Hoovers Speech on Rugged Individualism Essay Example | Topics and Well Written Essays - 1000 words

Hoovers Speech on Rugged Individualism - Essay Example   Herbert Hoover was born into a Quaker family in Iowa and became an orphan at the age of nine1. He was adopted by an uncle where he learnt strong work ethics that saw him determined to gain admission into Stanford despite mediocre grades. Hoover graduated with a degree in geology and went on to become a great mining engineer. Hoover’s background shaped his ideals to a great extent because most of his life, he worked hard to get what he got. By 1914, Hoover had amassed great wealth from holding high positions, owning profitable silver mines in Burma and royalties from writing the top textbook on mining engineering.2 In essence, he was a self-made millionaire. Additionally, Hoover was a great humanitarian, building his name organizing various relief efforts in Europe during the Great War and seemed a great presidential candidate during that period in America’s history; one of progressive promise.3 Historical Context Hoover’s speech on rugged individualism was hi s final speech on the presidential campaign trail against Democratic candidate Alfred Smith. Given in October 22nd, the ideals and philosophies he articulated reflected the progressive period that the country was in. The effects of World War I saw America become a determining factor in international finance, becoming a source of financial aid to the Allies such as Britain.4 The US economy was growing at a rate of 7 per cent annually and unemployment rates were dropping e.g. in 1926 it dropped by 2%.5 The country was experiencing an economic boom, strikingly evident in the New York Stock Exchange where share values increased exponentially within this decade. The business sector also, was revitalized and consumerism was very high-fridges, radios and automobiles for all households was the goal of this decade and credit purchases were the norm6. Federal banks provided easy loans to finance the prevalent consumerism culture and speculation was at an all-time high.7 This profitable busine ss climate propelled citizens to consider business as a source of national direction. Summary Description This speech outlines Hoover’s position on government involvement in private business. He argues that the government’s role in the affairs of the business sector does both entities more harm than good. In his opinion, businesses required stricter controls to ensure efficiency and focus but governments were not primarily concerned with efficiency but with other more important issues. If government involved itself in business, Hoover declared that it would have to become more centralized, like a dictatorship, and businesses would lose their efficiency. Businesses should succeed or fail without government interference, he reasoned. Hoover’s ideals reflected those of his party, and thus â€Å"rugged individualism† is a term that can also describe the Republican philosophy of self reliance to succeed or fail, without any government handouts. Hoover pointed out the progress that the country had witnessed since the end of World War I. He argued that â€Å"... I know of no better test of the improved conditions of the average family than the combined increase of life and industrial insurance, building and loan assets, and savings deposits... these alone have in seven years increased by nearly 100 per cent to the gigantic sum of over 50 billions of dollars...† The high consumerism practiced was also reinforced â€Å"

Why Might The Rapid Expansion Of Trade And Foreign Direct Investment Essay

Why Might The Rapid Expansion Of Trade And Foreign Direct Investment In The Asia Pacific Be The Main Driver Of Economic Change In The Asia Pacific - Essay Example FDI-induced trade is an important component of international business of the multinational companies. Kawai and Urata (2002) states that at the time of pre-crisis ‘miracle’ period, the percentage share foreign trade in the (GDP) gross domestic product was significantly higher for upcoming market economies in Asia Pacific than for other emerging economies in other parts of the globe. Generally, new developments have been experienced in the international economic activities of the Asia Pacific economies since 1980s. For example, between 1980 and 1977, the share of East Asia’s foreign trade in GDP increased at significantly greater rates. Currently, the region is more economically integrated with other parts of the world than with itself. Since FDI and trade are more of complementary to each other than substitutes, large inflows of FDI to Asia Pacific have increased the region’s participation in international trade. A combination of FDI and international trade has therefore become the main driver of economic change in the Asia Pacific. The rise in the levels of FDI in Asia Pacific can be attributed improved regional and global economic environment. For example, emergence of global markets and globally integrated production, accelerated technological change and existence of investment treaties between Asia Pacific and other countries. There are other reasons why the rapid expansion of trade and FDI in the Asia Pacific might be the main driver of economic change in the Asia Pacific. First, there has been reduced lending from commercial banks due to debt crisis. This has caused economies of the Asia Pacific to reform their investment policies so as to attract foreign capital. The economic changes can therefore be linked to economic benefits gained from FDI as an attractive alternative to loans from commercial bank. Moran (1998) observes that FDI is the most stable and strong source of external finance for countries that are developing in th e Pacific and Asian regions. In agreement with this, Rajan (2005) states that FDI is a source of supplementary capital that is productive. This therefore denotes that it is a scarce source of capital in terms of deep structural changes of an economy. Rajan (2004) and Nunnenkamp (2004) point out that FDI is an advanced form of international cooperation. It is therefore one of the most effective ways of integration and transforming a local/national economy into a global one. One of the major advantages of FDI is that it helps in facilitating economic development of the country where the investment is done. In other words, the host country. This scenario is mainly applicable for developing economies like that found among countries comprising the Asia Pacific. FDI normally favours an increase in the foreign-trade turnover of the receiving country, lead to diversity of production, technical and scientific collaboration forms, and expansion trade in volume. This is to say that the higher levels of FDI in a country, the higher the chances of that country engaging foreign trade. Such multinational companies will be exporting their produce to other global markets. FDI flows that are induced/stimulated by transnational corporations (TNCs) investing in Asia Pacific have had great economic significance in the region. They have brought in technological know-how, attracted capital flows, created global production networks, and introduced advanced managerial,

Company Analysis for Investment Opportunities

Company Analysis for Investment Opportunities 1 Introduction We have organised a shareholders club which we have called 6IM. There are six members within 6IM of which we all have  £1000 each to invest. As part of our Investment process we have decided to choose three companies in different sectors and conduct an in depth financial analysis. Due to the three companies working in different sectors we have also analysed key financial data of a major competitor to that particular company. We feel this will enable us to gain a greater understanding of the industry of which the three companies are working in and also a direct financial comparison with our chosen companies. Our report will begin with a brief profile of the three companies followed by a SWOT analysis to enable us to paint a picture of where the company currently sit and the potential investment opportunities and risks associated with that particular company. In addition to this we will conduct a five forces investigation to understand the industries competitiveness. In respect of financials we will gain an understanding of the numbers in the annual reports of both our targeted three companies and also our competitors. We will use a number of investment ratios to quantify the numbers which will help us review the performance of our chosen companies against our competitors and in addition devise a brief explanation as to what aspects of the business have made a positive or negative impact on the ratio in which we are assessing. The ratios that we will choose will be independent of each other due to the fact that some ratios are more relevant than others in certain industries. The ratios will be conducted for each of the last 3 financial years for both our targeted companies and competitors. The ratios will be split into four categories liquidity, profitability, financing and investment. Finally we will then standardise the ratios and compare our three chosen companies. We will use a marking system to identify which company we feel excel in each ratio to help us arrive at our chosen investment vehicle. The three companies in which we will be conducting the report on are: 1) MGM Grand Sector: Leisure Tourism Fiscal year: Jan 01st – Dec 31st 2) Rio Tinto Sector: Mining Fiscal year: Jan 01st – Dec 31st 3) Toyota Sector: Car manufacturing Fiscal year: April 01st – March 31st Investment Objective A medium term investment of 5 years Provide income through dividends Provide capital growth at the end of the term We would be looking at an annual expected return of between 8% and 10% Tax Implications 6IM discussed about the tax implications of our investment objectives. We felt that as we were all basic rate taxpayers receiving a dividend would be beneficial as we would not be impeded by the non reclaimable 10% tax credit or would we have a further liability of 22.5% due to the fact we were not higher rate tax payers. Regarding capital growth it was decided that if our money had grown substantially over the five years and the profit was above the capital gains tax annual exemption we would realise the gains over two tax years to ensure we would utilise as much of the gain tax free as possible. According to Tax Facts 2009-2010 (2009), Current Capital Gains Tax annual exemption is:  £ 10,100 (2009-10) Current Capital Gains Tax subject to being over the exemption is: 18% Attitude to Risk 6IM have agreed that we will adopt a moderately adventurous attitude to risk. As part of our risk assessment, collectively we decided to assess ourselves using a risk attitude profiling questionnaire as per Appendix II which was designed by Scottish Life a leading Life Pension investment provider. We discussed our views on ethical investments and we concluded that whilst our opinions were not strong enough to adopt negative screening criteria which would be to completely disregard any unethical company, we would look to see if the companies are trying to improve the way they work. In respect of the three companies chosen we also discussed that we would need to be aware of currency risk, political risk, market risk and inflation risk which would be in addition to the business risk and investment specific risk of the company. Finally our thoughts were if we felt that each of the companies were viable in respect of investment we would be happy to spilt our money and invest in all three which would gain potentially reduce our risk through diversification. 