Corporations

USG Corporation (“USG” or the “Company”), through its subsidiaries, manufactured and distributed building materials. USG was the world’s largest gypsum producer. The Company produced a wide range of products for use in new residential, new non-residential, and repair and remodel construction, as well as products used in certain industrial processes. USG’s operations were organized into four operating segments: Gypsum, Interior Systems, Wood Fiber, and Other Products. Takeover Target

USG had been a takeover target primarily due to its steady cash flow, low-cost production lines, and commanding market share. The Company had scale advantages in manufacturing and transportation which kept its costs low. USG had been a vertically integrated company with a commitment to produce diversification. The Company was geographically dispersed, controlling mines, quarries, transport ships and manufacturing plants in North America, Europe, Mexico, and other countries.

USG’s four operating divisions shared the following characteristics: i) had strong positions in their primarily markets, typically first or second; ii) led in technology, design, and innovation; iii) were low-cost producers; iv) had multiple plant locations and geographic coverage; and v) were highly integrated. Therefore, as the leading company in the industry, USG had been one of the most attractive takeover targets. Takeover Attempts Several takeovers and takeover attempts had shaken the building products industry during the late 1980’s.

In 1986, the Belzberg brothers accumulated a large position in USG and threatened takeover. However, they were bought out in a targeted share repurchase and the transaction netted the Belzbergs a tidy profit. On March 1, 1988, Desert Partners, a Texas-based takeover group, announced a tender offer to purchase USG for $42. 0 per share in cash to expire on June 10, 1988.

In addition, in a publicly disclosed letter to the board dated May 4, 1988, Desert Partners had indicated a willingness to increase their offer to $50.0 per share in cash, debt, and stock, but had not officially changed their tender offer. Leveraged Recapitalization Proposal USG resisted Desert Partners’ proposed offer and stated that the tender offer was unsolicited, coercive and inadequate, and recommended that shareholders not to tender their shares. Management made it clear that the Company was not for sale and that the tender offer was not in the best interest of the Company.

After debating a number of alternatives, management decided to counter-propose a leveraged recapitalization of the Company, which was announced on May 2, 1988. According to the plan, shareholders would receive $37. 0 in cash, $5. 0 in stated face amount of new 16% junior subordinated pay-in-kind debentures, and one share in the newly recapitalized company. While in some cases, leveraged recapitalizations are voluntary, proactive efforts, in USG’s case, the proposal was distinctly defensive.

Before the board could implement the leveraged recapitalization, it had to be approved by shareholders at a special meeting on July 8, 1988. On that day, shareholders had to decide whether to tender their shares or vote for the proposed leveraged recapitalization. Historical Financial Analysis Based on the historical financial information given in the case, USG reported stellar results. As the leading company in the industry, USG’s net sales significantly increased from $1. 6 billion in 1983 to $2. 9 billion in 1987.

Operating income (EBIT) increased from $158 million in 1983 to $532 in 1986, but dipped slightly in 1987 to $438 million primarily due to increased costs. Despite the lower net income of $204 million in 1987, versus net income of $226 million in 1986, USG’s return on equity at the end of 1987 stood at 34%, almost twice the average for comparable building products companies. The Company attributed much of its success to increased focus on their core building product business as its share of sales from building products increased from 79% in 1985 to over 90% in 1987.

Performance, as well as revenue, is reviewed every 6 months. This way it allows JVA Corp. to cut or increases pay every 6 months and review its bottom line. Employees can also benefit by having the opportunity to earn pay raises potentially twice a year, rather than the typical annual reviews. I t is my firm believe that to achieve the reduction of the percentage of revenue that is allotted to employee’s compensation from 8% to 5% without it having a big demoralizing effect on its employees.

JVA Corp. needs to make strategically costs cuts that allow the corporation to continue offering its employees rewards and pay raises for their good performance. I feel that this is essential to our organizations ability to attract new talent and retain the people whose performance stands out. These changes should not be permanent, but they should stay in place until the organization stabilizes and becomes profitable again. Some compensation packages like paid leisure travel should be complete eliminated for the time being, but not before explaining to employees that this is a necessary step for the corporation to take to be able to stay in business.

