The CPI. Financial Analysis

The CPI should utilize the techniques of financial analysis to determine if their efforts can generate a considerate amount of revenue. It should engage into prospects of growth that can maximize the value of the firm and increase the amount of wealth by the shareholders (Cho, 1987).Advertising We will write a custom research paper sample on The CPI. Financial Analysis specifically for you for only $16.05 $11/page Learn More The future earnings of the firm can be determined by the ratio of price to earnings; which compares the selling price of the stocks earning per share (Cho, 1987; Forgang Einolf, 2007). The recent trading price of the stock was $58.87 with a ratio of price to earnings of 24.06 and $2.45 as the earnings per share (Company, 1985). At the end of the year 2012, the P/E was 10.56, the trading price was at $54.43 and the earnings per share at $5.15, this is a clear indication that the investors are paying more of the share per stock in the current year and their earnings are at a lower rate (Company, 1985). The Colgate Palmolive may be overvalued. A high price per earning indicates that the investors are willing to pay more of the stocks because of their anticipation of a higher growth rate in the near future. A low price per earnings makes the investors to assume that the earnings in the future may be constrained (Company, 1985; Cho, 1987). In comparison with the Colgate Palmolive, an assumption of the CPI’s P/E ratio is given as 7 with 14 as the industry average. The current P/E of Colgate Palmolive is 24.06. For CPI to attract investors, they must strive to meet the industry average of 14 (Danker, 1971).Advertising Looking for research paper on business economics? Let's see if we can help you! Get your first paper with 15% OFF Learn More If it were to grow using its own cash reserves, then the P/E and the earnings per share would result in an improved value of the firm. If additional equity a nd fund growth are issued, there will be a dilution in earnings per share causing a decrease that is short term to the shareholder wealth and the price per earnings (Danker, 1971; Company, 1985). The CPI is restricted only to some certain regions of the country limiting the growth and the options to the investor. As it continues to investigate the options of expansion, the P/E ratios of other competitive companies can be used as a benchmark in attaining a maximum value of the shareholder’s wealth (Danker, 1971). Inelastic, elastic and unitary price elasticity all are linked to the concept of price elasticity. â€Å"They usually measure the demand for the goods and compare them to the fluctuation in the price of the goods† (Danker, 1971, p.21). â€Å"The demand for any good is measured by determining whether it is unitary, elastic or inelastic† (Boone, 2012, p.43). The elasticity usually varies between products because products differ in the rate of demand. In el astic price elasticity, the demand is usually greater than the price, the good or the demand for the product.Advertising We will write a custom research paper sample on The CPI. Financial Analysis specifically for you for only $16.05 $11/page Learn More â€Å"When a product is elastic, the changes in price level lead to a huge change in the product demand† (Boone, 2012, p.43). Many of the services offered and goods are usually elastic (Boone, 2012; Danker, 1971). In the determination of elasticity of demand, percentage change in quantity of a product is divided by the change in price percentage. â€Å"After the calculations are made and the equation is equal to one or greater, then the product is usually considered elastic†(Yu, 2005, p.21). The opposite of elastic demand is the inelastic demand. If change in demand is less than one, then the product is considered to have inelastic demand. Necessities are usually the products that are consi dered inelastic change in price level does not usually affect the demand of the product. â€Å"Unitary goods are goods that result to no effect on the demand even when there is a price change† (Boone, 2012, p.43). Very few goods are considered unitary (Boone, 2012; Yu, 2005). In the determination of exposing the currency revenue, the VP of marketing and the CFO need to ask themselves; will exposing the currencies revenue place the CFI in a better position or will it continue to give a lower return to its shareholders? (Bernstein Griffin, 2006). The CFO should put into consideration the value of its shareholders first before exposing the revenue currencies. If exposing the revenue will place the business in a better place and the shareholders earn maximum interest then my advice for the option (Bernstein Griffin, 2006; Yu, 2005).Advertising Looking for research paper on business economics? Let's see if we can help you! Get your first paper with 15% OFF Learn More Most businesses do not operate in a vacuum. When making plans of the business, one has to consider the world, country, state and the neighborhood. The local factors