can be analysed using various tools like PESTLE, SWOT analysis and Porters five force models. Measures of business performance might be companys expansion rate, revenue growth, development of strength, management of weaknesses and exploitation of opportunities etc. These measures can be achieved by subjective analysis and using business analysis tools. A brief discussion on these tools is presented as below. 2.3.1 PESTLE Analysis PESTLE, which is a popular macro-environmental analysis tool, stands for Political, Economic, Social, Technical, Legal, and Environmental analysis. Political factors include governments tax policy, employment and environmental law, trades and tariffs regulation, and political stability. Common Economic factors are GDP growth, nominal interest rates, exchange and the inflation rate. Key social factors are population growth, age distribution, health consciousness, religious views and career attitudes etc. Technological factors are spread and dependence on technology, innovation, research, and technological change etc. Legal factors are laws on discrimination, consumer, heath and safety law etc. Finally environmental factors include weather, climate, climate change etc. 2.3.2 Porters Five Force Model The five forces model is an industry analysis tool and provides a good idea of how a business should perform inside an industry. The model analyses five industry variables. These variables are ease of getting entry into industry, availability and potentiality of substitute products, suppliers and customers bargaining power and degree of competition in the industry. These factors determine how attractive and profitable an industry might be. 2.3.3 SWOT Analysis PESTLE and Porters models are used to analyse a companys macro and industry environment. SWOT Analysis is used for measuring a companys internal strengths and weaknesses. It also helps to identify specific opportunities and threats to company from the macro environment. 2.4 Techniques of Measuring Financial Performances Generally, financial performances are measured using the financial information of a company. Practically, ratio analyses are conducted on financial statement figures. Financial statements include companys income statement, balance sheet, statement of cash flow and statement of equity. There are several types of ratios profitability, liquidity, efficiency, gearing, and investor ratios. In following sections these groups of ratios are briefly discussed 2.4.1 Profitability Ratios These ratios are also called performance ratios where profit at different levels are compared with other figures and expressed in percentage. These ratios are (a) Gross Profit Margin: Gross profit margin is found by dividing gross profit by sales turnover and the formula looks like following The ratio can be a good indicator of companys direct cost or cost of sales. Profitability of a company in its core operation can be determined using this ratio. The higher the ratio the better it is. (b) Operating Profit Margin: Operating profit margin is found by dividing net profit by sales turnover and the formula looks like following As operating profit is found by deducting indirect expenses from gross profit, the ratio shows how much a company spends on non-direct activities. Too much cost on indirect cost might result in lower or negative operating profit margin. (c) Return on Capital: Shareholders and debt investors generally count profit on their investments. Return on capital can be calculated using the following formulas This ratio (ROCE) provides percentage return on the overall funds invested in the business. There is another ratio that provides return on stockholders equity which is called Return on Equity (ROE). The formula is as following ROE measures the profitability of the fund provided by the companys owners or shareholders. Profit margins and return on capital ratios together gives a good idea of overall profitability of the firm. A company having very good profit margin may have a poor ROCE or ROE ratio. Such cases happen when companies large investment operates in small scale or during the initial years. 2.4.2 Liquidity Ratios These are also known as solvency ratios, as they refer to the ability of the business to pay its payables in the short term. There are two main liquidity ratios. (a) Current Ratio: This is also known as the working capital ratio, as it is based on working capital or net current assets. It is calculated as: Current ratio is a measure of the liquidity of a business that compares its current assets with those payables due to be paid within 1 year of the statement of financial position date (otherwise known as current liabilities). (b) Quick Ratio: This is also known as the acid test ratio and is calculated as following This is similar to the current ratio, but takes the more prudent view that inventories may take some time to convert into cash, and therefore the true liquidity position is measured by the relationship of receivables and cash only to current liabilities. 