2 Marketing and industry data 2.1 MGM GRAND 2.1.1 Background and mission Background MGM operates in a very competitive entertainment and hospitality industry and is located on the New York Stock Exchange. The company owns, develops and operates casino and non casino resorts. The majority of MGMs hotels are located in Nevada where they own approximately 700 acres of land on the Las Vegas strip. Whilst MGM have a variety of hotels that occupies this land they also have a meaningful proportion that is considered undeveloped and could offer future investment opportunities. As well as resorts in Las Vegas, MGM also have operations in Michigan, Mississippi, Macau, Atlantic City and Illinois. One of their latest developments is the MGM Grand Ho Tram which will consist of a 4.2 billion multi property resort complex along the beaches of Southern China. In addition to this MGM will also open in December 2009 on the Las Vegas strip a project called City Centre which is a joint venture with Dubai World. MGM as at 31st December 2008 employ approximately 46,000 full time staff and 15,000 part time staff, they pride themselves on offering excellent customer service which has been demonstrated by many accolades, including AAA five diamond and 4 diamond awards at hotels and restaurants across their portfolio. There quality and reputation was enhanced further in October this year when 7 of MGMs restaurants were honoured with at least one Michelin star which demonstrates the quality they strive for. MGMs revenue in 2008 decreased by 6.27% which was largely down to the economic conditions and with MGM having the vast majority of its portfolio in Las Vegas this could be demonstrated by the reduction in visitor volumes during the time period (Appendix I). MGM feel whilst times are currently tough James J. Murren Chairman and CEO states â€Å"There company is well positioned to face the future thanks to our dedicated management team and work force, premier brands and best in class resorts. When the cycle changes, we will be stronger, with a foundation of experienced operators and an efficient operating profile that is not only business ready but has been battle tested.† (MGM Annual Report, 2008 p.8) Mission MGM Mirage Mission Statement, â€Å"Our mission is to deliver our winning combination of quality entertainment, luxurious facilities and exceptional customer service to every corner of the world in order to enhance a shareholder value and to sustain employee, customer and community relationships† (MGM Mirage, 2009). 2.1.2 SWOT analysis Strength Quality Employees: MGM have invested heavily in recruiting, training and maintaining employees. They run a variety of programs for example a diversity program which looks at unique strengths of individuals and being able to blend them to work together to achieve greater performance. In addition to training, to ensure they maintain their employees in August 2007 MGM entered into an agreement with 21,000 thousand of its Las Vegas employees to provide an increase in wages and benefits of approximately 4% annually. Diversified Offering: MGM would be expected to earn the majority of its revenues from gaming however this is not the case with over half of its net revenue derived from non gaming activities. MGM offer a complete resort experience for its guests, with their non-gaming activities being offered at a premium due to the quality of their offering. Brand Name Awareness: MGM is one of the leading hotel and leisure companies as at December 31st 2008 their operations consisted of 17 wholly owned casino resorts and a 50% investment in 4 other casino resorts. This high brand name awareness gives MGM a distinct advantage when competing against other casino brands and helps enable them to draw more customers. Weaknesses Financial Strength: In February 2009 all of the major credit rating agencies – Moodys, Standard Poors and Fitch downgraded MGMs rating on long term debt, there was a further downgrade by Moodys in March 2009. These downgrades will again potentially make it very difficult for MGM to obtain debt finance and may even increase the cost of any future debt financing. Amount of Indebtedness: As at the 31st December 2008, MGM had long term debt totalling approximately US$ 13.5 billion dollars. The amount of debt and the inability of MGM to take on further debt could have a catastrophic impact on its business. It is uncertain that the sources of credit they have available will be sufficient to fund current financial commitments, whilst MGM have received a waiver that they do not have to comply with certain financial covenants this has led to further restrictions and requirements for them to adhere to. Weak Returns: In 2008 MGM have seen a reduction in the majority of their financial ratios compared with its 2007 figures. The figures can be seen in our ratio analysis section of the report and whilst an explanation of the figures have been discussed, the reduced ratios can only cause investors concern and a reduction in confidence in placing investment into MGM. Opportunities Joint Ventures to co-develop resorts and Casinos. Expansion in developing countries. Threats Legal and Regulatory Threat: The gaming industry is highly regulated in which MGM must pay gaming taxes and maintain their licenses to continue their operations. A change in tax laws could adversely affect the profitability of their organization, in addition to tax changes if a regulation is violated in one jurisdiction this could result in disciplinary actions in other jurisdictions. Economic Market: Hotel revenue decreased by 10% in 2008 due to decreased occupancy and lower average room rates. The customers however that do make it to the resorts are spending less, which MGM believe is due to their inability to access near term credit which has led to a shift in spending from discretionary items to more fundamental costs (MGM Annual Report, 2008). A direct impact on MGM is the weak housing and real estate market both generally and in Nevada. 2.1.3 Leisure Tourism industry Five Forces analysis Threat of new entrant Due to the current economy recession, hotel industry suffered a setback in revenue. Hence, this industry is viewed as unattractive. Excessive initial setup investment. Extensive regulation generally concerns the firms responsibility, financial stability and character of the owners. Also, high license maintenance fee and gaming taxes discourages new entrants. New entrants to such markets must then spend heavily on advertising and promotion to gain levels of brand awareness of the existing players. Intensity of rivalry among competitors Hotel, resort and gaming business, especially in Las Vegas and Macau, had became increasingly intense where there is rivalry to build the â€Å"biggest and best† hotel/casino. Between 1996 and 2000, the number of hotel rooms at Las Vegas casinos doubled and due to the current economic conditions, the demand for rooms had dropped significantly and resulted in reductions to average room rates due to competitive pressures. Competition between casino companies involved ever more ambitious differentiation. The new casinos in Las Vegas broke fresh ground in innovative entertainment and design features. Threat of substitute products There had been a growing substitute competition for gaming which included an increasing number of state lotteries and offshore gambling on cruise ships. The installation of slot machines in unorthodox gambling area such as horse tracks. The growth of internet gambling. Bargaining power of buyers In the entertainment industry, buyers (consumer) usually have relatively high bargaining power as there is a practically negligible switching cost. The tendency of buyers to explore different hotel for a different experience. Accessibility of information via internet on hotel packages, consumers are now more informed and prepared for the wide range of available hotels specifically in Las Vegas and Macau. Bargaining power of supplier The main sources of supplier power in the service industry are labour unions. The unions cover approximately half of their total employees (30,000 of 61,000 employees) and had successfully negotiated for increases in wages and benefits of approximately 4% annually via the newly signed 5 year collective bargaining agreement in August 2007. The other supplies to hotel consist of food and beverage, retail merchandise and operating supplies. Due to economies of scale, big buyers like MGM would have an advantage over their suppliers as they can easily switch due to the wide availability of the supplies and its continuous stream of demand. 2.2 RIO TINTO 2.2.1 Background and mission Background Rio Tinto is a leading international mining business headquartered in London. Rio Tinto Group combines Rio Tinto Plc (listed on London Stock Exchange) and Rio Tinto Limited (listed on the Australian Securities Exchange) and operates as a single entity. The group is involved in mining and supply of minerals and metals including aluminium, coal, copper, diamonds, gold, iron ore, uranium and other industrial minerals. It operates in more than 50 countries and employs approximately 106,000 people (Rio Tinto, 2008). The companys main production areas are in Australia and North America however there are significant businesses in South America, Asia, Europe and southern Africa. Rio Tinto concentrates on large scale mining operations that have a long life and are cost effective. The company recorded revenue of US$ 54,264 million in 2008, an increase of 83% over 2007. Annual production records set for iron ore, bauxite and alumina. The business had a record net capital expenditure of US$ 8.5 billion, a 71% rise over 2007 (Rio Tinto, 2008). Mission â€Å"Rio Tinto aimsto maximise the overall return to its shareholders by sustainably finding, mining and processing mineral resources areas of expertise in which we have a clear competitive advantage.A fundamental part ofthis is to deliver value while operating in an ethically and socially responsible manner, and remaining committed to long term sustainable development.† (Rio Tinto, 2009) 2.2.2 SWOT analysis Strength International mining group ranks amongst top five commodities producers. Rio Tinto has extensive line of business (Iron ore, Copper, Energy, Aluminium, Industrial Minerals and Diamond) and each division provides its services to different industries. Company is well diversified in terms of the products and the markets. Geographically companies operations are spread over six continents. Globally number one producer of Aluminium because of recent acquisition of Alcan in October 2007. Alcan was ranked globally among top three producers of Aluminium and Bauxite. Worlds largest Uranium supplier. Weaknesses Majority of Iron ore and coal contracts are sold at annual contract price rather than the spot market. There is a significant deterioration in the pricing environment of these commodities. Production of zinc and silver by the company has been decreasing in recent times. Opportunities BP and Rio Tinto entered into partnership for the formation of a new jointly owned company, Hydrogen Energy, which will develop decarbonised energy projects around the world and lead the path for sustainable future uses of coal. The growing importance of uranium as a resource for future energy needs. Threats In the recent time there is a significant reduction in the commodity prices and the demand of the market especially because of the global economic crisis. Rising concern for environmental issues, health and safety standards across the globe. Especially for the industry to meet standards and quotes agreed in the KYOTO Protocol. 