I believe that employees much rather lose their paid travel expenses than to lose their jobs. Performance reviews should be conducted once every six months so that employees get feedback from management more often, but they will continue to be eligible for pay raises only once per year. The amount of they pay raise will continue to be determined by performance of the employee, unfortunately to be able to meet our compensation percentage reduction pay raise amounts will be 25% less than in previous years.

Only that employee whose performance goes above and beyond of what it is expected from them will receive the usual compensation (Whit the exception of paid leisure travel). This is in an effort to try to retain talent through these difficult times. I believe that by only reducing the percentage of the raise that employees receive instead of eliminating all raises we still encourage the personnel to try to perform their best and the culture of healthy competition remains in the organization.

Bonuses should continue to be handed out to a lesser percentage of the top employees if it was given to the top 20% employees it should be reduced to only 10% of the top performers. Bonus amounts should stay the same until the tough economic times have past. Amenities that are already offered on the worksite should not be taken away because this will have a direct impact on employees feeling about the company, but no new ones should be added until it is determined that the organization is on track to being profitable again.

Gym memberships should still discounts should continue to be offered because not only does it help employees release stress and stay in shape; it also has the potential to save the company a lot of money on healthcare costs. Phone bill discounts will only be given to managers and people who perform above average about 80% of the workforce will receive a lower discount on their personal phone bill or will be taken away for economic reason.

It is important to let employees know why you are taking this steps, letting them know that it is necessary to take them for the company to stay in business will be of great help when it comes to them being disgruntled. To conclude I believe that by taking all the steps mentioned above JVA Corp. Should have no trouble achieving its reduction of employee’s compensation from 8% to 5%. This reduction should be accomplished without having a significant impact on the operations of the corporation. Employees should recognize that the changes made where necessary to be able to stay in business.

A keiretsu business structure outlines a major difference in the way US and Japanese firms are structured. Keiretsu can be seen as a partnership between the government and businesses which creates a web on interlinking relationships between banks, suppliers, manufacturers, distributors and the government. They have also managed to become a topic of debate where some refer them to ‘government clad cartels’ and a ‘menace to trade’ while the others see them as ‘a model for change’ (Keiretsu, 2001)

Created around their own trading entities, keiretsu are integrated both vertically and horizontally which enable them to control every step in a chain in resource, industrial and service sector, serving as a competitive advantage against other firm structures. Horizontal Keiretsu are seen as relationships between trading corporations and banks, thus headed by the six major Japanese banks namely Mitsui, Fuyo, Mitsubishi, Sanwa, Sumitomo and Dai-Ichi Kangyo Bank Groups, also known as the “Big Six” (Keiretsu, 2001).

The purpose of vertical integration in keiretsu is to connect factors of production with the product and thus these are seen as relationships between relationships linking manufacturers with suppliers, retailers or even wholesalers. An example of such integration can be electronic producers and cars (Toyota, Nissan, Sony and Hitachi). Similarly at the distribution end, control is maintained to determine the type of the products in showrooms and their price. Both division of Keiretsu, vertical and horizontal are intricately woven together in order to self sustain themselves.

An example of one of the major players organized as an Keiretsu inter firm structure is Mitsubishi, which is organized around Bank of Tokyo- Mitsubishi Mitsubishi Corporation, Mitsubishi Chemical, Kirin Brewery, Mitsubishi Estate, Mitsubishi Electric, Mitsubishi Heavy Industries, Mitsubishi Motors, Nippon Oil, Nikon, Nippon Yusen, Mitsubishi Paper Mills Ltd and Mitsubishi Rayon Co. , Ltd. Toyota is also referred to as one of the largest vertically integrated Keiretsu firms.

