Next PESTLE Analysis | Next Plc

future(a)(a) PESTLE Analysis near PlcTagsPESTLE Analysis, PESTEL Analysis, PEST AnalysisIntroductionA PESTLE abbreviation provides and analysis of six of the key macro level factors which affect a pedigree and the decision which it makes (Grant, 2008). This grant lead apply the relevant factors within the PESTLE frame rub down to the international clothing retailer near and its subsidiaries. Data upon which the assignment is found tot ups from a variety of sources including the familys yearly theme (Next, 2012) and released and well as information from the academic and business press. In order to give the assignment a greater level of focus, the report impart be limited to an analysis of the external environment in the UK.PoliticalThere atomic number 18 a wide range of political factors which affect Next at present entirely if alike factors which whitethorn keep an concern upon the friendship in the future. One key political decision which affects Next in the UK is the rate of levy levied by the government. This has the ability to affect both the bottom line of the play along in the form of corpo dimensionn tax precisely as well the ability of customers to sp nete with next, linked to income tax. At present, levels of corpoproportionn tax in the UK select been impressi angiotensin-converting enzymered in order to attempt to stimulate stintingalal activity (Telegraph, 2012). However, given the continuing deficit, there is no guarantee that governments in the future will view as the rate of corpo ration tax at its current level. opposite key political decisions consider participation rates. At present, UK take rates stand at an either-time low of 0.5% (BoE, 2010). This whitethorn be seen as a appointed factor for firms such as Next who atomic number 18 effectively able to seize full-grown amounts of m matchlessy for the purposes of capital expansion at practically lower rates than look at been previously seen. Such borr owing whitethorn take place in the form of long termination borrowings from banks and monetary institutions, alternatively the federation may choose to loose corporate bonds (Arnold, 2008).Other political issues relate to the governments relatively arms length approach to Europe and re principal(prenominal)ing outside of the single currency atomic number 18a (FT, 2012). For a UK based business such as Next that has international operations in the Euro Zone, this could be seen as damaging with the prospect of foreign exchange rate risks being felt and the introduction of additional relations costs which would be eliminated if the government decided to join the Euro Zone.From a more general perspective, the UK political governance based upon parliamentary democracy may be seen as providing Next with a relatively low risk political environment in which to operate within (CIA, 2013). This may be seen as an wages in comparison close to of Nexts ventures into electric potential ly less fixed political nations such as Russia and those of the centre of attention East. As such, this makes the UK a relatively safe tradeplace for Next to make promote long term capital investments in where the party may think twice in the case of less stable political environments.EconomicA critical factor which may require an affect upon Next in the UK is the current state of the economical environment. As a business which makes use of a premium based differentiated schema, as opposed to being a cost leader, it may be seen that swings within the economic environment have the ability to disturb the fortunes of the company to a greater degree than those operational in the necessity and reckon sector of the commercialise (Johnson et al, 2008).From a stringently statistical perspective, the days since 2007 have been an economic rollercoaster for the UK. Following the onset of the global monetary crisis in 2007, the subsequent year saw GDP add-on revert to negativ e figures with -1% contraction in the economy. This was seeed by even worse act in 2009 with a -4% contraction. modest levels of maturation have been seen since in 2010 and 2011 with GDP growth of 1.8% and 0.8% respectively (World Bank, 2013). However, while the statistics show a slight re speaky in 2010 and 2011, an other(a)(prenominal)s within the business press (BBC News, 2012) indicate that the UK economy could continue to plane line or worse way out in a double dip recession. These headline figures may seem to paint kinda a negative picture for retailers such as Next which ar tallly reliant on the UK economy as a source of revenue. However, an analysis of more expatiate economic data may upliftedlight a different perspective.Tutt (2012) presents data which looks at the level of unemployment and house disposable incomes in the UK. In this case an alarming pattern is seen. On the one hand, levels of unemployment have been increase in recent years with a rise from 0. 