2.2.3 Mining industry Five Forces analysis Threat of new entrant High demand of capital as entry cost makes it tough for new entrant to enter in this field. Very low availability of new mining areas (mines) and risk on capital involved in searching for new mining areas restricts new entry in this field. Requirement of high, sophisticated and costly technology is again an entry barrier for new entrant. High government and environmental regulations. Intensity of rivalry among competitors High demand and optimum supply leads to limited rivalry amongst competitors. Threat of substitute products Being a standardised product (commodities) and basic raw material to the industry or to the end customers, there is no availability of substitute. Prices are fixed at macro level generally by external authorities (government) so the variability in prices of different suppliers is absent. Bargaining power of buyers Strong control on Pricing by government leads to low bargaining power of customers. Unavailability of substitute products shifts the favour towards the supplier from the customers. Customers (Industries) dependency on existing channel of distribution and product is very high; therefore the customers power is again low. Bargaining power of supplier Bargaining power of suppliers supplying technology is high because of the sophisticated technology requirement and reduced availability of specialist suppliers. Skilled labour requirements are high and availability is lower because of less lucrative future prospects that shift the favour towards suppliers. 2.3 TOYOTA 2.3.1 Background and mission Background Toyota Motor, the worlds largest automotive manufacturer, has a powerful aspiration to become ‘Greener. The company makes a hybrid-powered (petrol and electric) sedan – the ‘Prius that is being snapped up in US and European markets. Its petrol-powered cars, pickups, minivans, and SUVs include such models as Camry, Corolla, 4Runner, Land Cruiser, Sienna, the Scion brand, and a full-sized pickup truck, the V-8 Tundra. Toyota also makes forklifts, manufactured housing and offers financial services. Once a dark horse in the global automotive game, Toyota overtook Chrysler and Ford in worldwide sales and surpassed General Motors in 2008. The company gets nearly half of its sales from Asia (Just Auto, 2009). Mission Toyotas management value has developed from the companys origins and has been contemplated in the termsâ€Å"Just in Time Production† and Lean Manufacturing, which it was instrumental in developing (Strategonic, 2009). The Toyota Way has five mechanisms (Liker Jeffrey K., 2003): Perfecting business process. Eliminating wasted time and resources Building quality into workplace systems Building a learning culture for continuous improvement. Finding low-cost but reliable alternatives to expensive new technology 2.3.2 SWOT analysis Strength Toyota has become the lead name in the global market. People have a lot of trust for their name and this is why Toyota is the leader in automobile industry. The important edge over the companys competitors is the ample availability of the spare parts in the markets. Toyota is a financially strong company. This can be demonstrated by the analysis of the financial reports. Toyota vehicles have got a much stronger resale value than any other car in the global markets. This is why people prefer to buy a Toyota. Toyota is proud to have a successful team of competent managers and skilled workers. Extensive training has enabled the employees to perform outstandingly. Toyota is the only company having the most sophisticated network of dealerships where customers are treated by professional dealers. Weaknesses Being big has its own problems. The World market for cars is in a condition of oversupply and so car manufacturers need to make sure that it is their models that consumers want. Toyota markets most of its products in the US and in Japan therefore it is exposed to fluctuating economic and political conditions in those markets. Perhaps that is why the company is beginning to shift its attentions to the emerging India and Chinese markets. Movements in exchange rates could see the already narrow margins in the car market being reduced. There are some weaknesses in the dealership network. The dealers sometimes tend to deviate from the recommended course of action and principles of Toyota. This can result in customer complaints. A lot of effort is put into the sales forecasting because of the changing political and economic scenarios. For these reasons inventory has to be kept low. Opportunities Export is a major opportunity for Toyota Motors. Toyota can do better by focusing on segments much more than what is presently being done. Toyota is to target the urban youth market. The company has launched its Aygo, which is targeted at the streetwise youth market and captures (or attempts to) the nature of dance and DJ culture in a very competitive segment. The vehicle itself is a unique convertible, with models extending at the rear. The narrow segment is notorious for it narrows margins and difficulties for branding. Switching diesel market toward petrol and CNG market. Threats Even though Toyota enjoys the position of being the no.1 automobile company, still it faces some threat from competitors especially Honda. Honda has adopted aggressive strategies for capturing the market. In 2005 the recall of 80,000 SUVs negatively impacted on the brand of Toyota and posed a threat to its future reliability and sales. Even though Toyota keeps a careful eye on the changing trends, still the changing customer needs and trends can prove to be a threat. 2.3.3 Automobile industry Five Forces analysis Threat of new entrant Slow lethargic state of economy resulting in low per capita income leads to declined consumption. Hence, the productivity decreased at manufacturing level. Automobile sector is already over saturated market for the provided demand base. Initial cost of capital is very large. Industry requires highly specialised technology or plants and equipments. Constant RD: Patent and proprietary of auto designs restrict the entry into an industry. Intensity of rivalry among competitors Due to high cost of competition automobile industry earns low returns. Competition has intensified rivalry by offering rebates, long-term warranties and preferred financing to lure the customers which have put pressure on the profit margins. Foreign Trade increased the degree of rivalry. Export becomes essential for expansion and competition. High exit barrier: Entrants are reluctant to commit to acquiring specialised assets that cannot be sold or converted into other uses if the venture fails. Threat of substitute products Consumer seek substitute like bus, train or aeroplane to reach their destination. Peoples likeliness to seek alternative transportation depends upon the cost of operating a vehicle. Higher the operating cost less likely people will buy the automobile. Consumers decision to buy vehicles largely depends upon the price of petrol. Emergence of very small and economical car segment in automobile sector. Bargaining power of buyers Consumers are highly price sensitive and generally dont hold much buying power as they never do bulk purchase of cars. Wider range of product, negligible switching cost, readily available. More shrewd customers: Customers are very particular in terms of brand selection, technology and price of product. Dealers are cherishing the freedom of selling more than one brand at any time. Bargaining power of supplier Due to the fragmented automobile industry, most of the suppliers depend on just one or two automakers to buy majority of the products. Switching the supplier is devastating to the business of previous supplier. Long term supplier relationship in the automobile sector, which is considered to be an oligopoly, makes the relationship obligatory for suppliers and hence the supplier has lower grip on the prices Suppliers provide secondary material and have little responsibility over the design and assembly of automakers. Therefore, essentially little power is given to suppliers. 3 Financial Analysis The report describes a financial statement analysis between companies of our choice with their closest competitor which is followed by a 3 year trend analysis to provide an indication of the consistency of the companys performance. Assessment of performance will focus on 4 main areas namely profitability, liquidity, financing and investment. In order to provide comparability, relevant financial figures are converted to US dollar as per exchange rate stated in respective annual report. 3.1 MGM GRAND 3.1.1 Profitability Gross Operating Margin According to Walton and Aerts (2009) gross operating margin is the preferred ratio to measure operation efficiency. In the hotel industry, cost of sales revolve around payroll related expenses, gaming related taxes, room, convention, retails and other expenses. In year 2008, MGMs gross operating profit had dropped from 48% to 44%, due to drop in room occupancy by 10% affecting sales with no reduction in Cost of Sales in comparison to 2007. Stagnant Cost of Sales could be explained as there are several fixed expenses like payroll, electricity, food, etc would still be maintained regardless of room occupancy and further to that, in August 2007, there are total of 21,000 MGM employees entered into a 5 year agreement which provides approximately 4% annual increment in wages and benefits. This had contributed to the increase of the payroll expenses in 2008. As for Las Vegas Sands, through the opening of new hotels like Venetian Macao, The Palazzo and Four Seasons in 2008 it had increased its sales, however there were a substantial amount of additional payroll, advertising and promotion as part of opening activities related expenses and the launching of new passenger ferry service operations in Macao where it had an additional US$100 million in operating expenses. This had affected its gross operating profit margin to drop from 40% to 36% in 2008. In terms of gross operating profit margin, MGM had been observed as a better company in controlling cost as its margin had been higher than competitor Las Vegas Sands by 7% on annual basis. Net Profit Margin According to Walton and Aerts (2009), net profit margin explains that the ratio shows how successful the management is in creating profit from a given quantity of sales. MGM has steadily increased its net profit margin except in 2008, this compares favourably to its competitor Las Vegas Sands who has shown a trend of reducing profits since 2006. The size of the loss however in 2008 was far greater for MGM. Whilst the revenues for MGM have remained fairly constant, the reduction in profit was largely down to certain areas of its operating expenses in particular US$1.2 