Financial Analysis Archives - Page 7 of 15

February 4th, 2023

Financial Analysis of Office Depot

Part 1 Background introduction for Office Depot Office Depot is a supplier of office products and services. The company’s selection of brand name office supplies includes business machines, computers, computer software and office furniture, while its business services encompass copying, printing, document reproduction, shipping, and computer setup and repair. An S;P 500 company, Office Depot generates revenues of over US $14 billion annually and has 42,000 employees worldwide. It is headquartered in Boca Raton, Florida. Office Depot is one of the biggest office supplies retailers, but its sales revenue decreased dramatically 26% from 14.5 billion dollars in 2008 to 10.7 billion dollars in 2012.

Part 2 Macro-level systematic analysis for Office Depot This financial analysis report of fiscal year 2012 will adopt the macro-level and micro-level systematic method toward the development of office depot. The stakeholders related to OD should pay close attention to these two parts, in order to adjust the strategic and tactic actions upon office depot.

First of all, from the perspective of macro-level, the SWOT analysis is suitable to be imported. Details as follow:

Strength 1. Strong Network of Retail Stores Office depot has 1131 stores in North America and 546 stores in other countries. The network of retail stores distribution of the American three biggest office supplies companies as below: 2. Large Range of Products and Services The range of products and services selling distribution of the American three biggest office supplies companies as below: 3. Strong Marketing Avenues OD has three main marketing avenues which are online B2B/C, retailing terminal and key account. Its distribution centers operation efficiency is higher than the industry average, for 36 DCs has been supported 10.7 billion.

Weakness

1. Weak Competitive Performance More and more consumers are utilizing more technology and purchasing less paper, file storage and similar products instead of the traditional office stationary, leading the usage amount of office supplies declined. The technical products sales revenues accounted for only 20.9% of all, the ratio were 44.6% and 40% compared with Staples and Office Max respectively. 2. Weak Financial Performance A significant number of its vendors demand accelerated payments or require cash on delivery, such demands could have an adverse impact on its operating cash flow and result in severe stress on its liquidity. A downgrade in its credit ratings or a general disruption in the credit markets could make it more difficult for it to access funds, refinance indebtedness, obtain new funding or issue securities. 3. Weak Operating Performance Sales per retailing stores was average 6.4 million, the level stayed behind Office Max and Staples. The gross profit margin averages 30% while the operating profit margin almost 0%.

Opportunity

1. Expand online services As more consumers transfer their purchasing place from physical stores to online, OD could enhance the online selling power. 2. Acquisitions Staples’s revenue was twice the OD’s revenue, OD could merge with Office Max in order to compete with Staples at the same level. In addition, after that the alliance could integrate the source effectively and efficiently and cut more operating cost. 3. Emerging markets and expansion abroad Although the economy of America was sinking into mud, the emerging markets like the Golden Brick countries have much bigger purchasing power compared with American domestic market. OD can establish more physical retailing stores and online business with the support of its supply chain ability.

Threat

1. Economic Crisis lead to declines in business and consumer spending One of OD’s largest U.S. customer groups consists of various state and local governments, government agencies and non-profit organizations. The shadow of economic crisis not yet slaked till now, the financial deficit made the U.S. government cut various budgets which including the office supplies budget. The effect of economic crisis is same to the corporations in America. 2. Intense Competition OD face competition from other office supply stores that compete directly with it in numerous markets. This competition is likely to result in increased competitive pressures on pricing, product selection and services provided. Many of these retail competitors, including discounters, warehouse clubs, and drug stores and grocery chains, carry basic office supply products. Some of them also feature technology products. Many of them may price certain of these offerings lower than OD does, 3. The development of IT lead to the concept of Non-paper office activity Less paper, less ink. This environmental concept will reduce the usage amount of traditional stationary. Indeed, more and more new generation of staff practice with the help of information technology.

Part 3 Micro-level systematic analysis for Office Depot From the perspective of micro-level, the stakeholders related to OD should pay close attention to its financial data, in order to adjust the strategic and tactic actions upon the performance, efficiency, risks and liquidity factors of OD. The table below demonstrates the various financial ratios which the principle stakeholders concerns:

1. Performance

From the ratio charts above, it is obviously that the performance of OD is badly enough comparing with its competitors and industry. The ROE and ROA of Office Depot were both lower than the industry average level, but also below 0, reflected office depot had worst profitibility. The investors should be cautious to put stock in Office Depot. The GPM level of OD was higher than Office Max, Staples and industry average, however, the OPM of OD was lower than OM, Staples and industry average, this situation reflected the operation cost of OD was definitely higher than his competitors and industry average. As a result , the management should make the operation activities more efficiently and effectively, for instance, consider closing idle stores and to lay off employees, etc. Moreover, the operation management should focus on the cost cutting. Impersonal speaking, the tax authority should pay attension to OD’s financial data to identify if OD have over-cooked its fiancial statement.