86m in 2007 to 1.53m in 2011. However, conversely, the levels of disposable income of idiosyncratic households during the full point has consistently risen from 14,308 per household in 2007 to 16,042 per household in 2011 (Tutt, 2012). For Next and other premium end retailers this may have a key impact upon strategy. sequence there may be a couple of(prenominal) customers able to by the harvest-feasts and operate of Next due to rising unemployment, those who have remained in employment have in the main become wealthier. As a solvent it is likely that such economic patterns may protagonist Next to improve its average spend per customer, even if the total number of customers falls.Social-CulturalThere ar legion(predicate) social and cultural changes taking place in the UK at present which may have a spirited level of impact upon the performance of fashion retailers such as Next. In many cases, as representatives of an essentially socio-cultural industry, the fashion indus try itself may be seen as an industry which is affected by such trends to a greater degree than other industries (Curtis et al, 2007).One of the key issues in the UK market, just now excessively seen across Nexts wider European markets is the general aging of the population (Parliament UK, 2012). This may be seen as both occupationatic but also an opportunity for Next. One the one hand, an ageing population may see Next having to hold its product portfolio in an attempt to ensure that the products supplied by company appeal to this aging demographic of the population. In addition, the prospect of an aging population may also see that competition for the change magnitudely scurvyer young demographics of the market becomes more intense for Next as time progresses. Despite these drawbacks, there are also advantages linked to the issue. On consideration is that ageing populations tend to be less mobile than younger demographics, this may be a key advantage for Next given that its home delivery and online business simulate offer a convenient solution to the problem.Other socio-cultural factors include the consideration that the UK has since World War twain become an increasingly culturally diverse nation with an influx of diverse cultures, races and ethnicities all contributing towards the socio-cultural scope of the UK social arrangement (Shepherd, 2010). For Next, this has not only external implications such as those linked to aligning product ranges to specific cultural segments, in attrition, the company musty also ensure that it deals with issues such as managing transmutation in the context of its own organisation. In this case, increased cultural diversity can be seen as both a source of a competitive advantage yet also a potential source of conflict (Liff, 1997, Ivancevich et al, 2010). As EU expansion takes place and the mod member states become get on integrated into the EU, there is a distinct possibility that the trends for increased diver sity in the UKs labour and consumer markets will increase rather than decrease.TechnologicalThere is bantam doubt that impertinently technological girdments have transform the UK business environment, especially those operating in the retail sector. Key developments may be seen as those technologies which are internet or communications based in nature, such as the wide spread dispersion of broad band (Jobber, 2007).Key technological developments such as the internet have discontinueed firms such as Next to develop online business models which complement traditional bricks and mortar retail establishments. Empirical evidence from the ONS (2009) on the subject shows that the growth has been al more or less exponential with a rapid acceptance on the behalf of customers of online shopping in both retail and other markets.Yet communications technologies have not only been used by the sector to facilitate online sales and shift away from the traditional high street place. Other aspec ts of new technological development have seen a range of new marketing options opened up to retailers such as Next. Most important amongst these are developments which have allowed retailers to interact with customers using online social networking sites such as Facebook, YouTube and Twitter. These are now seen as key ingredients in the development of a victoryful marketing strategy (Zarrella, 2010), largely the product of technological changes in the sector.Other technologies have simply allowed businesses to develop better relationships with their consumers and proclaim in a more effective way. Take for instance the technological developments of smartphones and apps. Such technology has allowed companies to develop apps which allow consumers to find their nearest branch or check the facilities and product availability at a branch before making a visit. This allows an effective bridge to be built between the purely online business model such as those operated by a company like Am azon and those fall into the bricks and clicks category (McGoldrick, 2002) such as Next who must seek to leverage the benefits of both arms of the business.While technology in this section has largely been presented as an opportunity, there is of course a risk factor. umpteen have expressed concerns over the abandoning of the high street as consumers flock to online business models. The case is illustrated only too recently with the example of Jessops going into administration, a business which may be seen as travel victim to technological developments (Goodley, 2013).LegalLike all businesses, Next must conform to the legal negligible standards which are enforceable in a jurisdiction. The case of Nexts UK operations legal elements may be seen as more complex given that the company must comply with both UK law and EU law. whatsoever of the key legal regulations which affect Next in the UK are considered belowMinimum wage rule A key piece of legislation in the UK which affects organisations such as Next with a large number of low paid workers is that of various minimum wage regulations. In this case, the legislation requires UK employers to pay their employees a minimum of 6.19 per hour for those aged over 21 (Gov UK). Given the large number of employees of firms such as Next which