billion impairment charge related to goodwill and an indefinite lived intangible asset recognised in the Mandalay acquisition in 2005. Having reviewed the accounts, we would also address an area of caution in the MGM profit margin in 2007 as there was a one off recognition of a US$1.03 billion gain in relation to the City Centre Project. Due to the fluctuation in MGM net profit margin due to several onetime adjustments in the years 2007 and 2008 which makes it insufficient for comparison against Las Vegas Sands, hence only figures from 2006 would be taken for assessment where Las Vegas Sands net profit margin seems more favourable than MGM. Return on capital employed (ROCE) Return on capital employed (ROCE) is a performance ratio that demonstrates how much the company has earned on invested long-term funds (Walton and Aerts, 2009). In 2008, MGM board of directors had announced 20 million share repurchase which caused the total shareholder equity to drop by 34%. With this drop, we would be expecting an increase in ROCE ratio from 0.17 to 0.19 if income before tax and long debt remains the same in 2008. However due to the loss in 2008, the actual ROCE ratio indicates a negative return of 0.79% in relation to equity. On the other hand, Las Vegas Sands ROCE ratio in 2008 had dropped by 2% due to the increased of total asset by 33% due to the distribution of common share and preference stock amounting US$ 2.56 billion, which increased the stockholder equity by 50% and additional long term debts amounting US$ 2.84 billion. Despite the fact that Las Vegas Sands ROCE ratio had dropped in 2008, Las Vegas Sands still stand a better position than MGM as there are still positive returns. Return on shareholders equity (ROECE) MGM over the three years have had a very volatile ROECE which saw progression from 2006 to 2007 but in 2008 produced a negative 5.22% return in relation to Shareholder Equity. The components that make up the ROECE are very similar to the ROCE except that the ROECE is after interest and tax but before payments of dividends. In respect of MGM dividends are irrelevant as they have not paid a dividend in the last three years. The negative return in 2008 was solely down to their losses of US$670 million from their continuing operations before income tax. This loss was further inflated by US$186 million provision for income tax expense even though the company made a loss. The provision was for a non deductable good Company Analysis for Investment Opportunities Company Analysis for Investment Opportunities 1 Introduction We have organised a shareholders club which we have called 6IM. There are six members within 6IM of which we all have  £1000 each to invest. As part of our Investment process we have decided to choose three companies in different sectors and conduct an in depth financial analysis. Due to the three companies working in different sectors we have also analysed key financial data of a major competitor to that particular company. We feel this will enable us to gain a greater understanding of the industry of which the three companies are working in and also a direct financial comparison with our chosen companies. Our report will begin with a brief profile of the three companies followed by a SWOT analysis to enable us to paint a picture of where the company currently sit and the potential investment opportunities and risks associated with that particular company. In addition to this we will conduct a five forces investigation to understand the industries competitiveness. In respect of financials we will gain an understanding of the numbers in the annual reports of both our targeted three companies and also our competitors. We will use a number of investment ratios to quantify the numbers which will help us review the performance of our chosen companies against our competitors and in addition devise a brief explanation as to what aspects of the business have made a positive or negative impact on the ratio in which we are assessing. The ratios that we will choose will be independent of each other due to the fact that some ratios are more relevant than others in certain industries. The ratios will be conducted for each of the last 3 financial years for both our targeted companies and competitors. The ratios will be split into four categories liquidity, profitability, financing and investment. Finally we will then standardise the ratios and compare our three chosen companies. We will use a marking system to identify which company we feel excel in each ratio to help us arrive at our chosen investment vehicle. The three companies in which we will be conducting the report on are: 1) MGM Grand Sector: Leisure Tourism Fiscal year: Jan 01st – Dec 31st 2) Rio Tinto Sector: Mining Fiscal year: Jan 01st – Dec 31st 3) Toyota Sector: Car manufacturing Fiscal year: April 01st – March 31st Investment Objective A medium term investment of 5 years Provide income through dividends Provide capital growth at the end of the term We would be looking at an annual expected return of between 8% and 10% Tax Implications 6IM discussed about the tax implications of our investment objectives. We felt that as we were all basic rate taxpayers receiving a dividend would be beneficial as we would not be impeded by the non reclaimable 10% tax credit or would we have a further liability of 22.5% due to the fact we were not higher rate tax payers. Regarding capital growth it was decided that if our money had grown substantially over the five years and the profit was above the capital gains tax annual exemption we would realise the gains over two tax years to ensure we would utilise as much of the gain tax free as possible. According to Tax Facts 2009-2010 (2009), Current Capital Gains Tax annual exemption is:  £ 10,100 (2009-10) Current Capital Gains Tax subject to being over the exemption is: 18% Attitude to Risk 6IM have agreed that we will adopt a moderately adventurous attitude to risk. As part of our risk assessment, collectively we decided to assess ourselves using a risk attitude profiling questionnaire as per Appendix II which was designed by Scottish Life a leading Life Pension investment provider. We discussed our views on ethical investments and we concluded that whilst our opinions were not strong enough to adopt negative screening criteria which would be to completely disregard any unethical company, we would look to see if the companies are trying to improve the way they work. In respect of the three companies chosen we also discussed that we would need to be aware of currency risk, political risk, market risk and inflation risk which would be in addition to the business risk and investment specific risk of the company. Finally our thoughts were if we felt that each of the companies were viable in respect of investment we would be happy to spilt our money and invest in all three which would gain potentially reduce our risk through diversification. 2 Marketing and industry data 2.1 MGM GRAND 2.1.1 Background and mission Background MGM operates in a very competitive entertainment and hospitality industry and is located on the New York Stock Exchange. The company owns, develops and operates casino and non casino resorts. The majority of MGMs hotels are located in Nevada where they own approximately 700 acres of land on the Las Vegas strip. Whilst MGM have a variety of hotels that occupies this land they also have a meaningful proportion that is considered undeveloped and could offer future investment opportunities. As well as resorts in Las Vegas, MGM also have operations in Michigan, Mississippi, Macau, Atlantic City and Illinois. One of their latest developments is the MGM Grand Ho Tram which will consist of a 4.2 billion multi property resort complex along the beaches of Southern China. In addition to this MGM will also open in December 2009 on the Las Vegas strip a project called City Centre which is a joint venture with Dubai World. MGM as at 31st December 2008 employ approximately 46,000 full time staff and 15,000 part time staff, they pride themselves on offering excellent customer service which has been demonstrated by many accolades, including AAA five diamond and 4 diamond awards at hotels and restaurants across their portfolio. There quality and reputation was enhanced further in October this year when 7 of MGMs restaurants were honoured with at least one Michelin star which demonstrates the quality they strive for. MGMs revenue in 2008 decreased by 6.27% which was largely down to the economic conditions and with MGM having the vast majority of its portfolio in Las Vegas this could be demonstrated by the reduction in visitor volumes during the time period (Appendix I). MGM feel whilst times are currently tough James J. Murren Chairman and CEO states â€Å"There company is well positioned to face the future thanks to our dedicated management team and work force, premier brands and best in class resorts. When the cycle changes, we will be stronger, with a foundation of experienced operators and an efficient operating profile that is not only business ready but has been battle tested.† (MGM Annual Report, 2008 p.8) Mission MGM Mirage Mission Statement, â€Å"Our mission is to deliver our winning combination of quality entertainment, luxurious facilities and exceptional customer service to every corner of the world in order to enhance a shareholder value and to sustain employee, customer and community relationships† (MGM Mirage, 2009). 2.1.2 SWOT analysis Strength Quality Employees: MGM have invested heavily in recruiting, training and maintaining employees. They run a variety of programs for example a diversity program which looks at unique strengths of individuals and being able to blend them to work together to achieve greater performance. In addition to training, to ensure they maintain their employees in August 2007 MGM entered into an agreement with 21,000 thousand of its Las Vegas employees to provide an increase in wages and benefits of approximately 4% annually. Diversified Offering: MGM would be expected to earn the majority of its revenues from gaming however this is not the case with over half of its net revenue derived from non gaming activities. MGM offer a complete resort experience for its guests, with their non-gaming activities being offered at a premium due to the quality of their offering. Brand Name Awareness: MGM is one of the leading hotel and leisure companies as at December 31st 2008 their operations consisted of 17 wholly owned casino resorts and a 50% investment in 4 other casino resorts. This high brand name awareness gives MGM a distinct advantage when competing against other casino brands and helps enable them to draw more customers. Weaknesses Financial Strength: In February 2009 all of the major credit rating agencies – Moodys, Standard Poors and Fitch downgraded MGMs rating on long term debt, there was a further downgrade by Moodys in March 2009. These downgrades will again potentially make it very difficult for MGM to obtain debt finance and may even increase the cost of any future debt financing. Amount of Indebtedness: As at the 31st December 2008, MGM had long term debt totalling approximately US$ 13.5 billion dollars. The amount of debt and the inability of MGM to take on further debt could have a catastrophic impact on its business. It is uncertain that the sources of credit they have available will be sufficient to fund current financial commitments, whilst MGM have received a waiver that they do not have to comply with certain financial covenants this has led to further restrictions and requirements for them to adhere to. Weak Returns: In 2008 MGM have seen a reduction in the majority of their financial ratios compared with its 2007 figures. The figures can be seen in our ratio analysis section of the report and whilst an explanation of the figures have been discussed, the reduced ratios can only cause investors concern and a reduction in confidence in placing investment into MGM. Opportunities Joint Ventures to co-develop resorts and Casinos. Expansion in developing countries. Threats Legal and Regulatory Threat: The gaming industry is highly regulated in which MGM must pay gaming taxes and maintain their licenses to continue their operations. A change in tax laws could adversely affect the profitability of their organization, in addition to tax changes if a regulation is violated in one jurisdiction this could result in disciplinary actions in other jurisdictions. Economic Market: Hotel revenue decreased by 10% in 2008 due to decreased occupancy and lower average room rates. The customers however that do make it to the resorts are spending less, which MGM believe is due to their inability to access near term credit which has led to a shift in spending from discretionary items to more fundamental costs (MGM Annual Report, 2008). A direct impact on MGM is the weak housing and real estate market both generally and in Nevada. 