2. Risk

The debt ratio of OD was higher than industry average mean OD will be more likely of indebtedness and has more financial leverage. The risk that OD face will be greater.

3. Efficiency

The debtor age and creditor age of OD were decreasing and increasing respectively from 2008 to 2012 reflects OD great pressure in cash flow safety. The debtor age decreasing can lead to loss some key customers, therefore its market share will be negatively affected. The creditor age increasing can lead to affect its suppliers engage in collaboration. The inventory turnover of OD was below the industry average which means its inventory structure has severe problem, existing large proportion of dead stock. Moreover, some of its retailing terminals have ineffectively selling power, and the DCs amount may be not enough to support its sales.

4. Liquidity

The current ratio and quick ratio were also below the industry average and its competitors. The investors, suppliers, owners and management should consider its debt paying ability. In other words, its liquidity was worse.

In conclusion, Office Depot had many financial problems. In order to improve it, OD should try every means to cut its operating cost. In this respect, Office Max did better than OD. OD can seek conservation to discuss merging with OM, to complement each other’s advantages. Analysis method hypothesis:

It is very hard to find the complete financial ratios of office supplies industry, so I integrated the financial data of the American’s three largest office supplies companies into industry average, in order to avoid the benchmark changing.

February 4th, 2023

Pestle Anaysis Model Overview

Political, Economic, Social and Technological – plus Ecological or Environmental, Ethical, Demographic and Legal. It’s a matter of personal choice, but for most situations the original PEST analysis model arguably covers all of the ‘additional’ factors within the original four main sections. For example Ecological or Environmental factors can be positioned under any or all of the four main PEST headings, depending on their effect.

Legislative actors would normally be covered under the Political heading since they will generally be politically motivated. Demographics usually are an aspect of the larger Social issue. Industry Analysis is effectively covered under the Economic heading. Ethical considerations would typically be included in the Social and/or Political areas, depending on the perspective and the effect. Thus we can often see these ‘additional’ factors as ‘sub-items’ or perspectives within the four main sections. Keeping to four fundamental perspectives also imposes a discipline of considering tragic context and effect.

Many potential ‘additional’ factors (ethical, legislative, environmental for example) will commonly be contributory causes which act on one or some of the main four headings, rather than be big strategic factors in their own right. By gathering the relevant information on the UK automobile industry external environment, PESTLE analysis provides us a dynamic tool to grasp the situation at macro level. Political Low exit barriers government support Economical Strong M activity Increasing acceptance of cars Upward trend for environmental friendly cars

Technological Use of advance materials Advancement in greener alternatives Focus on niche and engine manufacturing Environmental Aggressive industry wide R expenditure in greener alternatives including hybrid technologies Commercialism’s of hydrogen and electric cars Increase in annual greener product launches Legal Carbon Emission Targets: currently set at the European level to 2020 Latest Trade Policy: I-J Trade & Investment Agency (KIT) is encouraging mobile investment to increase local Seems participation in international trade by learning from foreign companies

February 4th, 2023

Pest Analysis Of China

A PEST analysis is one of strategic tools for analyzing the environmental influences including political, economic, social and technological factors on the business. (Porter, M. , 1985) In this essay, it is going to explain about current china economy and analyze it For instant, it countries’ government or organizations have argument causing a war, which will be unstable in economy and society. Then, people feel unsecured about government, jobs and their daily life. If their business have big loss or company closes down, leads to lose Jobs. Therefore, they can not afford to purchase product and make company less profit or loss. It will be a wicked economic cycle. However, no matter how develop the domestic economy is, it is better to keep the environmental survival ability for next generations.

The environmental regulations could keep environmental friendly and maintain the balance between economy development and sustainable development. Economic factors: Economic factors influence a business directly, because they affect capital availability, cost, supply and demand. If demand is high, and the capital cost is low, which attract ore investment on the company and produce more product to make profitable. However, during economy recession period, there is still chances for some small potential corporations accessing business market and competing with others.

Recent years, China economic growth rapidly. Overall, it can be reflect from industrial sectors. Since from late 1978, China becomes market oriented economy. China gains tremendous in production of agriculture. Even though, there are more than half people rely on agriculture for living, the agriculture sector has less influence for gross domestic product. At the same time, labor input decreases in most of industries, due to labor productivity improvement and the migration from rural workers to urban areas.