are affected by the National Minimum Wage, temporary shifts in legislative constitution can have a high impact upon the sector.Other key legislative issues include equalise opportunities legislation and various other acts of parliament purported to ensure e shade both in the work place and in the recruitment and selection process (Pilbeam and Corbridge, 2010). In this case, such legislation has a localize impact upon the processes and practises of an organisation such as Next who are required not only to design corporate polices which facilitate equality but also to record activities related to recruitment and selection should an employee wawl foul at a later date. The iss ue here for businesses such as Next is that the legislative environment often places the burden of proof on the defendant rather than the claimant in such cases. As such, the development of detailed HR processes and practises is critical (Bratton and Gold, 2007).Further issues relate to potential moves on the behalf of legislators to become tougher in relation to issues of tax avoidance. While Next has to date not been implicated in any of the tax avoidance scandals, there is a consideration that the actions of other retailers such as Starbucks and Amazon (Syal, 2012) may have provoked the onset of a tougher legislative environment in the future which may have an impact upon innocent parties such as Next.EnvironmentalThe physical environment is also a key issue for firms operating in any given national market and consideration should be considered two how firms comprehend the physical environment and the impact this has on the business, but also the impact the physical environment generally has upon a business.In general terms, the physical environment which Next operates within in the UK may be seen as relatively benign in comparison to other parts of the military personnel which suffer from high intensity natural disasters such as earthquakes, hurricanes and forest fires. Despite such an environment there have been a number of environmental issues recently in the UK which have affected the retail sector. These have include increasing more frequent floods ( sell Bulletin, 2013) and poor sales due to snow storms and the failure of local governance to prepare for periods of inclement weather (Hall, 2011).Other aspects of the environmental analysis require firms to consider their own impact upon the environment. In general terms, the literature (Parsons and MacLaran, 2009) considers that consumers are becoming increasing aware of the impact of businesses upon their environment. As such, if businesses are to confine customer loyalty and avoid negative backlas hes, then they must seek to minimise their impact upon the environment. In the retail sector, this may include reducing waste, running more efficient transport operations and implementing ethical sourcing policies. While failure to comply with such consumer demands may result in a negative consumer backlash, with the adoption of the right approach, high environmental credentials can be used to add esteem to a product or service. Such an example is seen in the Marks and Spencer (2013) and Body Shop business models in the retail sector.ConclusionHaving reviewed the key factors within the macro level environment as presented in the PESTLE framework, it is possible to come to a number of conclusions in relating the model to Next and its UK operations. On the one hand, it would appear that the external environment is a significantly challenging one for Next with the prospect of further poor economic performance and a emergency to comply with what may be seen as a relatively tough legis lative environment. However, the PESTLE factors would also seem to indicate that there are some large opportunities for Next in the UK. Such opportunities include the ability to borrow at low pursuance rates to fund capital expansion and increased opportunities to link technological developments to changes in the social model of society in order to drive more sales through web based platforms. Other factors such as changing technologies and increases in diversity may be seen as neither positive or negative intrinsically but pipe down require some change on the behalf of Next. Having piddleed these conclusions, the final opinion of the writer is that the external environment is essentially neutral for Next at the moment and that the success of the business will be largely dependent upon whether managers of the business capitalise upon the stated opportunities or allow the quarrels to see Next becoming some other casualty of the death of the high street.BibliographyArnold, G. (2 008). Corporate financial management. quaternate ed. Harlow FT Prentice Hall.BBC News. (2012). UK economy in double dip recession. unattached online at http//www.bbc.co.uk/news/business-17836624 Accessed on 18/01/13.BoE. (2010). Bank of England concurs bank rate at 0.5% and the size of the asset purchase program at 200 billion. available online athttp//www.bankofengland.co.uk/publications/news/2010/084.htmAccessed on 18/01/13.Bratton, J, Gold, J. (2007). Human resource management conjecture and practise. 4th ed. Basingstoke Palgrave Macmillan.CIA. (2013). World fact book UK. Available online athttps//www.cia.gov/library/publications/the- creative activity-factbook/geos/uk.htmlAccessed on 18/01/13.Pilbeam, S, Corbridge, M. (2010). tidy sum resourcing and talent planning. 4th ed. Harlow FT Prentice Hall.Curtis, E, Watson, H, Sephton, L. (2007). Fashion retail. 