2.1.3 Leisure Tourism industry Five Forces analysis Threat of new entrant Due to the current economy recession, hotel industry suffered a setback in revenue. Hence, this industry is viewed as unattractive. Excessive initial setup investment. Extensive regulation generally concerns the firms responsibility, financial stability and character of the owners. Also, high license maintenance fee and gaming taxes discourages new entrants. New entrants to such markets must then spend heavily on advertising and promotion to gain levels of brand awareness of the existing players. Intensity of rivalry among competitors Hotel, resort and gaming business, especially in Las Vegas and Macau, had became increasingly intense where there is rivalry to build the â€Å"biggest and best† hotel/casino. Between 1996 and 2000, the number of hotel rooms at Las Vegas casinos doubled and due to the current economic conditions, the demand for rooms had dropped significantly and resulted in reductions to average room rates due to competitive pressures. Competition between casino companies involved ever more ambitious differentiation. The new casinos in Las Vegas broke fresh ground in innovative entertainment and design features. Threat of substitute products There had been a growing substitute competition for gaming which included an increasing number of state lotteries and offshore gambling on cruise ships. The installation of slot machines in unorthodox gambling area such as horse tracks. The growth of internet gambling. Bargaining power of buyers In the entertainment industry, buyers (consumer) usually have relatively high bargaining power as there is a practically negligible switching cost. The tendency of buyers to explore different hotel for a different experience. Accessibility of information via internet on hotel packages, consumers are now more informed and prepared for the wide range of available hotels specifically in Las Vegas and Macau. Bargaining power of supplier The main sources of supplier power in the service industry are labour unions. The unions cover approximately half of their total employees (30,000 of 61,000 employees) and had successfully negotiated for increases in wages and benefits of approximately 4% annually via the newly signed 5 year collective bargaining agreement in August 2007. The other supplies to hotel consist of food and beverage, retail merchandise and operating supplies. Due to economies of scale, big buyers like MGM would have an advantage over their suppliers as they can easily switch due to the wide availability of the supplies and its continuous stream of demand. 2.2 RIO TINTO 2.2.1 Background and mission Background Rio Tinto is a leading international mining business headquartered in London. Rio Tinto Group combines Rio Tinto Plc (listed on London Stock Exchange) and Rio Tinto Limited (listed on the Australian Securities Exchange) and operates as a single entity. The group is involved in mining and supply of minerals and metals including aluminium, coal, copper, diamonds, gold, iron ore, uranium and other industrial minerals. It operates in more than 50 countries and employs approximately 106,000 people (Rio Tinto, 2008). The companys main production areas are in Australia and North America however there are significant businesses in South America, Asia, Europe and southern Africa. Rio Tinto concentrates on large scale mining operations that have a long life and are cost effective. The company recorded revenue of US$ 54,264 million in 2008, an increase of 83% over 2007. Annual production records set for iron ore, bauxite and alumina. The business had a record net capital expenditure of US$ 8.5 billion, a 71% rise over 2007 (Rio Tinto, 2008). Mission â€Å"Rio Tinto aimsto maximise the overall return to its shareholders by sustainably finding, mining and processing mineral resources areas of expertise in which we have a clear competitive advantage.A fundamental part ofthis is to deliver value while operating in an ethically and socially responsible manner, and remaining committed to long term sustainable development.† (Rio Tinto, 2009) 2.2.2 SWOT analysis Strength International mining group ranks amongst top five commodities producers. Rio Tinto has extensive line of business (Iron ore, Copper, Energy, Aluminium, Industrial Minerals and Diamond) and each division provides its services to different industries. Company is well diversified in terms of the products and the markets. Geographically companies operations are spread over six continents. Globally number one producer of Aluminium because of recent acquisition of Alcan in October 2007. Alcan was ranked globally among top three producers of Aluminium and Bauxite. Worlds largest Uranium supplier. Weaknesses Majority of Iron ore and coal contracts are sold at annual contract price rather than the spot market. There is a significant deterioration in the pricing environment of these commodities. Production of zinc and silver by the company has been decreasing in recent times. Opportunities BP and Rio Tinto entered into partnership for the formation of a new jointly owned company, Hydrogen Energy, which will develop decarbonised energy projects around the world and lead the path for sustainable future uses of coal. The growing importance of uranium as a resource for future energy needs. Threats In the recent time there is a significant reduction in the commodity prices and the demand of the market especially because of the global economic crisis. Rising concern for environmental issues, health and safety standards across the globe. Especially for the industry to meet standards and quotes agreed in the KYOTO Protocol. 2.2.3 Mining industry Five Forces analysis Threat of new entrant High demand of capital as entry cost makes it tough for new entrant to enter in this field. Very low availability of new mining areas (mines) and risk on capital involved in searching for new mining areas restricts new entry in this field. Requirement of high, sophisticated and costly technology is again an entry barrier for new entrant. High government and environmental regulations. Intensity of rivalry among competitors High demand and optimum supply leads to limited rivalry amongst competitors. Threat of substitute products Being a standardised product (commodities) and basic raw material to the industry or to the end customers, there is no availability of substitute. Prices are fixed at macro level generally by external authorities (government) so the variability in prices of different suppliers is absent. Bargaining power of buyers Strong control on Pricing by government leads to low bargaining power of customers. Unavailability of substitute products shifts the favour towards the supplier from the customers. Customers (Industries) dependency on existing channel of distribution and product is very high; therefore the customers power is again low. Bargaining power of supplier Bargaining power of suppliers supplying technology is high because of the sophisticated technology requirement and reduced availability of specialist suppliers. Skilled labour requirements are high and availability is lower because of less lucrative future prospects that shift the favour towards suppliers. 2.3 TOYOTA 2.3.1 Background and mission Background Toyota Motor, the worlds largest automotive manufacturer, has a powerful aspiration to become ‘Greener. The company makes a hybrid-powered (petrol and electric) sedan – the ‘Prius that is being snapped up in US and European markets. Its petrol-powered cars, pickups, minivans, and SUVs include such models as Camry, Corolla, 4Runner, Land Cruiser, Sienna, the Scion brand, and a full-sized pickup truck, the V-8 Tundra. Toyota also makes forklifts, manufactured housing and offers financial services. Once a dark horse in the global automotive game, Toyota overtook Chrysler and Ford in worldwide sales and surpassed General Motors in 2008. The company gets nearly half of its sales from Asia (Just Auto, 2009). Mission Toyotas management value has developed from the companys origins and has been contemplated in the termsâ€Å"Just in Time Production† and Lean Manufacturing, which it was instrumental in developing (Strategonic, 2009). The Toyota Way has five mechanisms (Liker Jeffrey K., 2003): Perfecting business process. Eliminating wasted time and resources Building quality into workplace systems Building a learning culture for continuous improvement. Finding low-cost but reliable alternatives to expensive new technology 2.3.2 SWOT analysis Strength Toyota has become the lead name in the global market. People have a lot of trust for their name and this is why Toyota is the leader in automobile industry. The important edge over the companys competitors is the ample availability of the spare parts in the markets. Toyota is a financially strong company. This can be demonstrated by the analysis of the financial reports. Toyota vehicles have got a much stronger resale value than any other car in the global markets. This is why people prefer to buy a Toyota. Toyota is proud to have a successful team of competent managers and skilled workers. Extensive training has enabled the employees to perform outstandingly. Toyota is the only company having the most sophisticated network of dealerships where customers are treated by professional dealers. Weaknesses Being big has its own problems. The World market for cars is in a condition of oversupply and so car manufacturers need to make sure that it is their models that consumers want. Toyota markets most of its products in the US and in Japan therefore it is exposed to fluctuating economic and political conditions in those markets. Perhaps that is why the company is beginning to shift its attentions to the emerging India and Chinese markets. Movements in exchange rates could see the already narrow margins in the car market being reduced. There are some weaknesses in the dealership network. The dealers sometimes tend to deviate from the recommended course of action and principles of Toyota. This can result in customer complaints. A lot of effort is put into the sales forecasting because of the changing political and economic scenarios. For these reasons inventory has to be kept low. Opportunities Export is a major opportunity for Toyota Motors. Toyota can do better by focusing on segments much more than what is presently being done. Toyota is to target the urban youth market. The company has launched its Aygo, which is targeted at the streetwise youth market and captures (or attempts to) the nature of dance and DJ culture in a very competitive segment. The vehicle itself is a unique convertible, with models extending at the rear. The narrow segment is notorious for it narrows margins and difficulties for branding. Switching diesel market toward petrol and CNG market. Threats Even though Toyota enjoys the position of being the no.1 automobile company, still it faces some threat from competitors especially Honda. Honda has adopted aggressive strategies for capturing the market. In 2005 the recall of 80,000 SUVs negatively impacted on the brand of Toyota and posed a threat to its future reliability and sales. Even though Toyota keeps a careful eye on the changing trends, still the changing customer needs and trends can prove to be a threat. 