The Japanese recession in the 1990’s had adverse effects on the Keiretsu as most of the banks, which served as the major holding company were badly hit due to bad portfolios and suffered major losses due to which either they had to merge with other banks or completely go out of business. For example the Mitsui Bank and Sumitomo Bank merged together to become Sumitomo Mitsui Banking Corporation which blurred lines between the Keiretsu firms and rose strong suspicions in the business community regarding the effectiveness of the Keiretsu firm structure as an effective business model.

Hence, while the Keiretsu firm structure exists, due to loosening alliances, it is not as centralized and since companies could no longer avail the privilege of an easy bail out, it led to growing corporate acquisitions and independent shareholders. The success of Keiretsu firms makes us wonder how they took the centre stage in the business world. What was their source of competitive advantage that they dominated over the American firms and why their business model is not effective today?

Nike and Adidas

Both Nike and Adidas are sportswear companies that goods throughout many parts of the world are very popular and have been the top two leading sport companies in the sport industry; as a result, people have to compare and contrast which product proper for them. The aim of this essay is to compare and contrast these two companies in terms of company’s background, products and price, and sponsorships and marketing. Firstly, background of Nike company and Adidas company have different founder and slogan. Nike is an international U.S.-American sportswear manufacturer. It was founded by Bill Bowerman in the year 1972 and the slogan is “Just Do It”. On the other hand, Adidas is a worldwide sportswear manufacturer based in Germany and founded by Adolf Dassler on 18 August 1949. The slogan is “Impossible is nothing”. Secondly, both of Nike and Adidas company merchandise related products, but the product’s price are quieted different. These two companies sell and offer a wide range of products for the customers and their products offered is mainly on sportswear for men and women. These companies also provide the customers varieties of footwear such as sports shoes, casual shoes, boots, sandals and stockings. While they are selling similar products, Nike products are more expensive than Adidas because all Nike brand has high and advance technology.

Thirdly, there are similarities and differences points in sponsorships and how they market their products. Nike and Adidas have also been the top sponsors in the sport industry. Nike promotes its products by sponsorship agreements with celebrity athletes, professional teams and college athletic teams. In contrast, Adidas sponsors professional soccer, tennis, general athletics with mainly clothing. In terms of market focus, Retail is a key focus for Nike in connecting with consumers, both online and in store. Whereas, Adidas are European market focus because Europe is the birthplace of Adidas with a long tradition of domination in the marketplace. In conclusion, Nike and Adidas are both famous sports brand, people usually tend to compare them to each other and got a finally choice for buying these products and companies’ background, advertisement and price are important factors that influences consumers to make the final decision to buy these products.

References List

Nike, Inc History & Heritage. (2013). Retrieved September 6, 2013 from http://nikeinc.com/pages/history-heritage Adidas. (2013). Retrieved September 5, 2013 from http://en.wikipedia.org/wiki/Adidas Adidas products. (2012). Retrieved September 6, 2013 from http://en.wikipedia.org/wiki/Adidas#Products

NeoPets, Inc. was established in 1999 and is a free virtual online world which targets the youth. It creates an interactive world for its users where they own virtual pets, play games, trade imaginary items, interact with other NeoPets customers (Schnuer, 2005, p. 1). The customer base is about 178 million who own virtual pets and play online games through the site. The page is available in 11 languages with close to 867-plus billion page views. The primary revenue is derived from the advertisers and through the merchandise sales (those inspired by the characters on the website).

Immerse advertising is applied, where the message is communicated through the games and activities online.

Questions

1. The past has witnessed many successful children’s products like Ninja turtles or Hula Hoops lose popularity and turn into a fad. However, NeoPets can prevent the same by maintaining its strategic marketing course of action. The marketing orientation should be focused on the target market and product diversification. Since the primary target audience is the youth, NeoPets should keep adopting innovative methods and adding creative contents.