2nd ed. New York John Wiley and Sons.FT. (2012). UKs Euro trade success under attack. Available online athttp//www.ft.c om/cms/s/0/736bd72a-3c9a-11e2-a6b2-00144feabdc0.htmlAccessed on 18/01/13.Goodley, S. (2013). Jessops goes into administration, putting 2,000 jobs at risk. Available online athttp//www.guardian.co.uk/business/2013/jan/09/jessops-verge-administration-jobs-riskAccessed on 18/01/13.Gov UK. (2013). National minimum wage rates. Available online athttps//www.gov.uk/national-minimum-wage-ratesAccessed on 18/01/13.Grant, R, M. (2008). Contemporary strategy analysis. 6th ed. Oxford Blackwell Publishing.Hall, J. (2011). Snow costs Next and HMV 42m in unconnected Christmas sales. Available online athttp//www.telegraph.co.uk/ pay/newsbysector/retailandconsumer/8240799/Snow-costs-Next-and-HMV-42m-in-lost-Christmas-sales.htmlAccessed on 18/01/13.Ivancevich, J, M, Konopaske, R, Matteson, M, T. (2010). Organisational behaviour and management. 9th ed. New York McGraw Hill Irwin.Liff, S. (1997). Two routes to managing diversity individual differences or social group characteristics. Employee relation s. Vol. 19. No. 1. pp11-26.Marks and Spencer. (2013). Plan A Doing the right thing. Available online at http//plana.marksandspencer.com/we-are-doing/sustainable-raw-materials/stories/6/ Accessed on 14/01/12.Next. (2012). Annual report 2012. Available online athttp//ir2.flife.de/data/next/igb_html/index.php?bericht_id=1000007index=lang=ENGAccessed on 18/01/13.Parliament UK. (2012). Aging population. Available online athttp//www.parliament.uk/business/publications/research/key-issues-for-the-new-parliament/value-for-money-in-public-services/the-ageing-population/Accessed in 13/01/13.Retail Bulletin. (2013). Its time for retailers to prepare for the worst and adapt to climate constitutionals. Available online at http//www.theretailbulletin.com/news/its_time_for_retailers_to_prepare_for_the_worst_and_adapt_to_climate_extremes_07-01-13/ Accessed on 18/01/13.Shepherd, J. (2010). Englands schools are becoming more diverse. Available online athttp//www.guardian.co.uk/education/2010/jan/20/ schools-more-diverseAccessed on 18/01/13.Syal, R. (2012). Amazon, Google and Starbucks criminate of diverting UK profits. The Guardian Newspaper. Available online athttp//www.guardian.co.uk/business/2012/nov/12/amazon-google-starbucks-diverting-uk-profitsAccessed on 18/01/13.Telegraph. (2012). Budget 2012 familiarity tax cut will boost UK but not enough. Available online athttp//www.telegraph.co.uk/finance/budget/9158950/Budget-2012-Corporation-tax-cut-will-boost-UK-but-not-enough.htmlAccessed on 24/11/12.Tutt, L. (2012). Market report 2012 Gambling and betting. Key Note. Oct 2012.World Bank. (2012). GDP annual growth %. Available online at http//data.worldbank.org/indicator/NY.GDP.MKTP.KD.ZG Accessed on 12/01/13.Zarrella, D. (2010). The social media marketing book. California OReilly Media. railway car Sector Analysis Five Forces and SWOTAutomobile Sector Analysis Five Forces and SWOT1. Overview of the auto sectorFive forces analysisCompetitive Rivalry between Existing Players HighCompetition between existing automobile companies is high. Although the automobile market was dominated by the lead spoilt auto manufacturers in US, Toyota and Honda in Japan, the short letter is changed. With the growing demand in emerging market, the emerging competitors in China and India may drive an intensified price competition. However, the competition could also focus on the safety, warranty and financial services etc.Threat of New Entrants MediumAlthough the entrant barrier is high for the automobile industry because the requirement of capital and technology, an increasing number of automobile manufacturers are emerging in China and Asia due to the economic expansion and growing demand. However, these automakers are in the development status and may not catch up the leading technology in Japan and US, so the threat from new entrants is medium.Threats of Substitutes LowCustomers could choose to convert to transportation means other than automobile such as bicycles, b uses and subways. However, the automobile is still the favourite condescension the relevant high cost than other stimulate uped transportation means because its flexibility, comfort and convenience. bargain Power of Suppliers LowIn automobile industry, the component supplier has little talk terms big businessman because the manufacturer could switch to other suppliers easily. On the other hand, the components are generally low value and the suppliers find it difficult to bargain with automakers.Bargaining Power of Customers HighThe competition in the automobile industry is intense as mentioned above. So the customers have many choices on the brands and models. Customers care about the quality, price, safety, comfort, appearance of the car. Recently, customers are also more and more bear on about the environmental effect of the automobile and the energy efficiency. So the customers get more and more bargaining power in automobile industry.2. Toyota Motor federation2.1 Overview of the company caller-out penToyota Motor Corp. is one of the largest and leading automobiles manufacturers in the globe. It operates in three main business segments the two biggest are automobile and financial services whereas the third one is comprised by many smaller other divisions. It is spread worldwide as it has 50 manufacturing facilities in 27 countries and regionsToyota designs, manufactures and sales passenger cars of several types and utilities, trucks, tractors and material handling equipment, minivans and other car accessories. Its products can