2.4.3 Efficiency Ratios These ratios are also referred to as use of assets ratios. They measure the efficiency of the management of assets, both non-current and current. (a) Asset Turnover Ratio: These ratios compare the assets with the sales revenue (turnover) that they have earned. The end result is often expressed in money value to represent the value of sales revenue for each $1 invested in those assets. The formula is: (b) Inventory Days: Inventories may be analysed by calculating the ratio of inventories to cost of sales, and then multiplying by the number of days in a year to give inventories days. The formula is as following This figure gives the number of days that on average an item is in inventories before it is sold; this may alternatively be expressed as the number of days a firm could continue trading if the supply of goods ceased. (c) Receivable Days: This is a measure of the average time taken by customers to settle their debts. It is calculated by: As with inventories days, a slowing down in the speed of collecting debts will have a detrimental effect on cash flow. On the other hand, it may be that the business has deliberately offered extended credit in order to increase demand. (d) Payable Days: This is a measure of the average time taken to pay suppliers. Although it is not strictly a measure of asset efficiency on its own, it is part of the overall management of net current assets. It is calculated by: The result of this ratio can also be compared with the receivables days. A firm does not normally want to offer its customers more time to pay than it gets from its own suppliers, otherwise this could affect cash flow. Generally, the longer the payables payment period, the better, as the firm holds on to its cash for longer, but care must be taken not to upset suppliers by delaying payment, which could result in the loss of discounts and reliability. It is important to recognise when using these ratios that it is the trend of ratios that is important, not the individual values. Payment periods are longer in some types of organisation than in others. 2.4.4 Capital Structure Ratios Different firms have different methods of financing their activities. Some rely mainly on the issue of share capital and the retention of profits; others rely heavily on loan finance; most have a combination of the two. (a) The Gearing Ratio/Leverage Ratio: Gearing is a measure of the relationship between the amounts of finance provided by external parties (e.g. debentures) to the total capital employed. It is calculated by: The more highly geared a business, the more profits that have to be earned to pay the interest cost of the borrowing. Consequently, the higher the gearing, the more risky is the owners investment. On the other hand, a highly geared company might be more attractive to shareholders when profits are rising, because there are fewer of them to share out those profits. (b) Interest Cover: Connected to the gearing ratio is a measure of the number of times that the profit is able to cover the fixed interest due on long-term loans. It provides lenders with an idea of the level of security for the payment. The formula is: 2.5 Using Ratio Analysis Calculating the ratios is only one step in the analysis process. Once that is done, the results must be compared with other results. Comparison is commonly made between: Previous accounting periods; Other companies (perhaps in the same type of business); Budgets and expectations; Government statistics; Other ratios. 2.6 Conclusion This chapter gave brief overview of Marks and Spencer and also the tools and ratios that will be used to analyse the business and financial performances the company. The same ratios will be used to compare the performance of MS with Next. The next chapter will provide a brief overview on the research methodology and data that will be used for the research. Chapter 3 Research Methodology 3.1 Introduction Methodology may be defined as procedures that are used to conduct a function or activity. This chapter will briefly discuss on the methodology that will be used to analyse the business and financial performance of Marks and Spencer and comparing its performance with that of Next Inc. This section will also provide an overview of the data used in this study and their sources. 3.3 Required Data, Sources and Collection Methods Data required for completion of this research work are of secondary nature. Mark Spencers business related information were collected from companys website and annual reports of three years 2007, 2008 and 2009. Annual reports were collected from company website. The data required for macro-environmental analysis were collected from various articles, national statistical websites and newspapers. Financial information required for analysing financial performances are extracted from the annual reports of the company. Financial information of Next was collected in the same way. Findings of financial performance analysis are then used to identify the areas of improvement for MS. 3.4 Research Methodology Various quantitative and qualitative methods had been used to achieve the objectives these research. The nature of the methodologies are briefly discussed as following 3.4.1 Method for Analysing Business Performances: Method used for this purpose is qualitative. PESTLE analysis had been used for analysing the business performance in macro-environment. Porters model were used for analysing industry performance and position of MS. Finally, SWOT analysis was used to find out company specific opportunities and threats and companys key strengths and weaknesses. (See Chapter One to have idea of these tools). 