The website should add further puzzles or games to engage the attention of the users. The characters seen on the site can be introduced as toys or be a part of a movie/video game in the future, to increase their popularity among its users (Wingfield, 2005). Neopets, Inc. is already making initiatives on these lines and is in talks to develop video and cell phone games. The company should also try and customize its products according to customer needs. Adding benefits and features according to customer suggestions and requirements would help them maintain a customer oriented image.

The website should also maintain the technical stability and ensure that any problem is fixed immediately. The company should also abide by its social responsibility, meet regulatory requirements and serve the society.

2. The success achieved by NeoPets can be accredited greatly to the word of mouth advertising (Schnuer, 2005). Word of mouth has helped the website gain many new users to join and be a part of their online activities and communities. However, it is noticed that popularity for children products go through cycles of a sudden rise and a unexpected decline.

So assuming that the word of mouth technique would hold the same results in the future would not be justified, especially with tough competitors like Disney’s Club Penguin entering the market. A report by Fletcher (2008) states over 30 virtual sites are targeting the tweener (8-13 years) segment; so it is increasingly important to have better structured promotional activities. The strategic marketing strategy which combines the sales, customer and production marketing orientation should be adopted. Continuous product improvement should be insisted upon.

Viral marketing (where the existent customers are provided with additional benefits so that they facilitate and persuade new customers to join the website) should be adopted. This would help create a buzz about the website sustaining its online users and creating new customer base. NeoPets should also work on factors which have helped it become successful in the past. A report by Daniel (2007) states how the company established its base first in the English market before diverging into the 11 other language markets. Likewise the company is setting base in the youth before targeting the older age group segment.

However it is essential to retain the present customer base to become successful in the long run.

3. The acceptability for NeoPets would definitely differ from one country to the other. However, if the technology on offer is good then the cultural and linguistic differences would be nominal issues to deal with. The company is already available to close to 89. 9 percent of internet users across 11 other language countries and is further continuing its expansion. Also the feeling towards online games and pet ownership is universal.

Thereby the children across countries would be receptive to the website provided they get good service and understand the language the instructions are communicated in. NeoPets can try and customize its products according to the preference of the target market and try and filter any advertisement or message which may be considered offensive in a particular culture. For example if a pet or an item of food is considered religiously offensive in a particular country then NeoPets can filter that item and substitute it with an inoffensive one.

The limitation of the reach would perhaps be the internet accessibility among children in different countries. The company can perhaps take initiatives to contribute to the growth of bringing technology and internet accessibility to less developed countries. The diversification into video games and movies would also create a greater visibility to attract new customer base in different countries.

4. A report by Daniels et al. (2007) states that close to 79% of NeoPets users are aged 17 or less, and there has been serious criticism drawn for advertisements which are targeting the children.

The site should filter the offensive advertising and keep local sensitivity in mind. People also believe that the advertising lacks transparency. The company can make the advertising simple and straight forward by mentioning product sponsors in the beginning of a game or when a person logs on. The website also allegedly promotes gambling and consumption of junk food. Criticism has also been drawn cause of exclusion of religious substance. It was also found that hackers were able to access the website and entice a 12 year old girl to have sex (Daniels et al. 2007). Such occurrence can jeopardize the future of the company.

This may lead to serious legal and regulatory issues. And since the youth is every countries future, every parent would expect their children to keep away from any such negative influence. It is thereby important that each problem is dealt with and social responsibilities should be fulfilled to attain sustainable advantage and growth. NeoPets should also take the initiative to protect all its customers’ details and information, and comply with all data privacy requirements of all countries. Parents also believe that the website involves the kids in the games and ownership, which hampers their education.

To counter this criticism a parental control element could be added to the site; so that the parents can monitor the time each kid invests on the website. Various educational programs can also be introduced with lead characters teaching simple lesson between programs. Any religious or concern raised by a particular country should be addressed. With diversification activities on part of the company, there are various rules and regulations to be followed in different countries, all regulatory and legal issues should be addressed by NeoPets to avoid any problems in the future.