be divided into 2 main categories, conventional and hybrid fomites. The company sells its products under Toyota, Lexus, Hino and Daihatsu brandsThe company is also engaged in the financial industry as it provides financing to its customers and dealers. It is also involved in housing, marine, e-commercial, ITS and biotechnological activities.Toyota sells its vehicles in more than 170 countries and regions worldwide. Toyotas pr imary markets are Japan, North America, Europe and Asia. It is headquartered in Toyota City, Japan and industrious around 316,121 people as on March 31, 2008 strategy AnalysisToyotas strategy can be summarised under three key principles growth, efficiency and stability. These are the three priorities the companys management will pursue to earn future sustainable growth and increase the economic value.Growth will be achieved through never-ending investment in general in hybrid vehicle segment to meat the increasing demand. Efficiency is mainly focused on cost management and further reduction in order for the company to be able to provide high quality products in affordable prices and maintain its competitive advantages. Stability will be ensured by maintaining a solid financial base. Within the economic downturn it is important for Toyota to maintain sufficient liquidity in order to continue to finance its investments in research and development of new technologies, which is an in tegral and essential part of the companys advantages. coadjutor GroupAs Toyota operates in the global market its competitors come from all around the world. Its major competitors are BMW AG, DaimlerChrysler AG, Fiat S.p.A., carrefour Motor Company, customary Motors Corporation, Honda Motor Co. Ltd., prostate specific antigen Peugeot, Renault S.A., Volkswagen AG and many othersSWOT AnalysisStrengthsWeaknessesStrong overall financial performanceStrong nature and qualityStrong position is Asian marketResearch and developmentProduction pipeline system and cost managementDiversified product portfolioFinancial services are still undeveloped abundant expenses on pensions and post-retirement benefitsOpportunitiesThreatsIncreasing demand for hybrid and environmental-friendly carsExpansion in emerging Asian marketsFinancial and other non-auto division developmentNew car modelsGlobal economic crisisStrong competition in self-propelled industryYen and US dollar exchange ratesTight environme ntal regulations on vitamin C emissionsProblems with specific components of sold cars. (Recent brake problem)2.1. Key Financials Analysis31/3/200931/3/200831/3/200731/3/200631/3/2005gross revenue207,852.40264,120.58202,821.01178,294.05173,443.60 direct Income-4,667.5222,809.8218,959.8415,919.5115,192.39 clear up Income Available to greenness-4,423.7917,259.0513,923.6211,629.6310,950.45Total Assets292,725.95324,979.61275,051.76242,604.35227,515.08Total Liabilities185,398.39199,132.47169,488.89148,104.55138,230.49Common Equity101,865.07119,249.79100,242.1589,502.9484,563.86Net Cash cling Operating Activities14,724.726,357.627,783.522,136.222,144.6* IMPORTANT depression year to report losses* Stable increase in sales Decline in 2009 greatly affects income* Severe decrease in cash flow from operating activities, nearly 50%* Very big difference between sales and operating income points out implike cost expenses for the company. As this differences is constantly increasing it is no t far from the truth to say that Toyota is gradually loosing its competitive advantages in cost efficiency against its competitors.* General trend in key financial s shows a steady and permanent increase until 2008 and a sharp decline in 2009, due to severe problems of economic recession and its great impact on automobiles industry.This trend applies for almost all financial s, pointing out that the companys performance as a whole followed a movement like this.2.3. Multiples analysis31/3/200931/3/200831/3/200731/3/200631/3/2005 footing To Earnings-22.439.1914.7415.2511.23Price To Book0.971.322.041.971.44Price To Cash conflate7.414.837.837.805.87Price To gross sales0.50.70.81.00.7* Multiples follow companys general trend, namely increase until 2007 and then decreasing sharply* unvarying with overall picture of company, multiple analysis show the economic downturn of the entity from 2007 onwards* Point to mention negative P/E ratio. Markets expectation about company looks really sl im. The economic crisis, alongside with its severe problems generating income and its recently damaged reputation, create really unfortunate future prospects for Toyota. The negative P/E ratio and specifically its magnitude (-22) implies that nobody is neither willing to pay to buy the companys share nor expecting any profit generation.* Very sharp decline as well 31.62 units is something passing noticeable. If we focus on decline itself, it shows an extremely quick unfavorable turn of the market towards the company.2.4. Companys performance31/3/200931/3/200831/3/200731/3/200631/3/2005Profitability production on Equity-3.9814.4914.6814.0013.60Operating Profit Margin-2.258.649.358.938.76Asset UtilizationTotal Assets Turnover0.710.810.740.730.76Net Sales % Working swell28.93180.701412.6229.7815.30GearingEBITDA / come to Expense20.9486.1977.33153.70146.20Long term Debt/ Common Equit62.6350.4052.9253.4155.44Valuation InvestmentEarnings Per sell-1.415.434.343.573.32Dividend Yield Close3.212.821.591.401.63 liquid stateQuick Ratio0.810.770.760.810.87Current Ratio1.071.011.001.071.15* Negative profitability in 2009* Fluctuating sales/working capital as a result of fluctuation if