In the opposite, through the adjustment of secondary industry and tertiary industry, they become unrepeatable roles to GAP. (Eke-shah G, 2001) It provides activities as knowledge, skills, as well as experience, entertainment to improve the quality of business. (Assai H, 2009) Due to its foreign trade liberation and investment, the income has been dramatically rising after Joining the WTFO. Moreover, the demand for material and energy resource is also increasing. They import and process materials, then sell the final products. In addition, the Bank of China as central bank in china.

It uses monetary policy to increase or decrease interest rates and control the amount of money in the economy to achieve steady economic growth. Normally, government will not lend money to business company directly, it has to deposit money from bank of china first. Also, the central bank reduce lending to companies and individuals, according to the increasing amount of money they put with central bank. Moreover, the central bank also guide country bank to increase ore reserves and its ratio, such as 16. 5% for big bank, 14. 5% for small bank, in case of any financial crisis or loan needs.

At the same time, bank of china will control conflict and surplus, as well as increase tax for import product. Because if they increase tax, people would rather purchase and import product with those money, not saving them into bank. (Brasher K, 2010) Government expenditure is to purchase goods and service, allocate funds efficiently and invest on doing domestic infrastructure; for high technology innovation and education, as well as social security payments. Technically, increasing government spending can be met china’s economy development need.

By 2002, the government spending has increased to 5. 5% of GAP, which shows a good trend. (Marina M, 2006) During inflation period, the economy is lack of investment, and exports will suffer from inflation, as inflation increase the price to exports and encourage imports. Also, the most industrialized countries will be adjusted to increase their interest rates, which will be pay back through loans in the markets, which demonstrate that government try hard to control foreign flow-in cash. Environmental factors: The environmental factors affect organizations. Rosily, capital markets is determined by Chinese government. Government increase their expenditure, which could increase money supply for organization and make capital markets boom. Based on organization performance, the shareholders will decide to provide more equity funding or sell the shares. The labor market indicates that the availability of certain skills and the labor costs at different regions or industries in China, which are under the power of the training and government policies, as well as the inflation, industries sectors’ needs, and trade unions.

At last but not the least, China focus on being environment-friendly society. As china daily said, china will have an international green industry expo in Beijing in Novo of 2010, which will let others know more about domestic corporations and offer a new stage for them, also foreign companies are likely to explore Chinese green market and develop a green economy in china, such as clean energy, emission reductions, low carbon technology and so on. (Zinnia, July 2010) social: Income distribution is unequal within different areas and industries.

For example, the average income has 2. 6 times in east of china of the west of china. There are several reasons for it: the laid-off people who do not going to work, less desire for consuming due to the recession of economy, less social guarantee from Chinese government, huge income gap between urban and rural. The more income distribution expanding, the more motivation for economic growth, also can be obstacle for economic growth. Unequal income distribution and poverty will be barriers for china’s growth.

Thus, government need adjust the taxation system, reduce income difference in different field, improve the social security for to make people life more secure. Owing X, 2007) As to lifestyle changing, nowadays, there are more people choose working at home, it will be more connivance and easier for employment who want to keep balance between family and work. Also, with the number of single households increasing, company more like to assign this type of employees to work abroad or other regions where is far away from home.

Because they have less responsibility for family and less homesick. They will more easier to devote all themselves into work and adapt new multicultural work environment. (Lu D, 2009) For attitudes of work and leisure, people becomes more understanding and legible. They are not only focus on work any more, more like to enjoy life after done with workload. In company, they will organize leisure activities for employees. On the one hand, they can improve the ability of communication and colonization; on the another hand, they can have health mind, health body.

Moreover, education is becoming more and more important for everyone. Therefore, Chinese government encourage international schools Join venture with Chinese public schools to exchange culture and learning skills, also as business company, they will organization business restoration for employment, or assign them to study abroad, to introduce more advanced knowledge and valuable experience from people who are from different culture background. People can not work well, without good living conditions.

So that government pay more otter on housing amenities pollution Witt specific policies and regulations to control air/noisy pollution, creating an sustainable friendly living environment. Technology: Government and industry focus on technological effort, so government spend large amount of money on research, to develop and explore high technology innovation, also to speed the technology transfer. In china, the energy demand growth become slow down these years. China consumed less energy then the U. S. In 2009. Energy consumption growth fell to 5. 2 percent in 2009 from 16. Percent in 2004. Energy use per unit of gross domestic product dropped 15. 6 percent in the four years started 2006. China wants to reduce its energy use per unit of GAP by 20 percent in the five years through 2010. To reduce reliance on energy, china plans to conserve energy and reduce emission. As the sample of more-polluting fossil fuels, the Chinese government spent $34. 6 billion on clean-fuel projects last year, almost double the 18. 6 billion invested by the U. S. (Zinnia , Gag 2010) High technology information development has a significant role in the china economy.