2.3.3 Automobile industry Five Forces analysis Threat of new entrant Slow lethargic state of economy resulting in low per capita income leads to declined consumption. Hence, the productivity decreased at manufacturing level. Automobile sector is already over saturated market for the provided demand base. Initial cost of capital is very large. Industry requires highly specialised technology or plants and equipments. Constant RD: Patent and proprietary of auto designs restrict the entry into an industry. Intensity of rivalry among competitors Due to high cost of competition automobile industry earns low returns. Competition has intensified rivalry by offering rebates, long-term warranties and preferred financing to lure the customers which have put pressure on the profit margins. Foreign Trade increased the degree of rivalry. Export becomes essential for expansion and competition. High exit barrier: Entrants are reluctant to commit to acquiring specialised assets that cannot be sold or converted into other uses if the venture fails. Threat of substitute products Consumer seek substitute like bus, train or aeroplane to reach their destination. Peoples likeliness to seek alternative transportation depends upon the cost of operating a vehicle. Higher the operating cost less likely people will buy the automobile. Consumers decision to buy vehicles largely depends upon the price of petrol. Emergence of very small and economical car segment in automobile sector. Bargaining power of buyers Consumers are highly price sensitive and generally dont hold much buying power as they never do bulk purchase of cars. Wider range of product, negligible switching cost, readily available. More shrewd customers: Customers are very particular in terms of brand selection, technology and price of product. Dealers are cherishing the freedom of selling more than one brand at any time. Bargaining power of supplier Due to the fragmented automobile industry, most of the suppliers depend on just one or two automakers to buy majority of the products. Switching the supplier is devastating to the business of previous supplier. Long term supplier relationship in the automobile sector, which is considered to be an oligopoly, makes the relationship obligatory for suppliers and hence the supplier has lower grip on the prices Suppliers provide secondary material and have little responsibility over the design and assembly of automakers. Therefore, essentially little power is given to suppliers. 3 Financial Analysis The report describes a financial statement analysis between companies of our choice with their closest competitor which is followed by a 3 year trend analysis to provide an indication of the consistency of the companys performance. Assessment of performance will focus on 4 main areas namely profitability, liquidity, financing and investment. In order to provide comparability, relevant financial figures are converted to US dollar as per exchange rate stated in respective annual report. 3.1 MGM GRAND 3.1.1 Profitability Gross Operating Margin According to Walton and Aerts (2009) gross operating margin is the preferred ratio to measure operation efficiency. In the hotel industry, cost of sales revolve around payroll related expenses, gaming related taxes, room, convention, retails and other expenses. In year 2008, MGMs gross operating profit had dropped from 48% to 44%, due to drop in room occupancy by 10% affecting sales with no reduction in Cost of Sales in comparison to 2007. Stagnant Cost of Sales could be explained as there are several fixed expenses like payroll, electricity, food, etc would still be maintained regardless of room occupancy and further to that, in August 2007, there are total of 21,000 MGM employees entered into a 5 year agreement which provides approximately 4% annual increment in wages and benefits. This had contributed to the increase of the payroll expenses in 2008. As for Las Vegas Sands, through the opening of new hotels like Venetian Macao, The Palazzo and Four Seasons in 2008 it had increased its sales, however there were a substantial amount of additional payroll, advertising and promotion as part of opening activities related expenses and the launching of new passenger ferry service operations in Macao where it had an additional US$100 million in operating expenses. This had affected its gross operating profit margin to drop from 40% to 36% in 2008. In terms of gross operating profit margin, MGM had been observed as a better company in controlling cost as its margin had been higher than competitor Las Vegas Sands by 7% on annual basis. Net Profit Margin According to Walton and Aerts (2009), net profit margin explains that the ratio shows how successful the management is in creating profit from a given quantity of sales. MGM has steadily increased its net profit margin except in 2008, this compares favourably to its competitor Las Vegas Sands who has shown a trend of reducing profits since 2006. The size of the loss however in 2008 was far greater for MGM. Whilst the revenues for MGM have remained fairly constant, the reduction in profit was largely down to certain areas of its operating expenses in particular US$1.2 billion impairment charge related to goodwill and an indefinite lived intangible asset recognised in the Mandalay acquisition in 2005. Having reviewed the accounts, we would also address an area of caution in the MGM profit margin in 2007 as there was a one off recognition of a US$1.03 billion gain in relation to the City Centre Project. Due to the fluctuation in MGM net profit margin due to several onetime adjustments in the years 2007 and 2008 which makes it insufficient for comparison against Las Vegas Sands, hence only figures from 2006 would be taken for assessment where Las Vegas Sands net profit margin seems more favourable than MGM. Return on capital employed (ROCE) Return on capital employed (ROCE) is a performance ratio that demonstrates how much the company has earned on invested long-term funds (Walton and Aerts, 2009). In 2008, MGM board of directors had announced 20 million share repurchase which caused the total shareholder equity to drop by 34%. With this drop, we would be expecting an increase in ROCE ratio from 0.17 to 0.19 if income before tax and long debt remains the same in 2008. However due to the loss in 2008, the actual ROCE ratio indicates a negative return of 0.79% in relation to equity. On the other hand, Las Vegas Sands ROCE ratio in 2008 had dropped by 2% due to the increased of total asset by 33% due to the distribution of common share and preference stock amounting US$ 2.56 billion, which increased the stockholder equity by 50% and additional long term debts amounting US$ 2.84 billion. Despite the fact that Las Vegas Sands ROCE ratio had dropped in 2008, Las Vegas Sands still stand a better position than MGM as there are still positive returns. Return on shareholders equity (ROECE) MGM over the three years have had a very volatile ROECE which saw progression from 2006 to 2007 but in 2008 produced a negative 5.22% return in relation to Shareholder Equity. The components that make up the ROECE are very similar to the ROCE except that the ROECE is after interest and tax but before payments of dividends. In respect of MGM dividends are irrelevant as they have not paid a dividend in the last three years. The negative return in 2008 was solely down to their losses of US$670 million from their continuing operations before income tax. This loss was further inflated by US$186 million provision for income tax expense even though the company made a loss. The provision was for a non deductable good

Plastic People :: Media Movies Pleasantville Essays

Plastic People Disney is famous for bringing fantasy to life. The Disney theme parks are among the most visited in the world. So shouldn’t it make sense that people would want to live in a similar idealistic sort of atmosphere? It just may be possible in the town of Celebration. Then again it may be just like living in a tourist attraction. Russ Rymer expresses his personal disapproval of manufactured communities in his essay, Back to the Future: Disney Reinvents the Company Town. The movie â€Å"Pleasantville† exemplifies Rymer’s premonition of the results of such controlled communities. Both sources make it evident that with out foundation, culture or variety, a community is far from perfect. One of the first problems with the town is that it was built with out a foundation. The whole town was built at once. There have never been any causes to fight for, or differences to solve. With out these essentials, the town has no character. Going through such hard ships only make an individual stronger. The same thing can be said for a community. Never having to face loss of security can make people arrogant and unaware of what they should appreciate. The only symbol that represents the town is a picture of a girl on a bike with a dog behind her. This symbol along with the name of the town is generic. One of the most important aspects of a town is the character that defines it. Part of what gives something character is history. A town with no history has no definition. Fake towns share this quality. Cities and towns on TV or in the movies often have no personality. In the movie â€Å"Pleasantville† this concept is created artistically. The movie is about a town on an old black and white television show. This town has no personality at all. In fact it doesn’t even have color. Everyone appears, acts and thinks the same way. No one dares to think outside the box. There are no worries except for perhaps the occasional cat up a tree. There exists no crime, no disappointments, no sickness, and no weight gain. There is one major department store, one diner, one television shop etc., etc. There is no variety or creativity. There are no individuals. As result of no foundation, a community will automatically lack a second important element.