investments (working capital)* Gearing increase in 2009 at the alike(p) time with high decrease of interest cover* Stable and quite low liquidity2.5. Cash run analysis31/3/200931/3/200831/3/200731/3/200631/3/2005Cash extend Operating Activities14,724.726,357.627,783.522,136.222,144.6Cash Flow spend Activities(12,265.3)(34,254.0)(32,727.4)(29,704.4)(28,591.6)Cash Flow Financing Activities6,967.46,242.77,565.67,716.83,917.0Effect of exchange rates-1,294.04-749.27218.18604.94232.09Net Cash Flow8,132.86-2,402.992,839.91753.58-2,297.85* Severe decrease in cash flow from operating activities, nearly 50% which vividly affects its operating income* Extreme decrease in investing activities around 70%, probably caused by cash paucity and policy change. The company issued a new project with m ain goal to improve profits and cover operating expenses and as a result we see a large negative impact in new investments.* Financing activities exhibit a stationary trend over the past few years indicating the stable financial policy of the entity.* Adverse effects of exchange rates during the last two years indicating the risk the company runs because of the Yens depreciation to the U.S dollar and the Euro.2.6. Stock PerformanceThe companys share performance seems to move fit in to the index, with the trend to over perform it constantly. We can see the decline of the shares price, which started right before the end of 2008, chase the global economic recession. At the turning point, which is in the beginning of 2009, we observe a relatively high trading volume, probably indicating the forthcoming upward movement. It is also really significant to point out the extreme high trading volume observed during the first months of 2010, followed by a new decline of the shares price. This reflects the problems that Toyota is approach nowadays. There is a considerable lack of trust from the market towards the company which is mainly caused by its in earnest damaged reputation and loss of quality.3. crossover Motor Company3.1 Overview of the companyA . Company profileThe group operates in two segments Automotive and Financial Services. For the automotive segment which consists of carrefour, Lincoln, Mercury and Volvo has a main operating activity in manufacturing, sale and service of component for cars and trucks.The Financial services segment is include of financing, insurance and leasing regarding to cars, trucks, industrial equipment, construction equipment and other activities. The company has operation in North America, second America, Europe, Africa and Asia- Pacific.B. Strategy Analysis One FordThe Company has initiated the new strategy called One Ford which has detail as followo ONE TEAM focuses the significant of team work in order to reach the automotiv e leadership. The measurement is satisfactory of business partners, employees, investors, and related companies.o ONE PLAN The four-step plan has been naturalized which composed of balance between cost structure and revenue develop new product follow customer preference develop balance sheet status and finance the plan and cooperation around the world to leverage companys resources.o ONE GOAL That is to create an exciting and viable company with profitable growth for all.Ford has started the restructuring business process before the economic crisis which the Company has garnishd the excess substance, unopen some unprofitable plants and lower excess workforce. In addition, Ford has improved the product line in term of higher quality, more safety, use less energy and more economic.* Affordable Fuel miserliness Focusing on deliver fuel efficiency engine to the market. For example, the 2010 Ford Fusion is now Americas most fuel efficient midsize sedan for both the hybrid and conven tional gasoline models.* Electrification strategy plan to bring pure batteryelectric vehicles, next-generation hybrids and a plug-in hybrid to market quickly and more affordably over the next four years.* synthetic rubber leadership Ford got totaling 16 models picked from the Insurance Institute for Highway safe which more than other brands.* EcoBoost railway locomotive delivers significant gains in fuel economy along with a great performance drive feel.C. comrade GroupFords peer group is Daimler AG, Fiat Spa Honda Motor Company Limited, Motors Liquidation Company, Nissan Motor Company Limited, Toyota Motor Corp and Volkswagen AG.D. Fords SWOT AnalysisStrengthsWeaknessesl Wide geographicOperate throughout the world and has a strong market in North America, Europe and Asia. Sales of each region of 2008 are 49%, 39% and 12% respectively. The well diversified market of ford reduces the risk of economic problem in specific area.l Brand royaltyFord has renowned reputation about qualit y and also owns other renowned brands such as Lincoln, Mercury and Volvo.l Quality carFord owns totaling 16 models of car that rated as safety car by the Insurance Institute for Highway Safetyl Product RecallExperienced many recalled products due to the quality of defective cruise retard switch which may cause fire. Even though there is no fire cases reported but the Companys reputation is negative affected.l Negative operating resultl Low gross meteGSKs long-term debt increased by 115.5% in 2008, which may lead to problems such as heavy interest payment, risk of having too little working capital and even increasing possibilities of bankruptcy.l Too much long-term debtThis may lead to problems such as heavy interest payment, risk of having too little working capital and even increasing possibilities of