are mostly considered as the macroeconomic factors while the international and national trends are the macroeconomic factors (Sloman, 2005). When putting into consideration the macroeconomic trends, one must look at how the overall business environment is (Forgang Einolf, 2007). If there is increased rate of unemployment, bankruptcies and foreclosures in homes, then the consumers may have a bad attitude towards making any purchase. These can be used in decision making by scaling down of plans of purchasing inventory a business being committed to expansion projects that are costly (Bernstein Griffin, 2006; Sloman, 2005). The local trends in a region or neighborhood can have an impact on any business. One should not only consider the economic trends of the premises of the business but also the environment for the consume rs (Fosin Mlambo, 2001). The micro conditions usually have a direct effect of the operation of any business. The decisions usually are to be based on the falling and rising expectations of the consumers. A business can survive if it tailors if it tailors its marketing options to lower expectations in order to cut down on the expenses (Fosin Mlambo, 2001; Sloman, 2005). The media usually distorts the bad economic times both in the local and the international levels. When these are done, the business needs to make its own observations (Forgang Einolf, 2007). The bad economic news usually presents an opportunity for businesses. The company is usually a mini economy. The trends in sales, profit and expenses should be put into consideration. To acquire this, the business should be well positioned in the market which is competitive (Fosin Mlambo, 2001; Sloman, 2005). News about the world or neighborhood should not lead into making decisions that may undermine the success of the busine ss. People usually don’t stop buying in down trends but instead buy less. The change in buying habits can still lead a business into making a profit (Forgang Einolf, 2007). The business decisions must be balanced with the understanding of the economic trends and the experiences from interactions with customers. The business must develop a feel for the economic trends and also look at the opportunities that defy the trends (Forgang Einolf, 2007; Fosin Mlambo, 2001). The net income is usually obtained after all the deductions are removed from the companies’ revenue (Barr, 1993). For CPI the net income is Year 2012 2013 2014 2015 2016 2017 Revenue $30.10 $34.20 $38.10 $40.40 $45.60 $50.00 Operating expenses Selling, general, admin $16.10 $17.20 $18.90 $19.50 $21.40 $24.30 Depreciation $4.10 $4.40 $4.80 $4.90 $5.30 $5.70 Interest expense $0.45 $0.56 $0.69 $0.73 $0.78 $0.81 Taxes $1.10 $1.30 $1.70 $1.90 $2.00 $2.10 Total expense $21.75 $23.46 $26.0 9 $27.03 $29.48 $32.91 NET INCOME $8.35 $10.74 $12.01 $13.37 $16.12 $17.09 (Barr, 1993; Forgang Einolf, 2007) Cash flows Year 2012 2013 2014 2015 2016 2017 Operating cash flows future value $4.25 $6.34 $7.21 $8.47 $10.82 $11.39 Increase in fixed assets $1.30 $2.40 $0.90 $0.00 $4.90 $2.10 Free cash flows $2.19 $3.94 $6.31 $8.47 $5.92 $9.29 PVIF 0.943 0.89 0.816 0.735 0.681 0.666 Present Value Cash Flows $2.06517 $3.5066 $5.41896 $6.22545 $4.03152 $6.18714 (Barr, 1993) The Net Present Value This is usually the value of the net inflows that is generated by the project. These are usually the most reliable measure in capital budgeting as it accounts for the value of money in the form of time (Colander, 1995). Year 2012 2013 2014 2015 2016 2017 Net cash flow $2.06517 $3.5066 $5.41896 $6.22545 $4.03152 $6.18714 Present value factor 0.943 0.89 0.816 0.735 0.681 0.666 Present value of cash flows $1.947455 $3.120874 $4.421871 $4.575706 $2.745465 $4.120635 (Co lander, 1995; Forgang Einolf, 2007) The total present value of cash flows – 20.932006 Less initial investment – 18.000000 Net present value – $2.932006 The CPI has a positive net present value. This project is important to CPI as it enables the company to recover its initial outlay of $18.00. It also enables the company and their shareholders to meet their finance charge and as it generates an additional surplus of $2.93. The positive net present value shows an increase in the wealth of the shareholders. The dollar value of the NPV is important as this indicates that the value of the dollar is stable. These enable the firm to be able to meet all its expenditures (Barr, 1993; Colander, 1995). In making his decision, the CEO of the company has to put in mind the value of the shareholders. The shareholders are the ones who keep the firm stable and therefore should be in the forefront while making decisions. The working environment of the business is also a factor to be considered in making decisions (Sepp, 2012). The environment should be favorable to the consumers with adequate security. When the environment is unfavorable and the government is too much into a business, that business is likely to fail. The simplification strategies by the government are usually