As the internet and technology moving forward, it drive the success of the china economy. The trade barriers decrease, which produce more Job opportunities in the field of information Technology. Moreover, the expenditure of high-technology consumers are covering all over the world, such as computer and networking hardware, software and services, that is over than $1. 4 trillion in 2005. Also, that worldwide IT spending increase by 10 % over every year. The technology information widely spreading make the whole world become closer and make life easier. Hey also can do business and do shopping at home, no need even go out, you Just can find any information. With internet, business company like to have online teaching program for employment to upgrade their personal profile. They also choose internet for online meeting, consulting, to delivery the ideas to fellows, managers, customers, and business partners. (Porter, M. , 1985) Conclusion: In a conclusion, as well known, china is the fastest developing country, which has many potential business opportunities.

However, it is important to Judge and make sure the investment environment before running a business in china. PEST strategy as showed above analyze the external business environment to give a general picture of the operated business environment. So that company can take advantage of the appropriate opportunities and minimize the threats. If company can make correct strategic planning, it will offer a stable and solid environment for a company to grow into the future. Read more: http://www. Essays. Com/essays/economics/a-pestle-analysis-of-Chinas- current-economy-economics-essay. PH#ixzz2azQZaC22

February 4th, 2023

Pestel PHILIPS

Because of the international presence of Philips, each country doesn’t have the infrastructure to welcome properly Philips’ technologies, including online processes. So Philips needs to adapt its products to the country where they are. Moreover, Philips Company is very dependent on technology. New innovations can significantly improve operations of the company. Also, it’s important not to neglect the Research and Development department even if it’s the most expensive one. Many countries are now environment concerned and try to reduce pollution.

Philips s a large manufacturer can face some problems because of that, even more as it is a lightening company. Witt the important development to the LED, Philips challenge even if the LED market is not as profitable as the lamp market. LEGAL FACTOR NAS a real Each country has its own legislation even countries which are parts of the same organization, for example, in Europe, there is the European legislation and the country’s legislation, so Philips needs to be aware of every aspects of this system and adapt quickly.

February 4th, 2023

Pestel: Pest Analysis and Factors

The growing importance of environmental or ecological factors in the first decade of the 21st century have given rise to green easiness and encouraged widespread use of an updated version of the PEST framework. STEER analysis systematically considers Socio-cultural, Technological, Economic, Ecological, and Regulatory factors. Contents [hide] 1 Composition 2 Applicability of the factors 3 Use of PEST analysis with other models 4 See also 5 References 6 External links Composition[edit] The basic PEST analysis includes four factors: Political factors are basically to what degree the government intervenes in the economy.

Specifically, political factors include areas such as tax policy, labor law, environmental law, trade restrictions, tariffs, and political stability. Political factors may also include goods and services which the government wants to provide or be provided (merit goods) and those that the government does not want to be provided (demerit goods or merit bad). Furthermore, governments have great influence on the health, education, and infrastructure of a nation. Economic factors include economic growth, interest rates, exchange rates and the inflation rate.

These factors have major impacts on how businesses operate and make decisions. For example, interest rates effect a firm’s cost of capital and therefore to what extent a business grows and expands. Exchange rates affect the costs of exporting goods and the supply and price of imported goods in an economy. Social factors include the cultural aspects and include health consciousness, population growth rate, age distribution, career attitudes and emphasis on safety. Trends in social factors affect the demand for a company’s products and how that company operates.

For example, an aging population may imply a smaller and less-willing workforce (thus increasing the cost of labor). Furthermore, companies may change various management strategies to adapt to these social trends (such as recruiting older workers). Technological factors include technological aspects such as R&D activity, automation, technology incentives and the rate of technological change. They can determine barriers to entry, minimum efficient production level and influence outsourcing decisions.

Furthermore, technological shifts can affect costs, quality, and lead to innovation. Expanding the analysts to PESTLE or PESTLE adds: Legal factors include discrimination law, consumer law, antitrust law, employment awe, and health and safety law. These factors can affect how a company operates, its costs, and the demand for its products. Environmental factors include ecological and environmental aspects such as weather, climate, and climate change, which may especially affect industries such as tourism, farming, and insurance.