3.4.2 Methods Used for Analysing and Comparing Financial Performances: Financial ratio analysis (discussed in chapter 1) is used to analyse the companys performance in profitability, liquidity, efficiency and leverage. The values of these ratios are compared against the ratios of Next to compare the performances of two companies. For presentation of findings different types of charts were used. 3.4.3 Methods of Identifying Improvement Areas: Areas of improvement would be identified using the findings of financial performance analysis using ratios. The areas where Next is performing better than MS would be identified as areas of improvements. After identifying areas of improvement strategy would be formulated to eliminate problem areas in companys financial performances. 3.4.4 Research and Data Analysis Tools Microsoft Excel 2007, which is a popular spreadsheet application, is used for conducting the ratio analysis and presenting findings of analysis graphically. 3.5 Conclusion This chapter provided a brief overview of the research data, methods and tools used in this research. In next, chapter the findings of the research would be presented followed analysis of findings. Chapter 4 Analysis and Findings 3.1 Introduction This research is conducted based on the information available on the Annual Reports of Marks and Spencer and Next Group as well as on the findings of professional business analysts found on reliable internet sources. In this chapter, the most important section of this study, key findings of companys business performance in light of PESTLE, Five-Forces and SWOT analysis and also the financial performance over last three would be presented. A comparison of performance with Next Group would also appear in this section. 3.2 An Analysis of MSs Business and Performance Summary Business performance of Marks and Spencer can be measured in reference to the factors available in macro-economic environment, factors in apparel and food industry and in terms of companys strengths and weaknesses. The findings of business analysis are presented as following. 3.2.1 Findings from PESTLE Analysis MSs Performance Key factors relevant to Marks and Spencers business found from PESTEL analysis can be summarised as following (table 3.1) Recent political development in United Kingdom is posing threat to many businesses in form of rise in tax rate, cut of social benefit and cap in immigration. There is also setback of recession that had injured the British economy significantly. Despite these negative elements in political and economic environment Marks Spencers revenue has grown at a steady rate over last three years (See Chart 4.1) showing no sign of recessionary impact on its business. Social environment however demonstrate goods signs for clothe and food retailers. Marks and Spencer had introduced various successful brands that meet the changing social pattern and consumer demand. The company is also successful in adopting technologies. Its ecommerce sales have increased at a sizable chunk in last few years. MS has also successfully used consumer research technologies for identifying market demands and customer needs. The retailer has proved it as one of the most energy conscious and environmentally friendly comp any in British history. Marks and Spencer is a century old company and had well adopted itself in the macroeconomic context of United Kingdom. British retail industry is run by a few very big players. In apparel retailing the popular names are Marks and Spencer, Next and Debenham. However, food retailers like Tesco and Asda are trying to get into apparel market with lower prices. However, for completely new businesses it would be very tough to challenge companies like Marks and Spencer which have grown its market share by 4% from 7% to 11% in cloth and general merchandise. The companys market share has also improved by 2% in 2010. However, MS could not maintain its image regarding its relationships with suppliers. Many international pressure groups had criticised its bargaining power on its suppliers. 3.2.2 SWOT Analysis and MSs Performance Marks and Spencer is well capitalising on its strength by adding more clothing brands and stepping foot in international markets. Last year companys international revenue was more than  £900 million with a growth of 5%. The company also have capitalised on ecommerce technology; in 2010 MS Directs revenue grew by 27%. Financial Performance Analysis In this study, Marks and Spencers financial performance have been analysed on four performance areas. These areas were profitability, liquidity, efficiency and leverage. For measuring performance in these areas eleven different ratios had been used. The findings of ratio analysis are presented as following. 3.3.1 Profitability: MS vs. Next Average operating profit of MS and Next is respectively 11% and 15%. Though revenue of both the companies grew over the period, operating profit was steady. However, according to findings Next Group is more profitable than Marks and Spencer. Nexts Return on Capital Employed and Return on Equity are also significantly higher than MS (See Figure 4.3 and 4.4). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Based on the above analysis, the research concludes that Next Group is a highly profitable business by providing extra ordinary return to its equity holders. Liquidity Performances Both the companies liquidity is poor scoring far below standard value of 2:1. Marks and Spencers liquidity is at an alarming level of around 50% capability of paying off its current liabilities. Also, over the year none of the retailers could improve liquidity performance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.3.4 Efficiency Although in profitability and liquidity M S is lagging behind Next, in case of efficiency in receivables, payables and inventory management MS had been showing excellent dexterity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The ratios (Figure 4.6) indicate that, inventories are sold in 23 days by MS and in 40 days by Next after purchase. On the other hand, MS is capable of collecting its receivable assets within eleven days of sales which Next can do in 67 days. Payable days are matched with receivable days. However, though MSs collection from customers is faster, its payment frequency to suppliers is a little slow. This might a sign of efficiency in working capital management. The reason behind MSs extra ordinary efficiency is because of its long experience in British industry. Average Asset Turnover Ratio of MS over the last fours years is below 1.5 which is above 2.0 for Next. The ratio indicates that MS can generate sales of around  £1.34 against  £1 of its assets which, though is not poor, in comparison to Next is pretty ordinary. 3.3.5 Leverage Performances Leverage indicates the use of debt in boosting of equity return. Both Marks and Spencer and Next Group use debt which is reflected in their gearing ratios (See Table 4.7). .From Figure 4.8 it can be easily understood that Next Group a highly geared company in comparison to Marks and Spencer. MSs policy seems to be keeping long-term debt less than 50% in its balance sheet. The leverage ratio better explains why Nexts Return on Equity is very high. Now question is are the companys comfortable with these levels of leverage? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . In managing its leverage MS is again performing poorer than Next. While Nexts average interest cover ratio is 13.45 times, MSs one is only around 6 times. The figures indicate that, MS generate only around  £6 of operating profit for paying  £1 of debt cost. Therefore the leverage ratios indicate that MSs competitor is better managing its leverage with higher interest coverage ratio against higher leverage rate. 3.4 MS Summary of Business and Financial Performance Business Performance Summary Financial Performance Summary Marks Spencers revenue has grown at a steady rate over last three years Introduced various successful brands that meet the changing social pattern and consumer demand. Ecommerce sales have increased at a sizable chunk in last few years. Successfully used consumer research technologies for identifying market demands and customer needs. Most energy conscious and environmentally friendly company in British history. Grew its market share by 4% from 7% to 11% in cloth and general merchandise. Market share has also improved by 2% in 2010 in foods. MS could not maintain its image regarding its relationships with suppliers. International revenue was more than  £900 million with a growth of 5%. The company also have capitalised on ecommerce technology; in 2010 MS Directs revenue grew by 27%. Average operating profit margin is 11% in comparison to 15% of Next; Liquidity performance is very poor; Both current and quick ratios are less than 0.5; Average asset turnover rate is more than 1 in comparison to 1.5 of Next; Inventory, receivables and payables management is highly efficient and better than Next; Moderately levered company while Next is a highly levered one; Interest coverage ratio is healthy; but Next is doing better which shows the rationale behind using more debt by Next Overall financial performance of MS is not satisfactory against its competitor. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Table 4.9: Performance Summary Chapter 5 Conclusion Recommendations 5.1 Introduction In previous section, it has been observed that Marks and Spencers financial performance is not satisfactory in comparison to Next Group. Except the efficiency areas, MS needs to improve itself in profitability, liquidity and leverage. 5.2 Improving Profitability MSs average operating profit margin was only around 11%. It is found that though companys revenue has grown in last three years its profit margin shrank because of increase costs. Marks and Spencer needs to cut its operating costs to match its profitability with the industry. 5.3 Improving Liquidity The companys liquidity is below the alert level which had been persistent over last four years. Although for very large and established companys it is not a big concern. However, in times