The company should fulfill its social corporate responsibilities to help abate any criticism. The criticism should also be taken in a positive manner and a quick response would help NeoPets create a positive image. 5. NeoPets has been in the youth market for a long time now and has made its grounds. There are many users who might have stepped into their adulthood while being a user of this website. NeoPets can now try and target the older age group. It may first target the older teens and those just stepping out of their teens as they are still transcending out of their teenage.

A related website can be started or a special segment can be introduced in the present one. The games can be of higher complexity or based on more sophisticated concepts and ideas. If the kids find the new platform an easy way to interact with people their age group who share their interests, they would be attracted towards joining. The company can also get newer advertisers in this manner, and cater various products which can be used by adults. The company should however ensure that it retains its young audience, for sustainable growth.

References

1. Daniels, J. D. , Radebaugh, L. H. , Sullivan, D. P. , 2007, International business, environments and operations, Saddle River, N. J. , Prentice Hall.
2. Fletcher, M. , 2008, Virtual worlds Revolution (14605953), pg 54-56
3. NeoPets, Inc. , Pet central, available at http://www. neopets. com/petcentral. phtml
4. Schnuer, J. , 2005, Rik Kinney & Lee Borth. , Advertising age, 76(20), S-6.
5. Wingfield, N. , 2005, Web’s addictive NeoPets are ready for big career leap, Wall Street Journal – Eastern Edition, pp. B1-B5.

E-trade Corporation is a company that buys and sells market securities in the stock exchange. It is the largest deep discount securities in the world. It deals with the provision and order placement of securities such as stocks, bonds, options, futures and mutual funds to customers. It also holds more than $176 million funds as part of its capital which it obtained from the funds the customers of the company invested in it.

Recently the company has reported a decline of its sale volume of its shares by 80% due to a problem known as credit crunch which has occurred to the company. The shares of the company has fallen from $25. 79 to $3. 63 and this has resulted in stiff competition from its competitors such as the Schwab (NASDAQ: SCHW) and TDA Mere trade (NASDAQ:AMTD) who shares have been reported to be stable thus reduced the sales volume of E-Trade Company.

The improved infrastructure and technology of the company has resulted in the improved performance of the company and thus the price of the shares that are offered to the customers of E-Trade have started to the rise in value due to an extensive advertising campaign that has been conducted of the product of the company thus the company has been in a position to attract customers into this business and thus has led to its drastic increase in its sales volume.

Ratio Analysis of E-Trade (ETTC) Company

Ratio analysis provides information about the performance, the operations and the state of affairs of a company that are based on the financial statements. The financial statements are identified and interpreted using two variables that are related in the company’s books of accounts. Ratios are used in comparing other company’s that have the same set of financial statements so as to determine the company that performs better than the other the process is often known as trend analysis.  Financial ratios are classified into the following categories liquidity, efficiency and profitability.

Liquidity ratios  are ratios that are used to measure the company’s ability to meet its both short term and long term obligations. The liquidity ratios are classified into current ratios, quick ratios and debt to equity ratio. The current ratio is a liquidity ratio that is used to test the ability of the company to meet its current obligations. It is obtained by dividing total current assets by total current liabilities. The key business ratios and industry ratios are developed and derived from the financial statements of various companies.

The ratios help the investors to compare a company’s financial performance to other companies by using their industry size and region so as to determine which company performs better than the other. Quick ratio It is also known as the acid test ratio. It is a ratio that is used to determine a company’s ability to meet its current obligations. It is obtained by dividing total assets of a company by its total liabilities.

Make sure the exporter company has an approved export license. Export of Canalized Items: An application for export of canalized items mentioned in ITC (HS) Classifications of Export and Import items may be made to the Director General of Foreign Trade. (Foreign Trade Policy, 2004).