Management Control System

Coca Cola Goes Small in India The coca-cola company is the number one seller of soft drinks in the world. Every day an average of more than 1 Billion servings of Coca-Cola, Diet Coke, Sprite, Fanta and other products of Coca-Cola are enjoyed around the world. The company has the world’s largest production and distribution system for soft drinks and sells more than twice as many soft drinks as its nearest competitor. Coca-Cola products are sold in more than 200 countries around the globe.For several reasons, the company believes it will continue to grow internationally. One reasons is that disposable income is rising Another reason is that outside the United States and Europe, the world is getting younger. In addition, reaching world markets is becoming easier as political barriers fall and transportation difficulties are overcome. Still another reason is that the sharing of ideas, cultures and news around the world creates market opportunities.Part of the company mission for C oca-Cola to maintain the world’s powerful trademark and effectively utilize the world’s most effective and pervasive distribution system. In June 1999 Coca-Cola India introduced a 200-milliliter Coke bottle in Delhi, India, in a campaign to market Coke to its poorest customers. This strategy was successful for Coca-Cola in other countries such as Russia. The bottle sells for Rs. 12, making affordable to almost everyone. In 2001, Coca-Cola enjoyed 25% growth in India including an 18% increase in unit case sales of Coca-Cola.Because of the variability of bottling machinery, it is likely that every 200 milliliter bottle of Coca-Cola does not contain exactly 200 milliliters of fluid. Some bottles may contain more fluid and other less. Because 200 milliliters fills are somewhat unusual, a production engineer wants to test some of the bottles from the first production runs to determine how closely they are to the 200 milliliter specification. Suppose the following data are t he field measurements from a random sample of 50 bottles.Consider the measures of central tendency, variation, skewness. Based on this analysis, explain how the bottling process working? 200. 1 200. 1 199. 7 200. 1 200. 4 199. 6 200. 1 200. 3 200. 2 200. 2199. 9 200. 9 200. 4 199. 4 199. 8 200. 4 200. 8 200. 5 200. 5 199. 5200. 2 200. 1 200. 3 199. 6 199. 9 200. 4 199. 9 199. 9 200. 2 200. 6200. 2 200. 3 199. 8 199. 2 200. 2 200. 6 200. 0 201. 1 199. 7 200. 3200. 0 200. 5 199. 3 200. 2 199. 6 200. 6 199. 9 199. 7 200. 9 199. 8 Management Control System Management Control System Assignment â€Å"Budgeting Preparation† * Budget Preparation Budget preparation is a summary of company's plans that sets specific targets for sales, production, distribution and financing activities. It generally culminates in a cash budget, a budgeted income statement, and a budgeted balance sheet. In short, this budget represents a comprehensive expression of management's plans for future and how these plans are to be accomplished. It usually consists of a number of separate but interdependent budgets. One budget may be necessary before the other can be initiated.More one budget estimate effects other budget estimates because the figures of one budget is usually used in the preparation of other budget. This is the reason why these budgets are called interdependent budgets. * Gudeline of Budget Preparation Operating Budgets An operating budget is a statement that presents the financial plan for each responsibility centre during the budget period and reflects operating activities involving revenues and expenses. The most common types of operating budgets are  expense,  revenue, and  profit budgets Expense BudgetAn expense budget is an operating budget that documents expected expenses during the budget period. Three different kinds of expenses normally are evaluated in the expense budget -fixed,  variable  and  discretionary  (Discretionary expenses – costs that depend on managerial judgment because they cannot be determined with certainty, for example:  legal fees, accounting fees  and  R&D expenses). Revenue Budget A revenue budget identifies the revenues required by the organization. It is a budget that  projects future sales. Profit Budget A profit budget combines both expense and revenue budgets into one statement to show  gross and net profits. Feature article about  Production ManagementProfit budgets are used to make  final resource allocation, check on the adequacy of expense budgets relative to anticipated revenues, control activities across units, and assign responsibility to managers for their shares of the organization's financial performance. Financial Budgets Financial Budgets outline how an organization is going to acquire its cash and how it intends to use the cash. Three important financial budgets are the  cash budget,  capital expenditure budget  and the balance sheet budget. Cash budget Cash budgets are forecasts of how much cash the organization has on hand and how much it will need to meet  expenses.The cash budget helps managers determine whether they will have adequate amounts of cash to handle required disbursements when necessary, when there will be excess cash that needs to be invested, and when cash flows deviate from budgeted amounts. Capital Expenditure Budget Capital Expenditure Budgets ,  Investment in property,  buildings and  major equipment  are called capital expenditure. Such capital expenditure budgets allow management to forecast capital requirements, to on top of important capital projects, and to ensure the adequate cash is available to meet these expenditures as they come due.The balance sheet budget The balance sheet budget plans the amount of  assets  and liabilities  for the end of the time period under considerations. A balance sheet budget is also known as a  pro forma (projected) balance sheet. Analysis of the balance sheet budget may suggest problems or opportunities that will require managers to alter some of the other budgets * Budgeting Process * Behavioral Aspects Actually, an effective budget preparation process blends the two approaches. Budgetees prepare the first draft of the budget for their area of responsibility, they do so within guideliness established at higher level.Senior managers review and critique these proposed budgets. Research has shown that budget preparation where the process in which the budgetee is both involved and has influence over the setting of budget amounts and it has positive effects on managerial motivation for two reasons : 1. There is likely to be greater acceptance of budget goals if they are perceived as being under managers’ personal control, rather than being imposed externally. This will leads to higher personal commitment to achieve the goals. 2. Participative budgeting result in effective information exchanges.The approved budget amounts benefit from the expertise and personal knowledge of the budgetees, where the budgetees have a clearer understanding of their jobs through interactions with superior during the review and approval phase. The budget department has a particularly difficult in behavioral problem. It must analyze the budgets in details, and it must be certain that the budget are prepared properlu and that the information is accurate. To accomplis h the tasks, the budget department sometimes must act in ways that line managers perceive as threatening or hostile.To perform, their function effectively, the members of the budget department must have a reputation for impartiality and fairness. If they do not have this reputation, it becomes difficult, if not impossible, for them to perform the task necessary to maintaining the effective budgetary control system. Citation Anthony, R. N. , ; Govindarajan, V. (2007). Behavioral Aspects. In Management Control System (pp. 391-393). New York: McGraw-Hill. How to Prepare Budget. (n. d. ). Retrieved November 02, 2012, from CWA – Communication Workers of America:

Family or the Individual: Who Do We Work with?