designed to reduce uncertainty and regulatory complexity. Making the economic environment in which a business operates safe for the consumers will also boost the operations of the business (Colander, 1995; Sepp, 2012). In conclusion, I would support the above mentioned project as it mainly considers increasing the shareholder wealth. The project has a positive net present value and this shows that a value that maximizes the company will develop exploit and develop many positive NPV projects as it can. This is usually called capitalization. References Barr, N. A. (1993). Poland : income support and the social safety†¦ by N A Barr. Washington, D.C: World Bank. Bernstein, M., Grif fin, J. M. (2006). Regional differences in the price-elasticity of†¦ by Mark Bernstein. Golden, Colo: National Renewable Energy Laboratory. Boone, L. (2012). Contemporary marketing, 2013 update. Mason, OH. Cengage learning. Cho, T. (1987). The general trading company : concept and strategy by Tong-sŏng Cho. Lexington, Mass: Lexington Books. Colander, D. C. (1995). Economics. Chicago:Irwin. Company, A. T. (1985). Arctic Trading Company. By Arctic Trading Company. Churchill, Man: Arctic Trading Co. Danker, W. J. (1971). Profit for the Lord: economic activities in Moravian missions and the Basel Mission Trading Company. Grand Rapids: Eerdmans. Forgang, W. G., Einolf, K. W. (2007). Managerial economics : an accelerated approach. Armonk, N.Y: M.E. Sharpe. Fosin, A., Mlambo, K. (2001). Business environment and investment in Africa†¦. By Augustin Fosu. Journal of African economies, 10( 2)2, 5-18. Sepp, J. (2012). The Economy and Economics after Crisis. BWV Berliner: Wissen schafts-Verlag. Sloman, J. (2005). The economic environment of business by John Sloman. Harlow : FT Prentice Hall. Yu, T. H. (2005). Essays on the Upper Mississippi River and Illinois Waterway and U.S. grain market. College Station, Tex: Texas AM University. This research paper on The CPI. Financial Analysis was written and submitted by user Taraji Whitfield to help you with your own studies. You are free to use it for research and reference purposes in order to write your own paper; however, you must cite it accordingly. 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Study of Brand and Brand Valuation Methods The WritePass Journal

Study of Brand and Brand Valuation Methods Introduction Study of Brand and Brand Valuation Methods Introduction  Organisation Background  Rationale for the Chosen TopicStatement of the Problem in Valuing BrandsResearch QuestionsObjectives of the DissertationLiterature ReviewWhat Is A Brand?What is Goodwill?What is Brand Equity?The Development of Brand Valuation:Brand Valuation Methods   Research Methodology, Data Collection Methods and Data AnalysisDesk Research  ETHICAL CONSIDERATIONS:ReferencesManuchehr Shahrokhi, Professor of Finance, Department of Finance, Craig School of Business, California State University-Fresno, California, USABibliographyRelated Introduction A company’s brand image (Goodwill) or brand valuation plays a vital role in the modern business world. This has lead to the valuation of brands, which was quite unheard of in previous decades.   In this dissertation I attempt to analyse and understand various brand valuation methods, its merits and the way it’s represented using the different accounting policies and / or methods across the various accounting bodies worldwide.   The main objective of the dissertation is to understand various valuation model that will abide the various accounting bodies as well as satisfy the individual country’s rules and regulations. The roots of branding is evident in ancient civilisations and some study shows even before Birth of Christ and this   is evident from archaeological excavations in which we can find certain symbols or markings in pottery, coins and Arts. It was not until the 12th century trademarks were used to identify each manufacturer’s goods as well as measure their quality. In other words in the early times, brand names were not only used to distinguish between different goods which are similar but also distinguish their quality (Sudharshan, 1995). The value of a brand is indicated by how much money a company pays in order to acquire them. These may vary from brand to brand, however companies are prepared to pay a good price for top notch brands. For an example Procter and Gamble paid 2.6 times Richardson-Vicks’ book value, Nabisco sold for 3.2 times book value, and General Foods sold for 3.5 times book value (Business Week, 1995). This report will discuss the existing brand valuation methodologies and it’s significance in a company’s decision and require a sound marketing and financial view. Generally the marketing and financial approaches in this matter differ largely and today’s competitive market environment has made these two professions to work together in this regard. Brands are widely viewed as performance measures and important element decision making process. Many large corporate companies’ demands royalties from subsidiaries for using their brand name and this has made authorities such as tax and financial regulators to standardise the process of brand valuation. Brand valuation will be an important criterion to evaluate corporate performances in this century. Investors increasingly demand for greater disclosure of brand valuation and it’s the financial manager’s duty to ensure that such information’s are adequately provided with the investors. This has brought to adopt a standard brand valuation technique / method in company accounts.   