bankruptcy.OpportunitiesThreatsl Expanding market in emerging marketFord has a plan to go its sale in the emerging market which has great buying power in the future.l Eco-friendly engineFord has high reputation in the eco-friendly engine such as hybrid engine which has very promising market.l Fuel efficiencyFord found another opportunity in the market for fuel-efficient in small and middle car.l High competition due(p) to new competitor, lower demand and excess capacity.l Economic crisisEconomic crisis and regression in the States where is the main market of Ford caused severe effect to the Company.3.2. Key Financial AnalysisSource ThomsonFinancialscoring Factor 1,000,000 USDCurrency USD12/31/0812/31/0712/31/0612/31/0512/31/04Net Sales or Revenues146,277.00172,455.00160,123.00177,089.00171,652.00Operating Income3,518.008,031.00-8,167.007,010.0010,681.00Earnings Before Interest And Taxes (EBIT)-4,885.006,792.00-6,689.009,354.0011,669.00Interest Expense On Debt9,682.0010,927.008,783.007,643.007,071.00Net Income Available to Common-14,681.00-2,764.00-12,615.002,441.003,634.00Total Assets215,773.00276,459.00275,337.00264,891.00294,447.00ST Debt Current Portion of LT Debt63,972.0061,052.0062,456.0059,904.0066,433.00Long Term Debt90,716.00107,478.00109,593.0094,428.00106,540.00Total Liabilities231,889.00269,410.00277,643.00250,812.00277,525.00Common Equity-17,311.005,628.00-3,465.0012,957.0016,045.00 Net sales decreased from 2007 about 15% as the economic crisis in the State which is the main market of Ford. The Company has had substantial losses from operation since 2006. Ford has high outstanding of long-term loan which may causes liquidity deficiency or bankruptcy if the Company still has continuously loss in the future. As a result of net losses from operation since 2006, Ford has had negative shareholders equity since then.3.3. Multiples AnalysisMONTHLY HISTORICAL MARKET PRICESY2008Y2007Y2006Y2005Y2004January6.648.138.5813.1714.54February6.537.917.9712.6513.75March5.727.897.9611.3313.57April8.268.046.959.1115.36May6.808.347.169.9814.85June4.819.426.9310.2415.65July4.808.516.6710.7414.72August4.467.818.379.9714.11 family line5.208.498.0 99.8614.05October2.198.878.288.3213.03November2.697.518.138.1314.18December2.296.737.517.7214.64.5 Year5 YearVALUATIONY2008Y2007Y2006Y2005Y2004Y2003Growth RateAverageP/E Ratio (High)-1.36-6.93-1.4112.949.6334.66-1.042.57P/E Ratio (Low)-0.16-4.75-0.906.647.0113.16-1.01P/E Ratio (Close)-0.35-4.81-1.126.778.1332.00-1.011.73Price/Sales0.040.080.090.090.180.18-0.800.10Price/Book Value-0.322.62-4.141.141.742.62-3.940.21Price/Cash Flow0.441.241.760.701.111.35-0.671.05Price/Working Capital0.000.000.000.000.000.00-0.167.78TARenderChart.png* P/E ratio turned to be negative since net losses from operation since 2006 and also the market price has continuously decreased from 8.58 in the beginning of 2006 to 2.29 at the end of 2008.* P/B ratio had negative value in 2008 from the negative book value of Ford.3.4. Companys performanceWorldscopeCurrency USDPROFITABILITY RATIOS12/31/0812/31/0712/31/0612/31/0512/31/04Return On Invested Capital0.251.921.952.953.32Operating Profit Margin2.432.943.125.026 .54ASSETS UTILIZATION RATIOSAsset Turnover0.630.600.590.590.58Net Sales Pct Working Capital10.626.215.6811.0641.64LEVERAGE RATIOSEBITDA / Interest Expense-0.500.62-0.761.221.65LT Debt Pct Common Equity-76.88233.49316.381,268.121,229.66 liquid state RATIOSQuick Ratio1.051.081.121.081.03Current Ratio1.211.251.301.251.19 Profitability ratios do not show the good performance as Ford has had net loss from operation since 2006. Leverage ratios also go in the same trends as a result of negative equity and high outstanding balance of long-term loan. Liquidity ratios present that Ford still can generate cash to supply its working capital but if consider to the long-term debts Ford may cannot provide enough cash to support its debt payment since these ratios are still in the low range compared with its debt outstanding amount.3.5. Cash flow analysisSource ThomsonFinancialscoring Factor 1,000,000 USDCurrency USD12/31/0812/31/0712/31/0612/31/0512/31/04Net Cash Flow From Operating Activities-17 9.0017,074.009,609.0021,674.0022,591.00Net Cash Flow From Investing Activities3,143.006,457.0024,862.00-7,462.008,567.00Long Term Borrowings42,163.0033,113.0058,258.0024,559.0022,223.00Inc(Dec) In ST Borrowings-5,120.00919.00-5,825.00-8,591.004,937.00Reduction In Long Term Debt46,299.0039,431.0036,601.0036,080.0036,021.00Net Cash Flow From Financing Activities-9,104.00-5,242.0015,273.00-20,651.00-14,226.00 The Company cannot generated sufficient cash from operation and had negative net cash flow from operation. that the Company had to pay interest expenses for loans and had high net cash paid for financing activity.3.6. Stock market performance Ford shares have been traded lower than SP500 since 2001 until 2010. Especially since 2006 that the operating results had continuous substantial losses.4. Honda Motor Company Limited4.1. IntroductionHonda Motor is one of leading automobile manufacturers in the world. The company develops, manufactures and markets automobiles, bicycles and po wer products. The company also provides financing services to the dealer and customer for the sale of products. Honda has global operations in areas including North, South and Central America, Asia, Middle East, and Europe with its headquarter at Tokyo in Japan.Strategy analysisHonda Motor has three strategies. They are Staying Close to Customers, glocalization and flipper region strategy. Staying close to customers mean the maintenance of