Trade Fairs/Exhibitions: Any Indian wishing to organize any Trade Fair/Exhibition in India or abroad, would be required to obtain a certificate from an officer of the rank not below that of an Under Secretary to the Government of India, in the Ministry of Commerce, or an Officer of India Trade Promotion Organization, duly authorized by its chairman in this behalf, to the effect that such exhibition, fair or as the case may be, similar show or display, has been approved or sponsored by the Government of India in the Ministry of Commerce or the India Trade Promotion Organization and the same is being held in public interest.

Gifts/Spares/Replacement Goods: For export of gifts, indigenous/imported spares and replacement goods in excess of the prescribed ceiling/period, an application may be made to the Director General of Foreign Trade. Export through Courier Service: Import/Exports through a registered courier service are permitted as per the Notification issued by the Department of Revenue. However, importability/exportability of such items shall be regulated in accordance with the policy. (Exporter India, 2006) Acquire Export Credit Insurance

Be sure that the company has export credit insurance protects you from the consequences of the payment risks, both political and commercial. It enables you to expand your overseas business without fear of loss. Further, it creates a favorable climate for you under which you can hope to get timely and liberal credit facilities from the banks at home. The company can obtain Export Credit Insurance from the Export Credit and Guarantee Corporation of India Limited (Export Credit Guarantee, 2006).

In order to provide you Export Credit Insurance, the following covers are issued by the ECGC: Standard policies to protect you against the risk of not p 7 3 receiving payment while trading with overseas buyers on short-term credit. Policies in the form of ‘Open Cover’ in respect of shipments made during 24 months period. You have to obtain credit limit on each one of your buyers to enable ECGC to approve a limit on the basis of credit worthiness of the buyer. (ECGC, 1995).

These policies are basically similar to whole turnover policies but only apply to specific contracts. The specific Policies for exports of capital goods will be on medium or long-term credit, turnkey projects, civil construction works and technical services. These policies are basically similar to whole turnover policies but only apply to specific contracts. (Industrial Herald, 2006) Financial guarantees issued to banks against risk involved in providing credit or guarantee facilities to you, and special schemes viz.

transfer guarantee issued to protect banks which add confirmation to letters of credit, Insurance cover for Buyers’ Credit, Lines of Credit, Joint Ventures and Overseas Investment Insurance, and Exchange Fluctuation Risk Insurance. The other guarantees which banks can offer to through ECGC schemes are: Bid Bonds, Advance Payments Guarantee, Bank guarantee for due performance of the contract by the exporter, Bank guarantee for payment of retention money, Bank guarantee for loans in foreign currencies. Details of these schemes can be obtained from your own banker or local office of the Export Credit and Guarantee Corporation of India Ltd.

(Insurance on the Net, 2006) Furthermore, the company should have the Shipments (Comprehensive Risks) Policy is the one ideally suited to cover risks in respect of goods exported on short-term credit. Shipments to associates or to agents and those against letter of credit can be covered for only political risks by suitable endorsements to the shipments (comprehensive risks) Policy. Premium is charged on such shipments at lower rates. The ECGC would send the exporter an offer letter stating the terms of its cover and premium rates.

The policy will be issued after the exporter conveys his consent to the premium rate and pays a non-refundable policy fee of Rs. 100 for policies with maximum liability limit p 7 3 up to Rs. 5 lakhs; Rs. 200 between Rs. 5 lakhs and Rs. 20 lakhs and Rs. 100 for each additional Rs. 10 lakhs or part thereof subject to a ceiling of Rs. 2500. As commercial risks are not covered in the absence of a credit limit, you are advised to apply to ECGC for approval of credit limit on buyer in the prescribed Form No:144 (obtainable from ECGC) before making shipment.

Credit limit is the limit up to which claim can be paid under the policy for losses on account of commercial risks. If no application for credit limit on a buyer has been made, ECGC accepts liability for commercial risks up to a maximum of Rs. 5, 00,000 for D. P. /C. A. D. transactions and Rs. 2, 00,000 for D. A. transactions provided that at least three shipments have been effected to the buyer during the preceding two years on similar terms, at least one of them was not less than the discretionary limit availed of by the exporter and the buyer had made payment on the due dates.