Organisation Background This dissertation is not about a specific organisation brand valuation. It aims to cover many blue chip organisations accounting treatments in Brand Valuing. Mainly this study will involve understanding the accounting treatment of accounting bodies and accounting standards etc. The dominant model of branding in the twentieth century was the manufacturer as mega-advertiser. McKinsey (1994) believes that the traditional model of branding is no longer the only way, nor can it dominate in the future. According to Murphy (1990), brand is a complex phenomenon: â€Å"not only it is the actual product, but it is also the unique property of a specific owner and has been developed over time so as to embrace a set of values and attributes both tangible and intangible which meaningfully and appropriately differentiate products which are otherwise very similar.† These changes have prompted today’s business world to put a value into branding and thereby has the created the concept of Brand Equity or Goodwill of a company.   Rationale for the Chosen Topic In realisation of various valuation methods and different accounting bodies treat the Brand values in the Balance Sheet differently at large. This dissertation will answer â€Å"How companies calculate and disclose brand value in financial statements†. Weather researcher will able to identify and develop a proper Brand Valuation formula in this dissertation? Statement of the Problem in Valuing Brands Since the late 1980’s, it has become essential that a company recognises a brand as an intangible assent and as a result include them in their financial statements. The main reason for this was a wave of acquisitions that took place in that era that helped exposes the hidden value in highlys include, Nestlà © buying Rowntree, Danone purchasing Nabisco’s European business and Grand Metropolitan buying Pillsbury. However, accounting bodies throughout the world differ over how brand valuation should be done. The professional bodies have appeared uncertain as how to resolve the issue of brand valuation. It happens because of the lack of understanding and guidance over accounting treatment of brands. Much of the uncertainty associated with brands is regarding the relationship with goodwill and other intangible assets. There is real confusion about the distinction between brands and other assets such as goodwill or trademark. This difficulty leads to further problems when deciding how to measure and report them in financial statements. Research Questions In order to compile a report on Brand Valuation Methods I intent to find answers to the following research questions: What constitute Brand and Brand Equity? What are the problems in valuing a Brand? What are the available Brand Valuation methods? How does USA, UK and Indian Chartered Accounting Bodies value Brand? What is an acceptable and harmonized Brand Valuation model? Objectives of the Dissertation To understand the significance of Brands and how they have developed from time to time. To understand the Brand Equity Concept Different Valuation Methods in Valuing a Brand. To understand the Marketing and Finance perspectives of brand equity and how it will be presented and integrated, and their interrelationships in an Organisation. To analyse 4 financial accounts of large Blue Chip companies and their treatment as Intangible assets in the Accounts Literature Review What Is A Brand? â€Å"If this business were to be split up, I would be glad to take the brands, trademarks and goodwill and you could have all the bricks and mortar and I would   fare better than you†   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚     Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   (John Stuart, Former Chairman of Quaker Oats Ltd) This statement of John Stuart emphasise the importance of the brand. In other words a â€Å"name, term, sign, symbol, or design, or a combination of them, intended to identify the goods and services of one seller or group of sellers and to differentiate them from those of competition† is categorised as a Brand. Furthermore, a Brand also helps to create awareness, reputation, prominence, and more in the marketplace. What is Goodwill? Goodwill in financial statements arises when a company is purchased for more than the fair value of the identifiable assets of the company. The difference between the purchase price and the sum of the fair value of the net assets is by definition the value of the goodwill of the purchased company. The acquiring company must recognize goodwill as an asset in its financial statements and present it as a separate line item on the balance sheet, according to the current purchase accounting method. In this sense, goodwill serves as the balancing sum that allows one firm to provide accounting information regarding its purchase of another firm for a price substantially different from its book value. Goodwill can be negative, arising where the net assets at the date of acquisition, fairly valued, exceed the cost of acquisition. Negative goodwill is recognized as a liability. For example, a software company may have net assets (consisting primarily of miscellaneous equipment, and assuming no debt) valued at $1 million, but the companys overall value (including brand, customers, intellectual capital) is valued at $10 million. Anybody buying that company would book $10 million in total assets acquired, comprising $1 million physical assets, and $9 million in goodwill. Goodwill has no predetermined value prior to the acquisition; its magnitude depends on the two other variables by definition. What is Brand Equity? The goal of the brand leadership point is to create strong brands – but what is a strong brand? In Managing Brand Equity, brand equity is defined as the brand assets (or liabilities) linked to a brand’s name and symbol that add to (or subtract from) a product or service. These assets can be grouped into four dimensions: brand awareness, perceived quality, brand associations, and brand loyalty. These four dimensions guide brand development management and measurement. Brands are a key element, along with other intangibles such as intellectual property and staff skills and commitment. Often 40-75% of a company’s assets may be attributed to brands [Goodchild and Callow, 2001] Despite the above facts the Chartered Institute of Marketing 2003 state â€Å"Brands are emotive and you can’t measure emotion.† â€Å"The financial value of a brand is not interesting on its own; it’s what we can do to grow it that makes it interesting. The process of benchmarking a brand’s value involves understanding where that brand value comes from and supporting those areas to grow the strength of the brand.† [Shailendra Kumar, Future Brand, 2001] The Development of Brand Valuation: The technical knowledge of Chartered Accountants and accounting firms in valuing business valuations and applying discount rate, depreciation rates, appropriate tax rates etc was not developed in valuing a company Brand by accounting profession until recent time. This was mainly due to the fact that financial professionals lack commercial experience and to fully appreciate and understand how brands operate from the perspective of consumers and markets and retail distribution in a competitive context. This was an essential part in valuing a brand and without understanding the real valuation process any future predictions of the same will be no use because this valuation process will be carried out only by assumptions. And as a direct consequences provide no genuine benefit to business or investors alike. Despite the above fact, brand valuation methodologies have been developed and adopted in valuing brands recently and are now viewed as important business tool.   Only now, brand valuation and intangible asset valuation are given it’s importance after being taken seriously mostly due to USA financial reporting standards requiring acquired intangibles which can be separately identified and have separate economic lives to be valued and put on the balance sheet. International accounting standards will require UK (and other countries adopting IAS’s) public companies to do the same and this will be effective from January’2005. Additionally these intangibles require annual impairment testing to make sure their values have not been diminished. If they diminish in value then a write off to the profit and loss account is required. For example under new accounting standards AOL Time warner has written off $54 billion dollars. (AOL 2007 Annual Accounts) In the UK and Australia, accounting rules require companies to write off the goodwill obtained through acquisitions. The rules have often resulted in sizeable losses for acquiring companies in the year of acquisition. This happened because under these rules, the money paid in an acquisition over and above the fair value of identifiable assets is viewed as money lost without a compensating asset being acquired. However, this principle drew protests from a lot of UK companies. Those companies protested by capitalizing their acquired brands and arguing that they were not goodwill but identifiable assets. Some of the companies have gone further by capitalizing not only â€Å"acquired† brands but also the â€Å"home-grown† brands such as Cadbury. Brand Valuation Methods There are three methods for charging price premium on a branded product a)  Ã‚  Ã‚  Ã‚  Ã‚   Cost Method – On this method, the current value for historical expenses when creating a brand. b)  Ã‚  Ã‚  Ã‚  Ã‚   Market Method This approach looks into the transactions of brand. c)  Ã‚  Ã‚  Ã‚  Ã‚   Income Method In this approach, two methods are used to calculate the premium value: Discounted Cash Flow model Excess Earnings method.   Research Methodology, Data Collection Methods and Data Analysis In order to compile this dissertation, a Case Study/Desk Research based methodology has been used. Various company financial accounts have been verified with particular attent Primary data will consist information interviews, questionnaires etc. An in depth interview with a Brand Consultant is planned and interview will be conducted with Financial and Marketing Consultants of an Organisation. Secondary data will include data collection from annual reports, books, journals, articles and websites which give us an insight of how the companies have evolved from time to time and how did the company manage to build the brand and what strategies have they used in valuing a brand.   Both quantitative and qualitative data will be using in this research. Case studies the case studies will consist of a detailed study about various companies Brand Valuation Methods and the company from its beginning stage to the stage which it has attained now from the Desk Research. Analysis:   The various valuation methods will be explore and critically analysed in order to understand the advantages and disadvantages of each methods. Further how a Brand valued during Economy Boom had valuation done in Economy Recession period especially weather the Brand has been devalued to reflect the true picture. Apart from it this section also emphasizes on how the company attained this stage and about the competitive advantage and core competencies have bought them to this level. These analyses are undertaken with the help of the secondary and primary data. Desk Research Desk Research is the name given to finding published information which can include company Annual Reports, Financial details, Experts reports, Research Reports, Market statistics or comments and information about the issues in a marketplace. (Wikipedia   15.03.2011).With the widespread adoption of the Internet, use of published information (desk research) to scope a market is becoming increasingly common as a means of carrying out Market Researches. Traditionally using desk research to find information about potential customers, competitors and intermediaries in markets has been a time intensive process, often carried out on an on-going basis to cope with the slow delivery of paper-based material. With the Internet, vast seas of information have opened up electronically making desk research a practical tool for research, particularly in dynamic markets where data is quickly out of date. In this report the internet will play a vital part especially the Google search engine and the various sources of electronic journals since this published report stand as a verification source to the researchers Primary Research and various in-depth knowledge about the subject were explored. This is one of the major disadvantages of Desktop Research. Too much of information can easily distract and deviate the Research Objectives   ETHICAL CONSIDERATIONS: Research ethics relates to questions about how we formulate and clarify our research topic, the data collection and processing method and how we report our research findings in a moral and responsible way.   The appropriateness of a researcher’s behaviour in relation to the rights of those who become subject of their work or are affected by their work is referred to as research ethics (Saunders et al, 2007). Although all research methods have specific ethical issues associated with them, qualitative research is likely to have a greater range of ethical concerns compared to quantitative research. Most of the data that will be used in conducting this research will be quantitative data. The quantitative information’s are readily and publicly available without any form of moral or ethical intrusion.   Time Scale   TIMETABLE OF WORK               Week 1 – 2 Discussion with Supervisor about the direction and obtaining guidance Week 3 – 5 : Desk Top Research on Brand Valuation Models Week 6 – 8   Literature review on Branding and Study on IAS – Brand / Goodwill Week 9 11: Collecting Financial Data of 4 Blue Chip Company and its treatment on Balance sheet. Week 12 – 14: Organising interview with Financial controller of Large blue company’s view on Brand Valuation method. Week 15 16: Analyse the Collection of data and interview notes. Week 17 – 18 : Develop a Brand Value Model Week 19 – 21   : Finalising the Report Week 22 :   Binding and Submission of Report References Aaker, D.A. (1997), Should you take your brand to where the action is?, Harvard Business Review, . Aaker, D.A. (1996a), Measuring brand equity across products and markets, California Management Review, Vol. 38 No.3, pp.102-20. Aaker David A (1991), ‘Managing Brand Equity’, p.15, NY Free Press Allen, D. (1990), Creating value, the financial management of brands, in â€Å"Report of the committee on cost, profitability, for marketing† (Eds), Accounting Review, Supplement, Vol. 47 pp.575-615. Blackston, M. (1995), The qualitative dimension of brand equity, Journal of Advertising Research, pp.RC2. Bhattacharyya, D. K., (2003) Research Methodology, Anurag Jain for Excel Books, India. Cravens, K.S., Guilding, C. (1999), Strategic brand valuation: a cross-functional perspective, Business Horizons, Vol. 42 No.4, . Gill, H. (1995), Broad definition on brand and asset, Management Accounting Journal, . Kevin Lane Keller Strategic Brand Management (2006), 2nd Edition Kapferer, J.N. (1992), Strategic Brand Management: New Approaches to Creating and Evaluating Brand Equity, The Free Press, New York, NY., Manuchehr Shahrokhi, Professor of Finance, Department of Finance, Craig School of Business, California State University-Fresno, California, USA Mukherjee, D N (Nov –Dec, 1998), ‘Managing Intangible Assets’, Business World, p.772. Philip Kotler and Gary Armstrong: Principles of Marketing, Tenth Edition, Prentice Hall Zeff and Dharan, 1997 Readings and Notes on Financial Accounting Websites Brand Management www.brand.com (April 2011) Brand Finance Plc – www.brandfinance.com (April 2011) Wikipedia – www.wikipedia.com (April 2011) Bibliography John Murphy, 1990,   â€Å"Brand Valuation† Simon, C.J., Sullivan, M.W. (1993), The measurement and determinants of brand equity: a financial approach,

GUNNS AND THE AUSTRALIAN PULP AND PAPER MANUFACTURING INDUSTRY Research

GUNNS AND THE AUSTRALIAN PULP AND MANUFACTURING INDUSTRY - Research Paper Example This study highlights the strategic problems of the company and suggests measures that can be taken up by the company to ensure its sustainable growth in future. The external environment of the company has been analysed using PESTEL analysis and the various competitive factors affecting the company have been identified utilising the Porter’s five forces model analysis concerning the global paper industry. The strict environmental regulations and the strong supplier power in the paper industry are identified to be having a significant impact on the company. The internal environment of the company has also been analysed utilising SWOT analysis as the strategic tool. The core competencies of the company have been identified to be its diversified products portfolio and it is trying to attain competitive advantage in the market through the strengthening of its core competencies. The financial analysis of the company shows that indebtedness is a major problem of the company and it i s facing difficulty to source its fund for future investments. Based on the in-depth analysis of the company and its environmental conditions the best strategic alternative for the company has been identified to restructure its business model, focusing more on plantation based business and accepting the proposed investment proposal related to Bell Bay pulpwood mill. 2. External Environmental Analysis Gunns Ltd. is engaged in the business activities related to forest management, processing, milling, exportation and merchandising of wood products (Bloomberg, 2012). The company operates its business in the global paper industry and the external environmental analysis of the company has been done in this study utilising various strategic tools like PESTEL analysis and Porter's Five Forces Model. 2.1 PESTEL Analysis PESTLE stands for Political, Economical, Social, Technological, Legal and Environmental factors. It is an external environmental analysis tool which helps the organisations t o determine the external trends (Knowhownonprofit, n.d.). Hence Gunns Ltd. which is an Australian company, the country’s business environment can be better understood through the PESTEL analysis presented below: (Source: Businessmate, n.d.). a. Political: Different types of social welfare policies have been undertaken by the Australian government in the recent years like lending support to the aging people and the introduction of the scheme of paid parental leave. Apart from this the carbon tax was enacted by the Australian government recently but had to face protest from different industrial sectors of the country (BBC News Asia, 2012). b. Economical: There has been a steady growth of the Australian economy in the past 10 years. It is likely that the economy would continue to be strong paving way to further industrial growth and development in the nation. On the other and the indebtedness of Australia has increased which is evident from the rise of external debt as a percent age of GDP. At the end of the year 2011, Australia's debt from foreign countries grew to around 94.58% of GDP (Marketline, 2012). c. Social: In accordance with Central Intelligence (CIA) World Factbook the Gini coefficient of Australia ranges from 0 to 100, i.e. from perfect equality to inequality were 30.5 in 2006. The aging population of the country is also on