the qualities of a small company, Provide value product with flexibility and efficiency as a small company does and maintain global reach and technology advantage as a large company does is the drive to the future growth of Honda. Glocalization means the effort to launch subsidiaries in regions that could best meet the demand of local customers and expand the subsidiaries as the local demand increases. Five region strategy requires the operations focus on five areas the world. They are North America, South America, Europe/Middle East/Africa, Asia /Oceania and Japan. The management decisions are served to suit the situation in different areas. The advanced RD capacity equips the Honda to provide flexible products to adjust the need of these regions.Business activitiesThe company operates through four business segments the automobile business, labourcycle business, financial services, and power products.The automobiles business division manufactures passenger cars, multi-wagons, minivans, port utility vehicle, sports coupe and mini vehicles. Hondas automobiles use gasoline engines of three, four or six-cylinder, diesel engines and gasoline-electric hybrid systems. Honda also offers alternative fuel-powered vehicles such as natural gas, ethanol, and fuel cell vehicles. In 2008, the company sold 3,925,000 units of automobiles.The motorcycle business produces a range of motorcycles, including scooters, electric-motor-assisted bicycles, sports bikes and large touring cycles. Hondas motorcycles use gasoline engines developed by Ho nda that are demeanor or water cooled, two or four cycled, and single, two, four or six cylinder. In 2008, the company sold a total of 9,320,000 units of motorcycles.Honda offers a variety of financial services to its customers and dealers through its widespread finance subsidiaries.Hondas power products manufactures a variety of power products including power tillers, portable generators, general purpose engines, grass cutters, portable engines, water pumps, snow throwers, power carriers, power sprayers, lawn mowers and lawn tractors (riding lawn mowers). Honda also manufactures the major components and parts used in its products, including engines, frames and transmissions.Peer GroupThe globalization of the Honda motor makes it face the global intense competition. The competitors include Ford Motor, Nissan Motor, Toyota Motor, Volkswagen etc.(in the automobile sector) and Yamaha Motor, Harley-Davidson etc.(in the motor vehicle industry).SWOT AnalysisStrengthsWeaknessesl Global d iversificationThe company operates a total of 397 subsidiaries, and 104 affiliates all over the world.l Leading market position and good brand imageHonda is one of the largest vehicle and motorcycle manufacturers over the world with strong brand strength.l Strong Research and Development capacityThe large investment in RD could equip Honda the capability to differentiate itself in the intense competitive market.l Declining Market Share in SectorEvident of decline in unit sales and lost of market shares in the automobile industry.l Low employee productivityHonda has a weak proportion on the number of employees and the revenues.OpportunitiesThreatsl Growing demand in Asian marketHonda has taken measures to occupy the capacious potential Asian market.l Growing demand in hybrid electric vehiclesThe companys emphasis on hybrid technology innovation will capture market trends as an opportunity to enhance its market share.l Global competitionThe competition would result in price pressure and thus reduce the profitability.l Tightening emission regulationsThe emission standards will cause Honda to occur more costs in product development, testing and manufacturing process design.4.2. Key Financials AnalysisSource ThomsonFinancialCurrency JPYScaling Factor gazillion JPY31/3/200931/3/200831/3/200731/3/200631/3/2005Sales10,011,241.0012,002,834.0011,087,140.009,907,996.008,650,105.00Operating Income189,643.00953,109.00851,879.00730,889.00630,920.00Net Income Available to Common137,005.00600,039.00592,322.00597,033.00486,197.00Total Assets11,579,494.0012,439,610.0011,964,917.0010,533,995.009,187,808.00Total Liabilities7,449,150.007,753,539.007,359,399.006,320,785.005,828,513.00Common Equity4,007,288.004,544,265.004,482,611.004,125,750.003,289,294.00Net Cash Flow Operating Activities3836411126918904525576557746624l The operating income reduces dramatically, approximately 80% from the previous years result. This result is caused by the severe decline in the sales and the co nsequently increase in inventory cost.l Before 2009, all the s are in a healthy and steady upward trend. further in the fiscal year ended at 31st march 2009, the volumes all experienced a dramatic decline. They are caused by the sales plunge.l The declines trends are due to the economic recession caused by the financial crisis because the demand in Japan, US and Europe shrank. The automobile industry faces a severe challenge and most companies in the sector reported unsatisfactory results.4.3. Multiple analysis31/3/200931/3/200831/3/200731/3/200631/3/2005Price To Earnings30.78.610.3Price To Book1.01.11.61.5Price To Cash Flow4.64.26.8Price To Sales0.40.40.70.70.6l Although the P/E ratio increases significantly, its not a good sign. The increase in P/E ratio is not due to the high expectation of the investors and the fundamentals such as growth opportunities. Instead, the soaring P/E is the result of the plummeting earnings to common shareholders.l The price to book ratio and price t o sales declined in 2008 and 2009, indicating the declining