Dani Romero Dr. Mack Cherry PHIL 3311 3/1/2013 Family or the individual: Who do we work with? Just as culture and individuals, medical ethics varies around the world. In the Western world medical ethics regarding consent is almost driven by the idea of separating the patient from the family. As discussed in class and readings, Western bio-ethics, compared to other countries, goes to the extent in dehumanizing the family figure when it comes to medical ethics, unless the patient is incapable to make their own decisions on their care.This idea is applied to most cases, even to those pertaining to minors. In other countries, for example China, family is the first source a physician goes to in order to to discuss the patients care and state before talking to the patient. The main question is, which approach should be used when it comes to consent? Is it better to glorify the patients independence by getting rid of the family figure or is it better for the physician to go to the family fi rst before bombarding a patient with overwhelming information?Of course, both sides of the argument have valid ideas defending their reasoning; however, trying to approach this as unbiased standard would be useless. In addition to making an insight to both arguments I will also apply what I have experienced with regards to a family vs. individual approach in my culture. First of all, we must understand that each approach is based on a statistical analysis, meaning that it’s a summation of the most common outcomes of each individual case.We approach each case like this because it would be impossible to remember every single outcome for each individual case that is relevant. This doesn’t mean that every single family is evil and tries to exclude the patient from their own choices; however, it also doesn’t mean that every family is a depiction of the Brady Bunch where everyone is happy, understanding and embraces each others flaws and quirks. In addition, we must a lso fully understand what the term family really means.According to the Oxford Dictionary a family means â€Å" a group consisting of parents and children living together in a household†. If you approach this through a biological point of view it means â€Å"a principal taxonomic category that ranks above genus and below order† (Oxford Dictionary). In both descriptions a family is basically a group that shares similar qualities and characteristics, but unlike friends that share same interests, family members are joined by a blood line that holds together by, not only interest, but also biological need to survive (e. . Propagation of their genes to future generations) In Western culture there has been a desire to separate the patient from the family. It almost feels as if society sees the family figure as a source of unfair control or a dictatorship that silences the individuals voice. In our modern society, bio ethics is driven by working for whats the best interest of the patient and what they, as an individual, say is better fit for them.In this approach, the family plays a only a â€Å"by default† sense, meaning that the patient is incapable of acting on their own behalf and has failed to appoint another individual to serve in their behalf and make decisions in the patients best interest (Boisaubin, 2004; Cherry and Engelhardt, 2004) Through the passing of the years, we as American’s have built up a mind set that families are evil and should not be trusted since we believe that no one knows better than what the individual wants but the individual himself.The ideas behind isolating the individual from the family is to protect their â€Å"best interest†. By having the patient as the â€Å"go to figure† we are enforcing the authority the patient has over themselves thus assuring that they are the only one that have control on what should happen to them. The idea of liberty plays a great part in Western culture, thus by isolating the patient we are playing by what every American is entitled to, which in this case, is the liberty to either accept or deny treatments offered by physicians.Also, as mentioned before, the main reason why an a patient is treated as an individual is in order to protect their best interest. As it can be easily seen, the family figure plays no role in this approach. The families main role is to play a historian in order to help the physician fill any gaps left by the patient. In this case families are suppose to be trusted, unless they show signs that they are incapable of being trusted. As mentioned in Ruiping Fan’s and Julia Tao’s â€Å"Consent to Medical Treatment: The Complex Interplay of Patients, Families, and Physicians,Western ioethics began as a fight against paternalism in order for the patient to gain autonomy over themselves (Engelhardt, 2002). Bioethics was build up on the pillars of individualism and autonomy over ones own body and decisions. Kn owing this it doesn’t seem strange that Western bioethics drive a wedge between the family and the individual. Most would believe that the wedge driven between patient and family wouldn’t affect pediatrics since children aren’t seen as a someone who is responsible and aware of their actions and their repercussions.However, in Western society the same idea is being applied to pediatric care. In today’s society, under the â€Å"Convention on the Rights of Children† by the United nations â€Å"minor children ought to be treated as self-possessed moral agents, who are to undertake their own moral and life-style decision making as soon as possible and as far as feasible† (Parental Authority and Pediatric Bioethical, pg. 553). An example would be acceptance of allowing children as young as 14 years-old to get birth control and abortion with out parental consent.Even if, according to Englehardt, some isn’t considered a responsible person in the sense that they are rational and are able to understand their actions till the age of 18 (). It almost seems strange that children at such young age have the mental and moral capacity to make such drastic decisions with out parental consent. This all falls under the same idea of the individual being independent and free to make their own choice, even if the individual doesn’t have full control over their impulses.Granted that parents and guardians are suppose to act in behalf of their child’s best interest; however, how is possible for Western bioethics to try to drive a wedge between the bond of child and parent at such an early age? On the other hand when we look at other countries such as China, we see that there is there is a more family oriented approach to medical ethics. According to Yali Cong’s article â€Å"Doctor-Family-Patient Relationship: The Chinese Paradigm of Informed Consent† a â€Å"family member† can either be the patients fa mily or the representative of the patient’s entire family, usually meaning the grandfather, father or elder son (pg. 52). The individual makes part of the family, thus whatever causes harm to the individual causes harm to the family ( e. c emotionally, mentally, economically) therefore the family should be with the individual in order to support them through the process. In most cases in China, the physician discusses the patients health with the family first and then they decide how much the patient should be told or if they should be told at all.Even if this approach is family oriented, it doesn’t mean that the individuals voice is ignored and all the decisions are made by the family and don’t consider the individual. It means that if the individual isn’t able to communicate or the family decides not fully disclose all the information to the patient, family members will act in the patients behalf and follow what the patient best interest is. This bioeth ical approach revolves around one central idea: why should we separate the patient from the people they are there to support them?As explained, Chinese physicians would never directly tell the patient that they are suffering from a terminal illness. On the other hand they would approach the family and educate them about what’s going on and what could happen and then the family can decide what to do in regards of letting the patient know. Families usually tell their loved ones the diagnosis gradually in order for them to take in the news and learn to accept it little-by-little and allowing them to adjust to their state (Doctor-Family-Patient Relationship, pg. 155)Another similar approach to the family oriented consent is that of Confucian moral balance where not only is family integrity important but also pursuits a harmonious ambiance where family members can cooperate and work harmoniously with one another in order to work for the patients best interest (The Family and Harmo nious Medical Decision Making, pg. 580). In the case of Tankai and her unfortunate death due a strike to the head in an accident her parents had to become the figure of authority since Tankai couldn’t possible act in her behalf.After her death, Tankai’s father decided to donate her organs in the hope that â€Å"their daughters life could at least partially be continued in someone [else]† (HEC Forum 2008, pg. 191). In this case, the family stepped in and acted on their daughters behalf and did what they knew Tankai would have decided on if she where to be of sound and mind before her passing. As shown by this case, the families job is to act in the behalf of the individual and do what they would have considered their best interest.In addition, it is understood that when the term â€Å"best interest† is used in this context it doesn’t mean the what the family may benefit from but what a the individual of the family will ultimately benefit from. After understanding both sides of the argument, I can see that I lean more towards the family oriented approach. I was brought up in a traditional Catholic home, in addition I come from a Mexican background meaning that I come from a very conservative household.Family plays a big role in the morals that have been taught to me through both my religion and culture. As I grew older I started to deviate from some of the ideas that had been drilled into my head by my culture. However, I don’t understand the Western obsession with separating the individual from the family as if they where to ignore the individuals voice and carry out their beliefs on them. Family is seen as the core of social and economic activity and therefore the locust of moral activity.I’m not saying that individuals choices should be manipulated by the families interest but the family shouldn’t be removed from the picture since they are the source of the individuals moral and ethical reasoning. The in dividual’s reasoning usually comes from elder family members that have been passed down from one generation to another, which makes the idea of cutting off the family seem even more irrational. As I grew up, I was taught that with out family you don’t have anything. I was taught that family is the glue that holds all your life together and without it life would be hard and eventually fall apart.Of course, not all families are the same and there may be a reason why Western medical ethics have decided to remove the family figure, but for the most part family members tend to care more for the people they have a stronger connection to thus making them one of the most reliable choice rather than a â€Å"by default† choice. However, if the family doesn’t seem to be trust worthy (due to their actions, behavior, and decisions of care for the patient) or the patient has expressed that they don’t wish to have to do anything with them, I believe that the fami ly oriented approach is the better one.I trust that my parents, siblings or any other family member, can responsibly act on my behalf if I’m not able to do so. Why wouldn’t I trust the people that have been there for me through thick and thin, and have molded me to become the person I am today? It seems bizarre to think that some people can’t trust their own family members; however, I do understand that not everyone has the same luck with family members and experience. In my own personal view of the situation I would prefer for my parents to be informed first about by condition, that is if it’s a horrble diagnosis.I would prefer for my parents to have their breakdown and cry out their feelings prior to me knowing the diagnoses. I believe this because when I am informed by the physician I would have my moment and would be able to look at my parents and have them be the shoulder for me to cry on, rather than them having a meltdown and me not have anyone to look up to and reassure me â€Å"everything would be ok†. Generally, it’s the families duty to comfort the ill family member, and having them cry and have a meltdown would be more stressful rather than comforting.I also agree with the Chinese ethical belief that when it comes to medical context it should com down to three different parties: the patient, family and physician (The Family and Harmonious Medical Decision Making, pg. 580) Another thing to think about when it comes to family oriented approach is the role parental and guardian supervision take place in pediatric care. Due to my upbringing in a catholic home it’s really hard for me to stomach the idea that children as young as 14 years-old can receive abortions and birth-control without parental consent.Yes, I understand the idea that it’s better for them to be sexually active with protection rather than having them have unprotected intimate relationship. However, this comes back to the idea of m oral pluralism, that everyone is a secular individual and necessarily share the same beliefs. However, maybe it’s because it got beaten into my head that it wasn’t acceptable to be intimate till marriage, but to me it seems that we are giving children the easy way out.Technically, Western culture is enforcing children to go behind their parents back and engage in such activities that they [the child] could lead to consequences that they can easily be protected from or taken out of. My question is; when is protecting the child’s â€Å"best interest† gone too far? Western culture is attempting to take apart the family figure by allowing children to be â€Å" self-possessed moral agents† (Parental Authority†¦ pg. 553). Overall, there is a definite connection between Chinese morals with hose that I have been exposed to, making it harder for me to understand the reasoning behind Western fight for the separation of the patient from the family. Famil y oriented and individual oriented approaches to medical cases have one thing in common; that they both strive for the patients best interest; however, how you arrive at that is a long path that has been twisted and turned by modern Western society. This makes is impossible for physicians to choose a default approach to all cases.Unless you live in a family and tradition driven society like China, one can’t assume that everyone is comfortable with a family approach. However, since America is a melting-pot or cultures there really isn’t a right answer for which approach should be the default one. Most individuals, and physicians, prefer the individual approach since it’s just easier to talk to the individual with out having 10 different people screaming at you giving different opinions.Regardless of what’s easier, I believe that if the patient is to say that they prefer a family oriented approach as that the one used in China, their wishes should be respec ted and carried out since it is considered the patients best interest. As a prospective medical student I know I will have to understand and keep an open mind and do what the patients best interest is. Overall, I find that the family approach may be more relaxing to the patient; however, if the patients family doesn’t seem trustworthy or doesn’t seem interested on the patients best interest