Furthermore, growing awareness of the potential impacts of climate change is affecting how companies operate and the products they offer, both creating new markets and diminishing or destroying existing ones. Other factors for the various offshoots include: Demographic factors include gender, age, ethnicity, knowledge of languages, disabilities, mobility, home ownership, employment status, religious belief or practice, culture and tradition, living standards and income level.

Regulatory factors include acts of parliament and associated regulations, international and national standards, local government by-laws, and mechanisms to monitor and ensure compliance with these. Applicability of the factors[edit] The model’s factors will vary in importance to a given company based on its industry and the goods it produces. For example, consumer and EBB companies tend to be ore affected by the social factors, while a global defense contractor would tend to be more affected by political factors.

Additionally, factors that are more likely to change in the future or more relevant to a given company will carry greater importance. For example, a company which has borrowed heavily will need to focus more on the economic factors (especially interest rates). Furthermore, conglomerate companies who produce a wide range of products (such as Sony, Disney, or BP) may find it more useful to analyze one department of its company at a time with the PESTLE model, thus focusing on the specific factors elevate to that one department.

February 4th, 2023

Pestle: Retailing and Convenience Stores

Pestle analysis draft
Political:
Employment laws: employees have to make sure that they are following the employability laws and employ the people who are entitled to work in UK and providing them with the minimum wages as per the law. Economic:

Price competition: A very important factor for the convenience stores in UK the small chain stores such as Londis and Crosscutter will have a increased competition within the industry from small and independent convenience stores. Not only those they will also have a price competition with some discount stores such as Lidl and aldi Government tax and inflation rates: Convenience stores in the UK have to accordingly plan their pricing strategies based on the inflation rates which are increasing every year. Social:

Lifestyle changes: delicate shopping patterns of UK consumers increase market competiveness. In the UK consumers do shop more than once a week, which makes them spread their spending throughout the week to other convenience stores as well as the store they use for their main shopping. Health concerns: consumers have become more health consciousness and therefore avoid eating ready meals and opt to cook from scratch. Technological:

New developments: Not all convenience store have the facility of a self-service checkout but this has been a major technological development for the stores. It also enables consumers to shop quickly and avoid long queues on the tills. Mobile technology: new apps created to find the nearest convenience stores around you such as the app called around me

Pestle analysis draft
Political:
Employment laws: employees have to make sure that they are following the employability laws and employ the people who are entitled to work in UK and providing them with the minimum wages as per the law. Economic:

Price competition: A very important factor for the convenience stores in UK the small chain stores such as Londis and Crosscutter will have a increased competition within the industry from small and independent convenience stores. Not only those they will also have a price competition with some discount stores such as Lidl and aldi Government tax and inflation rates: Convenience stores in the UK have to accordingly plan their pricing strategies based on the inflation rates which are increasing every year. Social:

Lifestyle changes: delicate shopping patterns of UK consumers increase market competiveness. In the UK consumers do shop more than once a week, which makes them spread their spending throughout the week to other convenience stores as well as the store they use for their main shopping. Health concerns: consumers have become more health consciousness and therefore avoid eating ready meals and opt to cook from scratch. Technological:

New developments: Not all convenience store have the facility of a self-service checkout but this has been a major technological development for the stores. It also enables consumers to shop quickly and avoid long queues on the tills. Mobile technology: new apps created to find the nearest convenience stores around you such as the app called around me

Pestle analysis draft
Political:
Employment laws: employees have to make sure that they are following the employability laws and employ the people who are entitled to work in UK and providing them with the minimum wages as per the law. Economic:

Price competition: A very important factor for the convenience stores in UK the small chain stores such as Londis and Crosscutter will have a increased competition within the industry from small and independent convenience stores. Not only those they will also have a price competition with some discount stores such as Lidl and aldi Government tax and inflation rates: Convenience stores in the UK have to accordingly plan their pricing strategies based on the inflation rates which are increasing every year. Social:

Lifestyle changes: delicate shopping patterns of UK consumers increase market competiveness. In the UK consumers do shop more than once a week, which makes them spread their spending throughout the week to other convenience stores as well as the store they use for their main shopping. Health concerns: consumers have become more health consciousness and therefore avoid eating ready meals and opt to cook from scratch. Technological:

New developments: Not all convenience store have the facility of a self-service checkout but this has been a major technological development for the stores. It also enables consumers to shop quickly and avoid long queues on the tills. Mobile technology: new apps created to find the nearest convenience stores around you such as the app called around me Pestle analysis draft

Political:
Employment laws: employees have to make sure that they are following the employability laws and employ the people who are entitled to work in UK and providing them with the minimum wages as per the law. Economic: