Investment

The strong will to deeply understand the field and build the business. Kaolin’s enthusiastic research on feta cheese before and during summer 2001 shows his firm will for success. He went on field and online to search any information about food imports. Furthermore, when he found himself struggling to maintain his pricing structure, he had a major breakthrough – his innovation. He established website Melancholia and started to promote credit sales. 2. Kaolin’s knowledge In finance and counting indeed helped him in rising and handling money.

He explained his friends who had expressed interest and encouragement about his business and finally rose $40,000 as a capital. With a very limited source of capital, he made sure to keep up the money flow. Even until now, Melancholy could keep the price low while keep the quality up. 3. Khan’s belief and courage. With no savings and precious little knowledge of the import business, Kaolin was brave enough to refuse his Bulgarian winery contact when it is not beneficial for him. He then worked hard to raise the UAPITA – with some help from his friends, and stopped working at the restaurant.

Even though the first container was a disappointment, he never gave up In overcoming any obstacles. His belief of success attracted other people who also believe in the same thing, and the success Just happened as simple as that. 1. The strong will to deeply understand the field and build the business. Kaolin’s enthusiastic research on feta cheese before and during summer 2001 shows his firm will for success. He went on field and online to search any information about food imports.

Furthermore, when he found himself struggling to maintain his pricing structure, he had a major breakthrough – his Innovation. He established website Melancholy and started to promote credit sales. 2. Khan’s knowledge In finance and accounting indeed helped him in rising and handling money. He explained his friends who had expressed interest and encouragement about his business and finally rose $40,000 as a capital. With a very limited source of capital, he made sure to keep up the money flow. Even until now, Melancholy could keep the price low while keep the quality up. Khan’s belief and courage. With no savings and precious little knowledge of the import business, Kaolin was brave enough to refuse his Bulgarian winery contact when it is not beneficial for him. He then worked hard to raise the capital – with some help from his friends, and stopped working at the restaurant. Even though the first container was a disappointment, he never gave up in overcoming any obstacles. His belief of success attracted other people who also believe in the same thing, and the success Just happened as simple as that. 1.

The strong will to deeply understand the field and build the business. Kaolin’s enthusiastic research on feta cheese before and during summer 2001 shows his firm will for success. He went on field and online to search any information about food imports. Furthermore, when he found himself struggling to maintain his pricing structure, he had a major breakthrough – his Innovation. He established website Melancholia and started to promote credit sales. 2. Khan’s knowledge In finance and accounting Indeed helped him In rising and handling money.

He explained his friends who had expressed interest and encouragement about his business and finally rose $40,000 as a capital. With a very Melancholia could keep the price low while keep the quality up. 3. Kaolin’s belief and courage. With no savings and precious little knowledge of the import business, Kaolin was brave enough to refuse his Bulgarian winery contact when it is not beneficial for him. He then worked hard to raise the capital – with some help from his friends, and stopped working at the restaurant. Even though the first container was a spontaneity, he never gave up in overcoming any obstacles.

His belief of success attracted other people who also believe in the same thing, and the success Just happened as simple as that. 1. The strong will to deeply understand the field and build the business. Kaolin’s enthusiastic research on feta cheese before and during summer 2001 shows his firm will for success. He went on field and online to search any information about food imports. Furthermore, when he found himself struggling to maintain his pricing structure, he had a major breakthrough – his innovation. He established website Melancholia and started to promote credit sales. . Kaolin’s knowledge in finance and accounting indeed helped him in rising and handling money. He explained his friends who had expressed interest and encouragement about his business and finally rose $40,000 as a capital. With a very limited source of capital, he made sure to keep up the money flow. Even until now, Melancholia could keep the price low while keep the quality up. 3. Kaolin’s belief and courage. With no savings and precious little knowledge of the import business, Kaolin was brave enough o refuse his Bulgarian winery contact when it is not beneficial for him.

He then worked hard to raise the capital – with some help from his friends, and stopped working at the restaurant. Even though the first container was a disappointment, he never gave up in overcoming any obstacles. His belief of success attracted other people who also believe in the same thing, and the success Just happened as simple as that. 1. The strong will to deeply understand the field and build the business. Kaolin’s enthusiastic research on feta cheese before and during summer 2001 shows is firm will for success.

He went on field and online to search any information about food imports. Furthermore, when he found himself struggling to maintain his pricing Melancholia and started to promote credit sales. 2. Kaolin’s knowledge in finance and keep up the money flow. Even until now, Melancholia could keep the price low while keep the quality up. 3. Kaolin’s belief and courage. With no savings and precious little Even though the first container was a disappointment, he never gave up in believe in the same thing, and the success Just happened as simple as that.

Exercise: Chapter 1 Assignment 1 Application 14 Refer to figure 1. 4 on page 12 of your text. Use this figure to rate each of the following scenarios. Record beside each scenario your choice (a, b, c, d) and explain fully your choice. High in effectiveness and high in efficiency high in effectiveness and low in efficiency low in effectiveness and high in efficiency low in effectiveness and low in efficiency

Scenario #1 : The Production Manager of Mom’s Cookies had a monthly production target of 100,000 bags of cookies. His target for quality inspectors is to have the reject rate less than 2% of production. Both these targets were met for August. Labor costs are up 5% because overtime had to be incurred to complete some orders,Both goals were met but unfortunately labor costs went up. Scenario #2: The reject rate for Mom’s Cookies was 8% this month. The normal target is less than 2%.

The problem was traced too poorly maintained oven which burnt a number of batches before the problem was rectified. Addition costs were incurred to fix the equipment problem as well as extra costs associated with the Ingredients to make the replacement batches. The company however did make their monthly target of 100,000 bags of cookies. B,The company wasted resources but however they did reach their monthly goals which was 100,000 bag of cookies. Scenario #3: The month end reports for Mom’s Cookies have Just been received by the Production

Manager. They show that during the month of September, the company product 101 ,050 bags of cookies. The reject rate was 1%. Labor and raw materials were within budgeted levels. No breakdown of equipment occurred. A,Goals were achieved no breakdown of the equipment,no wasted resources and high productivity. Scenario #4: to be hired. There was not enough time to train these people and projection levels suffered. Only 95,080 bags of cookies were produced this month. The reject rate was 1. 9%.

Labor and raw materials were within budgeted levels. C,There was no wasted products but goals were not achieved. Scenario #5: Mom’s cookies imports their chocolate chips from Trinidad and Tobago. Unfortunately their dollar has increased in value against the Canadian dollar which has driven up chocolate costs by 10%. In addition, gas prices have gone up and the company uses gas ovens and gas heating. This has added another 5% to the company’s expenses. The reject rate was 1. 8% and the company produced 100,200 bags of cookies.

This will be followed by a personal economic outlook or the remainder of 2014. Current State of U. S Economy: A. Gross Domestic Product (GAP) According to the figures illustrated in the above graph prepared by the Bureau of Economic Analysis (SEA), an agency of the Commerce Department, U. S. Real gross domestic product contracted sharply at an annual rate of 1. 0 percent in IQ 2014 compared to 2. 6 percent in the previous quarter. This marked the first decline in economic growth since January 2011, a period of three years.

The drop in GAP growth comes as a revision, down from the BEAK’S original estimate released last April which showed an increase of 0. 1 percent. The BEA announces early estimates based on incomplete and partial data to provide a general picture of economic activity. These estimates are usually revised, with a second and third estimate being released as more data is acquired. The third and last revision for IQ 2014 is due to be released on June 25th and it remains to be seen how the GAP numbers will be affected. So why did the numbers decline so drastically?

Many economists blame the anemic growth due to diminished business inventories, and the abnormally, harsh winter the country experienced during the beginning of the year, however, not everyone agrees. Forbes quotes Steve Blitz, chief economist at ITS Investment Research who states, “Looking through the rest of the report, we see the cold hand of winter, although I am not sure to what extent the cold in the Midwest caused the level of exports to drop by $40. 5 billion while imports only dropped $8. 8 billion. Surely the supply chains weren’t frozen in only one direction. Despite the historically, cold weather, there is more to the unexpected, weak performance of the battered U. S economy. Numerous components of the GAP played a hand in causing the decline in economic growth, including a decrease in exports, lack of business investments and decreased government spending. Reduction in real exports (real imports, which are a subtracted in the GAP calculation declined as well), accounted for a significant portion of the economic decline, followed by a decrease in inventory investments, non residential fixed investments, residential investments and a cutback in state and local government spending.

The GAP ‘s only supporter so far this year came in the form of increased real personal consumer expenditures, which grew from 2. 1 percent from the previous estimate of 2. 0 percent, mainly reflecting sharp increases in services and light increases in other areas. The BEA states, “The downturn in the percent change in real GAP, primarily reflected a downturn in exports, a larger decrease in private inventory investment, and downturns in nonresidential fixed investment and in state and local government spending that were partly offset by an upturn in federal government spending” (2014).

The table below, prepared by the BEA, shows precisely which components of GAP rose and tumbled in IQ 2014. B. Foreign Trade (Exports & Imports) According to records maintained by the U. S Census Bureau and the BEA, exports in April of $193. 3 billion and imports of $240. Billion resulted in a trade deficit of $47. 2 billion, up from $44. 2 billion in March. The April exports were $0. 3 billion less than March exports of $193. 7 billion, but imports were $2. 7 billion more than March imports of $237. 8 billion. The chart produced by the BEA below displays the U. S. International trade in goods and services in a period of two years, from April 2012 to April 2014. Goods deficit in April increased by $3. 3 billion from March to $65. 8 billion and services surplus increased by $0. 2 billion from March to $18. 6 billion. Exports of goods decreased $0. 6 billion to $135. Billion, but imports however increased by $2. 7 billion to $200. 9 billion. Services exports increased by $0. 3 billion to $58. 2 billion and imports followed suit increasing by $0. 1 billion to $39. 7 billion. From April 2013 to April 2014, the goods and services deficit has increased by $6. Billion. Imports in that time period were up by 5. 4 percent or, $12. 4 billion and exports were up by 3. 0 percent, or $5. 6 billion. C. Gross Private Domestic Investments (Business Investment) Gross private domestic investment is a vital component of GAP because it gives us an idea of future productive capacity. It accounts for approximately 14 percent of our GAP and is considered to be the least stable component. The BEA defines gross private domestic investment as private fixed investment and change in private inventories.

It is measured without a deduction for consumption of fixed capital and includes replacements and addition to the capital stock, but excludes investment by U. S. Residents in other countries, hence the domestic. The BEA divides business investments into to sub-categories, fixed nonresidential investment, residential investment and business inventories. In short, gross private domestic investment is n aggregate component of expenditures and includes fixed investments (nonresidential and residential) and change in private inventories.

In the above graph from the Bureau of Labor Statistics (BLESS), the analysis depicts gross private domestic investment data with future projections as far as 2022. The growth rate for the time period of 2002 to 2012 is 0. 6 percent, with negative annual growth rates for all categories of fixed residential structures. However, the annual growth rate in business inventories in this same time period increased from the last decade from -3. 3 percent to 12. 9 percent. They project business inventories to increase by 2022 at an average annual rate of 0. 6 percent. D. Consumer Spending The Consumer Confidence Index increased slightly in May.

The index is currently at 83. 0, up from 81. 7 Just last month in April. The BEA recently reported that consumer spending increased to 10914. 40 billion in IQ 2014, up from 10831. 50 billion in Q 2013. U. S. Consumer spending fell for the first time in a year in April 2014 after two months of solid gains, but the decline is probably interim in nature given the strengthening numbers in the Job market. The drop followed a revised 1. Percent increase in March that was the largest gain since August 2009. Real disposable personal income (DIP) remained steady throughout IQ 2014 with a slight decreases in both April and May.

E. Unemployment Rate As reported by the Bull’s latest economic news release, total nonfat payroll employment increased by 217,000 in May. The increase was due largely to professional and business services, health care and social assistance, leisure and hospitality, transportation and warehousing and temporary services. Employment in other sectors such as manufacturing, mining and logging, construction, wholesale ND retail trade, information and financial services, and government remained steady. The unemployment rate remained unchanged at 6. 3 percent. In May, following a decline of 0. 4 percent in April.

The number of unemployed persons remained the same in May at 9. 8 million, a decrease of 1. 9 million over the last year. Over the previous year, nonfat payroll employment averaged approximately 197,000 a month. The long term unemployed numbers remained steady at 3. 4 million and accounted for 34. 6 percent of the unemployed. That number has declined by almost a million workers, as the economy continues to gradually recover ND improve. The graph below by the BEA shows the inclines and declines of the unemployment rate since 1990. Updated unemployment figures and charts for June 2014 will be released on July 3, 2014. F.

Inflation Rate (ICP) The most recent release by the BLESS states that the ICP for all urban consumers (ICP-U) increased by 0. 3 percent in April on a seasonally adjusted basis. Over the past year, the all items index increased by 2. 0 percent before seasonal adjustment. Gasoline, shelter, and food indexes all rose in April and so did all items less food and energy. The consumer price index for May will be released on June 17, 2014. G. Government Spending: Fiscal and Monetary Policies According to the data reported by the BEA, current government expenditures exceeded receipts and caused a net government saving of -966. Billion during first quarter of 2014; an increase from Q 2013. Net lending or net borrowing which is an alternative measure of the government fiscal position was -1036. 5 billion, increasing from -968. 7 Q 2013. U. S. Economic Outlook: Remainder 2014 Coming off the harshest winter we’ve experienced in quite some time, the economy is expected to rebound and continue improving its upward growth in the remainder of 2014. The economy is expected to expand 2. 4 percent with the recovery of the housing market and business investments. Government consumption is expected to slow economic growth this year for the fourth straight year in a row.

Consumer spending will remain in the 2 percent range, but it’s possible that it might increase due to the increase in disposable personal income. This is assuming consumer confidence increases as the year passes. Employment is expected to continue its growth of 180,000-190,000 Jobs gained monthly similar to the previous two years. Structural unemployment will continue to be an issue as most Jobs created will be in he food service and retail industries. Small businesses are expected to gain confidence and provide support to the economic growth in 2014 with a key source of funding that’s been missing since the recession; home equity.

The increase in home values over the previous year and the ongoing housing recovery is expected to support small businesses. The recovering housing market will play a role in GAP growth as home values continue to rise fueling construction activity leading to an accelerated pace in residential investment. Accelerated business investment will gain approximately 2. 5 percent to around 4. Percent in the following quarters; driven by hefty gains in nonresidential structures and slight increases in equipment and software expenditures. Growing demand for industrial space will support the increase in business investments.

Inflation will rise modestly from the lows of 2013 but will remain humble. Consumer prices will rise as producer prices rise due to global and domestic demand. Net exports will play a leading role and is expected to add to the overall GAP growth. Economists predict a 6. 6 percent rate of growth, along with the support of the oil boom to increase the pace of export activity. U. S. Economic Personal Outlook: 2014 From the extensive research I’ve done on this topic, my personal outlook on the economy for 2014 in one word, subpart. I expect GAP to grow slightly over the year due to more than one component.

Consumer spending is a strong candidate to increase most simply because disposable income is increasing. I understand that we just recently went through a recession and money conservation would be wise, but we’re a consumer nation and a consumer based culture, therefore I expect personal consumer expenditures to rise. The winter that affected the nation during the ginning of the year slowed growth but in March, when the weather started to lift consumer expenditures skyrocketed. Personally, it would seem as if consumer confidence is on the rise and the data supports my theory.

I believe the increasing home values will embolden consumers and business owners alike and add to economic growth, with businesses leading the way. I feel as if consumers aren’t ready to make such a big financial commitment such as a mortgage and the ones willing to take risks will be the entrepreneurs or the business owners, so I expect to see growth in business investments. Residential investments will continue to improve as confidence is restored in the housing market allowing consumers to purchase rental properties to supplement or increase their income.

Non residential investments will increase as well as values rise due to demand but I’m not quite sure how strong this demand will be. Being the consumer culture we are, I expect us to import more than we export like we have for over a two decades now, however, the strengthening oil and gas sector in the country will gain momentum, gradually relieving us of our oil dependency on OPEC nations in the years to come, decreasing our imports of foreign oil. Economic growth in 2014 may be slow, but it’s much better compared to where we were as a nation a couple of years ago.

Executive Summary In the Case study, Cooper Industries is trying to acquire Nicholson File Company. However, there are two other companies that are interested in Nicholson as well: VLN Corporation and H. K. Porter Company. In 1971, VLN together with Nicholson management constructed a deal that, however, didn’t get the support from the majority of common stockholders. After having done a discounted cash flow analysis, I determined that Nicholson stock is undervalued. Also, Nicholson seems to be a good strategic fit for Cooper.

Therefore, Cooper could acquire Nicholson on friendly terms with a relatively large premium to attract the majority of the shares needed. The problem for Cooper is to determine how best to acquire Nicholson and the adequate price to pay. 1. ) and 2. ) In my opinion, Mr. Cizik should make an attempt to gain control of the Nicholson File Company. Cooper Industries has been pursuing a policy of expansion through the acquisition of other companies and this strategy appears to be working well for them. They have acquired a number of companies and have been successful in integrating them into Cooper Industries.

They have established three criteria that potential companies for acquisition must meet and Nicholson meets all three criteria. Nicholson holds 50% of the market share in files and rasps, its main products, therefore implying that Cooper could be a “major factor” in this industry. Nicholson is also a leading company in their markets and it is a stable company in terms of not being dependent on a few major customers. Nicholson has a great deal of potential for greater sales growth as it is only growing sales at 2% compared with the industry average of 7%.

Due to the strengths of its products and distribution system they should be capable of raising growth rates to the industry average. The company is further desirable to Cooper as the two companies sales forces could be combined leading to cost savings. Nicholson’s European distribution system could also be very helpful in expanding Cooper’s sales in Europe. As Cooper Industries sells more of their product to industry and Nicholson to the consumer market by combining the companies they may be able to increase sales of both product lines to the market segment they are weaker in. All in all, Mr.

Cizik should try to gain control on Nicholson File company as it seems to be a good strategic fit. 3. Nicholson’s firm value derived by the means of DCF analysis amounts to $ 39. 86 mio. After subtracting net debt, the value of Nicholson’s equity amounts to $ 28. 86 mio. meaning an equity value per share of $ 49. 42 (undervalued). This should also be the maximum price that Cooper should afford to pay for Nicholson. 4. Cooper analyzed the benefits of the merger with Nicholson. Cooper estimated that the cost of goods sold after acquiring Nicholson could be reduced from 69% of sales to 65% meaning a dollar value of this synergy of $ 11. 7 Mio. Also, SG&A could be reduced from 22% of sales to 19% of sales resulting in a dollar value of this synergy of $ 8. 45 Mio. These numbers are based on the combined net sales for 1972 using a 7% growth rate in sales from previous net sales (growth of industry level). The opposite distribution of business activity in business and consumer market is likely to result in revenue growth. The numerical effect of this revenue pulling, however, is highly vague at this point in time. 5. The exchange value Cooper could afford to pay out without causing any dilution according to my calculation is $ 37. 2 per share meaning an Exchange Ratio of 1. 55. Thus, we could offer 1. 55 Cooper shares for every Nicholson share they need. This amounts to 133,013 of Coopers shares for 86,000 Nicholson shares. If they wanted to pay cash for the remaining stocks it would then be $37. 12 * 86000 = $ 3. 19 mio. for the remaining stocks needed to gain control via 50. 1% of all shares. Despite the threat of EPS dilution, Cooper might be willing to pay a price higher than $ 37. 12, if the negative short-term effect will be outweighed by positive ones in the ong-run. In general, it is crucial to consider the effect of acquisitions on EPS as a significant, or enduring dilution of EPS will harm the corporation’s performance significantly. 6. I do recommend a loan as capital preferred financing structure. This use of debt rather than equity financing for the acquisition of Nicholson causes a higher return on equity, as well as an increase in the efficiency of existing capital structure. Also, there are tax advantages to be realized through debt financing (tax shield).

The ultimate goal would be to maximize shareholder value and this can be supported through a lower WACC resulting from a higher leverage (as effect outweighs increase of risk). The interest on debt is tax deductible resulting in a higher Net Income and, thus, EPS. Nicholson management had accepted an offer from VLN Corporation using convertible stock but rejected a cash offer from H. K Porter. Nicholson may not want cash for their company. If that was the case, Cooper would need to offer cumulative convertible stock. 7. With an exchange ratio of 2, about 78% of the new firm would be owned by Cooper.

The relatively high exchange ratio would result in a severe reduction of control to Nicholson’s shareholder (22%). Under the given circumstances with an exchange ratio of 2, the acquisition premium for paid would be $ 14 per share. The minimum synergies required that this offer makes sense would be $ 8. 18 Mio. Given my synergy valuation from task 4, this would definitely be a realistic achievement. 8. Porter bought Nicholson’s shares with the intention to take over the company themselves. However, as they weren’t able to acquire enough shares required to buy the company, they are now looking to tender their shares.

Obviously, they’d like to do this profitably and, thus, their primary concerns are the price- and liquidity-level. They try to get the most value out of their stocks, so price is of primary importance in a bargaining process with them. Nevertheless, they want to be able to quickly liquidate their stocks meaning a preference for cash payments. They expressed that convertible preferred stock was acceptable as they assume Cooper stock to be stable and easily tradable on the NYE. The speculators/ unaccounted for shareholders would also be primarily concerned with price.

These shareholders may be tempted to buy or not to buy based on what Nicholson family and its management suggests they do. Thus, one possible way to reach these group of shareholders may be through management. Due to this influence, the family Nicholson and its management have a greater bargaining position as implied by their shares. They are interested in more than just the price. The management is not highly attracted to a takeover, but they know they no longer have a choice. So, at least, they wish to see Nicholson remain autonomous within any acquiring company.

Nicholson’s management and family is most likely not willing to sell the majority of their shares for cash; They wish to maintain a stake in the company. As a result, Cooper would need to offer a stock exchange. VLN, as Coopers bidding competitor, is unlikely to be willing to sell their shares to Cooper for a reasonable price. Ex-Post: In 1972 Cooper industries acquired Nicolson File Company Two Cooper Industries Inc. Based on the given information in the case study regarding the acquisition of Nicholson File Company by Cooper Industries, there is no question that Cooper should try to gain control of Nicholson.

This decision is based on an analysis of the bargaining positions of each group of Nicholson stockholders which have disparate goals and needs that need to be met. In addition, an appropriate payment method and specific dollar value based on a competitora€™s offer and Cooper financial data was decided. The remainder of this paper will provide the analysis and rationale for this determination. Should Cooper Industries Acquire Nicholson File Company? Cooper Industries has been expanding through diversification since 1996.

Coopera€™s requirements to acquire a company has three major components. The target company must be: 1. In an industry in which Cooper could become a major player 2. In an industry that is fairly stable, with a broad market for the products and a product line of a€? small ticketa€™ items; and 3. A leader in its market segment. When looking at the criteria that Cizika€™s company (Cooper Industries), set forth relative to acquisitions, the acquisition of Nicholson meets all three objectives plus has significant potential short and long-term potential.

Cooper management feels that by eliminating redundancy and streamlining Nicholsona€™s operations this potential can be realized. Currently, Nicholsona€™s financial history boasts a 2% increase in profit annually but this percentage is way below the industry average of 6%. Cooper management proposed that if Nicholson stops selling to every market, increased efficiencies would result and cut cost of goods sold from 69% of sales to 65%. It was also suggested that the acquisition could lower selling, general, and administrative expenses from 22% of sales to 19%.

Nicholsona€™s position in the file and rasp market where it holds a 50% market share of a $50 million dollar market meets all three of Coopera€™s objectives. Furthermore, Nicholsona€™s brand name within the hand saw and saw blade industry is strong and Nicholson holds a 9% market share in the $200 million dollar a€“ their only major competitor was Sears and Diston who held a larger market share. Shareholder Standings At the time of the proposed merger between Nicholson File and VLN, there were a total of approximately 584,000 Nicholson shares outstanding. H. K.

Porter had not purchased enough shares to hold majority control, and this situation provided Cooper with yet another opportunity to acquire Nicholson. Nicholson and Porter stockholders had their own concerns, as well as bargaining positions, and if Cooper was to acquire Nicholson they had to address all of their concerns and convince them that the merger was a mutually beneficial proposition. The table below, Exhibit 7 in the case study, shows the estimated disposition of shares in early 1972: Estimated Distribution of Nicholson File Company Stock_______________

Shares supporting Cooper H. K. Porter 177,000 Cooper Industries 29,000206,000 Shares supporting VLN Nicholson family and management117,000 Owned by VLN 14,000 131,000 Shares owned by speculators 50,000 a€“ 100,000 Shares unaccounted for 197,000 a€“ 147,000 Total Nicholson shares outstanding 584,000 Shareholder Concerns There are three major groups of shareholders that Cooper must consider when putting together their offer to acquire Nicholson. These groups are Nicholson, H. K. Porter, and the group of Unaccounted for Shares and Spectator Shares. Nicholson File Company

Loss of control – Nicholson managementa€™s greatest fear was loss of operating control. The company had been in the Nicholson family for years, and if Cooper expected to gain support for the offer by Nicholson and gain at least 86,000 shares to tip them over the majority (206,000 + 86,000 = 292,000; 584,000/2 = 292,000) they would need to guarantee them that they would work with the current management to maintain the identity and image of Nicholson. Additionally, Wall Street investors would view the maintenance of Nicholson management as a stabilizing factor in the merger.

Loss of product lines a€“ Whichever company acquired Nicholson, there was no doubt that aggressive cost cutting measures would be pursued; this would undoubtedly mean marginal product lines would cease to exist. Although Cooper could not emphatically guarantee that nothing would change, they could guarantee that they would work with Nicholson to determine if improvements could be made to product lines at risk and thereby maintain their existence, or at the least–include Nicholson management in the decision making alternatives. H. K. Porter

Stock valuation – If the merger with VPN were successful, Porter would receive VLN preferred stock for their 177,000 Nicholson shares. VLN stock performance had been dreary, and did not show any signs of growth in the short-term. This would make it difficult for them to sell the shares of VLN on the American Stock Exchange which does not trade in large blocks. Additionally, from the years 1968 to 1971, VLN net sales had grown only 3% from $97 million to $100 million. Net income actually decreased by almost 7% for the same time period from $3. 2 million to $2. 98 million.

Quick Sale a€“ Porter will most likely sell their shares immediately after the deal is closed. They will do this because they no longer will have an interest in acquiring Nicholson, and history has shown many times over that share prices will fall rather quickly as mergers do not create synergies through added value or earnings growth. Unaccounted For Shares and Spectator Shares Valuation and Sustainability a€“ This voting bloc has the same concerns as Porter relative to share pricing, but is more concerned with sustainability unlike Porter who is concerned with making a quick dollar.

They own a lot more shares, estimated between 150,000-200,000 shares, and are not certain that VLN Corporation projected figures are truthful. VLN Corporation has not paid consistent dividends for many quarters, and has not shown any real growth, yet is still offering to match Nicholsona€™s $1. 60 dividend rate as part of the merger deal. Shareholder Negotiations Both Nicholson and Porter had strong postures regarding the merger, and Cooper needed both companies to bless the merger to get it approved by a majority of the stockholders.

Cooper only owned 29,000 shares and needed a total of 292,000 shares to gain a majority. Nicholson and Unaccounted Shares The Nicholson family and management owned 117,000 shares. However, the speculation was that 150,000-200,000 of the unaccounted for shares would vote with the Nicholson family. This amount of shares would give Nicholson immense bargaining power. Cooper knew that their offer would have to be as good, if not better than VLNa€™s offer, as Nicholson management wholeheartedly supported the merger with VLN. H. K. Porter Porter owned 177,000 shares.

This was a major voting bloc and gaining their support was essential. Luckily, Porter was eager to work with Cooper because they believed their VLN preferred stock would only be worth $23. 12 in the first year (essentially worthless). Therefore, their support would be mutually beneficial and easier to garner. Coopera€™s Offer to Acquire Nicholson As has been detailed above, each group of shareholders has their own concerns and bargaining power. Cooper has to induce both Nicholson and Porter that their offer is more than fair, and as a result, all three companies and shareholders will profit.

Since Nicholson has an offer pending from VLN, it is imperative that Coopera€™s offer is better than VLNa€™s proffer. The VLN offer includes that (1) the exchange would be a tax-free transaction, (2) the $1. 60 preferred dividend equaled the current rate on the Nicholson stock, (3) a preferred share was worth a minimum of $53. 10. At the time of the proposed offer, the closing price of Cooper stock was $24 per share. In order to match the bid by VLN, Coopera€™s offer would have to be greater than two-for-one for each Nicholson share. The offer would need to be in the range of 2. 5/2. 50:1 to be greater than the $53. 10 offer pending. It is of extreme importance to Nicholson that they maintain control. In mergers, culture clashes are often the a€? kiss-of-death. a€? Cooper has a sincere offer to maintain the integrity of the company and Nicholson would be wise to consider Coopera€™s offer as their goals and interests for the long-term are mutual. Cooper has a history of successful mergers and acquisitions, which should be of some comfort to Nicholson as they will be acquired by some company or group of investors.

H. K. Porter Requirements Since Porter was not able to gain a majority vote, they are willing to side with Cooper over VLN. Porter realizes that a merger between Cooper and Nicholson will give them the opportunity to convert shares of Nicholson into Cooper stock a€“ a much more enticing proposition than that of VLN. Cooper needs to guarantee Porter that the exchange will be tax-free, and that the Nicholson stock he converts will be worth at least $50 each. Unaccounted for Shares and Spectator Shares

The offer to this voting alliance will need to be greater than the $53. 10 per share offer by VLN. They will also want the exchange to be tax-free to avoid capital gains taxes. As has been mentioned above, this group will most likely side with the Nicholson family so if the Nicholson family is satisfied, then this group will be also. Payment Considerations There are several considerations that Cooper management must take into account prior to deciding the specifics of the offer they will give Nicholson File Company in terms of dollar value and the form of payment.

The form of payment may include an offer of cash, stock, debt or some combination of the payment options. Furthermore, Cooper not only has to consider Nicholson shareholders when determining what to offer, but it also needs to take into account the other 80% of the shares publicly held, including a substantial percentage of shares held by competitor H. K. Porter. As previously described, one of the challenges Cooper is facing in this acquisition is to ensure a satisfactory offer that appeals to a sufficiently broad range of shareholders with different interests.

This includes H. K. Porter which currently holds about 25% of the total outstanding shares and which recently failed in its attempted acquisition of Nicholson. Also, the Nicholson family that founded Nicholson File Company currently owns approximately 20% of its own shares. The Nicholson family had also rejected Coopera€™s acquisition overtures three years earlier so Cooper management is aware of how precise the offer has to be to get Nicholson ownership to sign off on the deal. Another 50% of Nicholson shares are held by speculators and by other unknown parties.

Form of Payment & Dollar Value The form of payment and the parameters for the dollar value offer that may be accepted by Nicholson management is exhibited in the described failed and accepted acquisition offer in the case study of Cooper (see Chart #1 below). The acquisition offers by both H. K. Porter, $42 per share in cash and VLN Corporation, $53. 10 in convertible stock, help provide at least a range within which Cooper may tailor its offer. Based on these two offers, it appears that the appropriate form of payment should be Cooper cumulative convertible stock.

The primary basis for this recommendation is that Nicholson management had already accepted an offer from VLN Corporation using convertible stock but rejected a cash offer from H. K Porter. This is consistent with Chang and Suk (1998) research which found that a€? cash offers are more likely than stock offers to have termination initiated by the target firm. a€? It is also believed that if Nicholson management signs off on any merger, speculators and the unknown portion of shareholders will go along with the merger. However, one negative aspect of using stock is that a€? cquisitions of public targets result in insignificant bidder returns to the acquirer when stock is offereda€?. (Chang & Suk, 1998) is this a direct quote, if so we need the reference) Cooper management believes strongly that the Nicholson acquisition will not result in negative returns due to the potential improvements that can be made through simple reorganization of some Nicholson operating businesses. Also, it appears an exchange of stock is appropriate because Cooper currently only has $9 million in cash on hand and would need to incur significant debt in order to offer a decent cash offer.

It already has $5 million in long-term debt due and $34 million in long-term debt outstanding, levels significant enough that may prevent Cooper management from considering a cash offer for Nicholson. Competitor Acquisition Offer Details Type of offerOffer price per shareDividendsTax FreeOffer Accepted/Rejected H. K. CooperCash$42NoNoNo VLN CorporationConvertible stock$53. 10YesYesYes VLN and Porter Offer Details Since Nicholson management has already accepted VLN Corporationa€™s offer, it is clear that the terms Cooper needs to offer would have to exceed those already offered by VLN.

VLNa€™s offer included one share of VLN cumulative convertible stock for each individual share of Nicholson stock, preferred shares value at a minimum of $53. 10, $1. 60 preferred dividend equaling the current rate of Nicholson common stock, and convertible into five shares the first three years and four the fourth year. In addition, the offer was desirable since the exchange of stock would be tax-free as opposed to a cash offer. According to Dhaliwal et al (2005), to qualify as a a€? tax-free acquisitiona€¦tax laws require that the acquirer use its own stock as payment. a€? However, Cooper also has to consider the demands of H.

K. Porter in order to get approval for the merger. H. K. Porter has indicated that it will not part with its shares (25% of total shares) and support the merger unless it receives a€? Cooper common or convertible securities in a tax-free exchange worth at least $50 for each Nicholson share it holds. a€? This demand is below the current book value of $51. 25 for Nicholson common stock, but above the $44 per share on the open market. The final consideration that assists with setting up the range for an appropriate offer that may be accepted by a simple majority of shareholders is the total value of Nicholson stock.

With 584,000 shares of Nicholson File Company Stock and at $44 per share, this amounts to a total market value of $25,696,000. Therefore, in order to make the offer attractive, Cooper will have to make an offer that exceeds the market value of all of the stock but will have to ensure that the offer is not too high that it affects Coopera€™s long-term plans to continue to pursue acquisitions. A basic rule for Cooper acquisitions is that they bring significant long-term returns on the acquisitions as well as steady growth in earnings per share.

Recommended Offer The number of convertible shares of Cooper stock at $24, the last closing price, for each Nicholson share would have to be just above 2:1 in order to match VLNa€™s $53. 10 offer. So, Cooper should offer convertible stock fixed at 2-1/2:1 within the first five years after the offering. This amounts to an offer of $60 per Nicholson share. This would not only exceed VLNa€™s offer per share but would also help make up the deficit in dividends, $1. 40 by Cooper and $1. 60 by VLN, and make the offer more attractive to Nicholson shareholders.

Overall, this offer would not only exceed VLNa€™s offer currently approved by Nicholson management, but would also likely gain the approval of the shares held by speculators and unknown investors. In addition, this offer meets the payment method required by H. K. Porter for its Nicholson shares, and actually exceeds the $50 minimum offer per share it had requested. As a result, it appears that Cooper should be successful persuading Nicholson shareholders and unaccounted for shareholders to accept the offer, and in return acquire at least 80% of the outstanding Nicholson shares of stock

Question 3 (5 points) Suppose your dear old Grandfather approaches you for investment advice. He knows of your great training in finance and statistics and gives the following instructions: “Obviously, I want to maximize my returns, but since my life is now quite boring, I also enjoy a good thrill. My first priority is to pick the security with the highest return. After that, pick me the most volatile investment so I can enjoy the thrills of holding risk. Suppose there are three securities (X, Y, and Z) to choose from next year, the economy will be in an expansion, normal, or recession state with probabilities 0. 0, 0. 20, and 0. 40 respectively. The returns (%) on the securities in these states are as follows: Security X {expansion = +13, normal = +9, recession = +7}; Security Y,{+1 5,+1 5,+2}; Security Z {+17,+10,+2. 5}. Which investment best fits your grandfather’s needs? Your Answer Correct. Once you see the calculations, his preferences determine the obvious choice. Security X. An exposure to how your choices depend on your risk preferences.

Question 4 (10 points) The more idiosyncratic risk in the return of a security, the larger the risk premium investors will demand.

Your Answer True False. 10. 00 Correct. You understand risk-aversion and the implied diversification by investors. 10. 00 / 10. 00 Fundamentals of risk and diversification. Question 5 (10 points) We often want to find investments that perform well when other parts of our portfolio are struggling. When considering stocks to add to the portfolio, those with a correlation closer to zero with our existing portfolio will most effectively help us diversify. Your Answer Correct. You understand relationships and their critical role in diversification. True.

Again, understanding relationships and diversification.

Question 6 (10 points) As a CEO you wish to maximize the productivity of your workers. You are thinking about providing your employees with smartness so they can be readily available to clients and increase sales. However, you are also concerned that your employees are Just as likely to download APS that will distract them from their work, leading them to play games and update their social networking sites rather than focus on the Job of pleasing clients. To test this you randomly select 6 employees for an experiment.

You provide 3 with the new smart phone and the other 3 use their existing technology. The following chart shows their changes in sales. Based on this small sample, what is the correlation between smartened and increase in sales? [Hint: It may help to use the spreadsheet function COERCE to calculate the correlation] (Enter the answer with no more nor less than two decimal places, and leave off the % sign. For example, if your answer is 13. 97% you should enter it as 13. 97 NOT 0. 14 nor 14) {Anthony, Smartened: Yes; change in sales 120; Kirk,

Smartened No; Change in Sales 60; Michael, Smartened No; Change in Sales 150; Scarlet. , Smartened Yes; Change in Sales 130; Pete, Smartened Yes; Change in Sales 40; Angela, Smartened No; Change in Sales 60. }

Answer for Question 6 You entered: Your Answer 8. 03 Correct. You know how to calculate/measure relationships. Calculation of correlation; important to finance and Just about anything else.

Question 7 (10 points) Investors generally do not like to bear risk. Because of this, the price of an otherwise identical government bond relative to a corporate bond will be Your The same. Lower. Higher. Correct.

You will be willing to pay less for something that you dislike relative to the alternative. Total Simple pricing of risk-aversion.

Question 8 (1 5 points) Suppose your client is risk-averse but can invest in only one of the three securities, X, Y, or Z, in an uncertain world characterized as follows. Next year the economy will be in an expansion, normal, or recession state with probabilities 0. 40, 0. 40, and 0. 20, respectively. The returns (%) on the three securities in these states are as follows: Security X {expansion = +14, normal = +10, recession = +7}; Security Y {+1 1, 9, +8}; Security Z {+13, +8, +7. }. Which security can you rule out, that is, you will not advise your client to invest in it? Your Answer Inherent 0. 00 Calculate the basic statistics for all three securities and evaluate them based on risk- return trade-offs. Security Z. None of the securities. 0. 00/ 15. 00 This is a real life situation that requires you to think through a bit.

Question 9 (15 points) You have Just taken over as a fund manager at a brokerage firm. Your assistant, Thomas, is briefing you on the current portfolio and states “We have too such of our portfolio in Alpha.

We should probably move some of those funds into Gamma so we can achieve better diversification. ” Is he right? [Hint: Feel free to use spreadsheet statistical functions. ] Here is the data on all three stocks. Assume, for convenience, that all three securities do not pay dividends. Alpha, Current Price 40; Current Weight 80%; Next Year’s Price: Expansion 48, Normal 44, Recession 36; Beta, Current Price 27. 50; Current Weight 20%; Next Year’s Price: Expansion 27. 50, Normal 26, Recession 25; Gamma, Current Price 15; Current Weight 0%; Next Year’s Price: Expansion 16. 0, Normal 19. 50, Recession 12. Your Answer It depends. Yes. 15. 00 Correct. You know how to calculate relationships and to make informed portfolio management decisions. No. 15. 00/ 15. 00 A good question for figuring out portfolio composition given that we are into diversification.

Question 10 (1 5 points) Suppose there are two mortgage bankers. Banker 1 has two $1,000,000 mortgages to sell. The borrowers live on opposite sides of the country and face an independent probability of default of 5%, with the banker able to salvage 40% of the Ortega value in case of default.

Banker 2 also has two $1,000,000 mortgages to sell, but Banker g’s borrowers live on the same street, have the same Job security and income. Put differently, the fates and thus solvency of Banker g’s borrowers move in lock step. They have a probability of defaulting of 5%, with the banker able to salvage 40% of the mortgage value in case of default. Both Bankers plan to sell their respective mortgages as a bundle in a mortgage-backed security (MBPS) (I. E. , as a portfolio). Which of the following is correct? Your Answer Banker 1 ‘s MBPS has a higher expected return and more risk.

Banker g’s MBPS has a higher expected return and more risk. Banker 1 ‘s MBPS has more risk, but the expected returns on both MBPS are the same. Banker Xi’s MBPS has a higher expected return and less risk. Banker g’s MBPS has more risk, but the expected returns on both MBPS are the same. Correct. You can calculate, and base decisions on, risk-return trade-offs. Banker g’s MBPS has a higher expected return and less risk. A topical issue given the current crisis; requires you to both calculate and make decisions based on risk-return trade-offs.

This is good policy to control CO by government. It reduce all the CO which comes from other transports. It can impact on transport group significant. In new Zealand all bus transports are following to this rules. 2. The second policy is private buses. Before sass, the government had to arranged the buses and other transports for public. But after sometime, they started to used private transport. By these two policies, the government should reduce the CO because private buses help to reduce CO and public can get good traveling transport. Kyoto protocol is the best policy to reduce CO. Element 1

Assess political, economic, and cultural trends. 1. 2 Relevant national economic indicators are selected and assessed in terms of implications for business development. Range may include but is not limited to – inflation, unemployment, interest rates, investment spending, money supply, share market fluctuations, business confidence, indicators.. Why invest in New Zealand? New Sealant’s stable economy and political system, reputation for innovation and the ease of doing business make it an attractive place to invest. The right partnerships between overseas capital and New Zealand businesses have exulted in outstanding commercial successes.

The New Zealand Government actively encourages foreign investment and the country has world class infrastructure to support business activity. Whether you are a corporate, funds or individual investor, there are a number of compelling reasons to consider New Zealand. Source: New Zealand Trade and Enterprise Question 1. 2 (PC 1. 2) You have been hired by a prospective overseas investor who has read the above extract from the New Zealand Trade and Enterprise website and wants to know more about investment and business development opportunities in New Zealand.

The investor is also interested in Australia but wants to invest in either New Zealand or Australia. You are to present information to the investor after assessing the various economic indicators of New Zealand in terms of implications for business development. You may refer to New Zealand trade website (nest. Gobo. NZ) and New Zealand statistics (instant. Gobo. NZ) website for further information. You are required to select and assess six relevant national indicators from the range provided above. The investor’s decision to invest in New Zealand will rely on the information you provide.

Select at least six relevant national economic indicators. Assess the impact of these economic indicators on the development of business in New Zealand. 1 . Inflation- inflation generally refers to the rate of price increases. In practice this refers to the price increase in the consumer price index, which tracks the prices of a basket of goods and service consumed by the average new slanderer. Inflation is important as it can distort incentives to consumer, save and interest. If prices are rising rapidly, then it is better to spend money now rather than save. As a dollar save today will buy less tomorrow when prices will increase.

This can also delay investment and reduce the future growth of economy. This is why reserve bank of NZ aims to keep inflation between 1% and 3%. At low levels of inflation the distortions to consumptions, savings and investments are small. 2. Unemployment- Unemployment rate is in New Zealand unchanged at 6% in the first quarter of 2014 from 6% in the fourth quarter of 2013. Unemployment rate is in NZ averaged 6. 29% from 1985 until 2014, reaching an al time high of 1 1. 20% in the third quarter of 1991 and a record he raise the OCCUR march 2014 from a historic low of 2. 5% to 4% by march 2015.

The URBAN will watch for any wobbles in emerging market economics. Higher interest rates will moderate the recovery rather than cause a slump. High interest rates will reduce new borrowing and investment. Consumption will slow as existing borrowers pay more interest. 4. Money supply- in NZ, increased to 39574 NZ million in march of 2. 14% from 38216 NZ million in Feb.. 2014. Money supply in NZ overspreading. 251 NZ million from 1977 until 2014 and reaching in all time high of 39881 NZ million in DCE of 2013. Money supply NZ is reported by URBAN. 5. Business confidence- business confidence in NZ decreased to 64. 80 in April of 2014 from 67. 0 in march of 2014. Business confidence in NZ averaged 5. 65 from 1970 until 2014, reaching in all time high of 80. 90 in Feb.. Of 1994. 6. Investment- in NZ, people spend their money on their needs, business and if they do invest money on something then they can get back the profit of their invest but it takes sometime. 1. 3 Relevant international economic indicators are selected and assessed in terms of implications for business development. Range may include but is not limited to – international trade, balance of payments, currency fluctuations, international market fluctuations, regulations for entry to specific international markets.

Question 1. 3 (PC 1. 3) Using the ‘5. 4 Macroeconomic Foundations’ document from the NZ Department of Statistics: Select three relevant indicators from the range listed above and in the Macroeconomic foundations document and assess their implications for business development in New Zealand. 1 . International trade- International trade is the exchange of capital, goods and international trade. International trade makes a competition between different countries. International trade has been made possible by advances in technology. The impact of international trade can be seen in different parts like Jobs, economy etc.

One impact of international trade is its effect on the economy of the nations engaging in the trade. The effect is felt by both less developed and more developed countries. More developed countries get benefit by purchasing raw materials and finished products from less developed countries. In NZ , mostly china is the one country who delivered their stuff in NZ. NZ markets gets benefit because the currency is low in china and NZ sell all the stuff in markets by NZ currency. 2. Balance of payments- Balance of payments shows the economy and financial situation between two or more countries. Its means import and export in different countries.

In NZ, a few number of companies do import and export. NZ market companies use imports in a cheap price from another countries like china, Korea. Its effects really good on the country because they Just spend a little bit money on things and they sell that all stuff in their own country currency rate. By using this , they are coming more rich. 3. Currency fluctuation- Currency fluctuation is when the currency rate goes up and down. Most investors will be familiar with the concept of currency exposure, with constantly changing exchange rates affecting the cost of investing in international stocks. F any country imports the things from another country and if the currency rate go down to that export country, import country can get more benefits . 1. 4 Relevant industry or sector indicators are identified and assessed in terms of Range may include but is not limited to – population trends; building permits; cuisines surveys; specialist trade, industry, or service surveys. Scenario You are looking at opening a cafe© in the Auckland CB. Identify at least 2 relevant industry or sector indicators for your cafe© from the above range.

Next assess the implications of these indicators for your business. Question 1. 4 (PC 1. 4) Using the ‘Auckland City Council’ website Identify at least 2 relevant industry or sector indicators Assess the implications of these indicators for business in New Zealand Population trend- In Auckland CB, there are different type of people staying,working, studying there. For everyday life, all types of people comes in the Auckland CB. The years. Five years ago, 4% more New Slanderer than Australians were buying takeaway coffees, or Tea. They always feel hungry and they must spend their money on coffees.

They would like to buy muffins, coffees because Auckland CB is mostly business area. Population is really beneficial for cafes. If Every person walking near the cafe©, they must buy coffee. Mostly in NZ, the winter season is long than summer season, so in winter everyone feel cold and must have to drink some hot. That’s why cafe© is good in Auckland CB. Business surveys- According to population trend and winter season, cafe must be open in Auckland CB. The business of cafe© can get promotions in Auckland CB. Sales of coffees and muffins will be must high because people love coffees.

In this modern century, people don’t want waste their time on eating or drinking things but the coffees takes too less time to make. Its good and easy for all people and teenagers mostly loves to sit in the cafe© stores. The business can get benefits in Auckland CB. 1. 5 Relevant cultural indicators are identified and determined in terms of Question 1. 5 (PC 1. ) Using the ‘Travel Group serving the local New Zealand’ case study: Identify the relevant cultural indicators Determine the overall effect of these changes on the Travel Group. Culture- In NZ, there are different types of people living here. They all people have their own culture.

In the beginning of this country, two types of people struggle for this country to stay here. Maori and kiwi people are the main citizens in NZ. Maori people and kiwi people have different culture and they have differences in traditions, religious, wearing. There are Indians, Chinese, Asians are living in NZ as well. Recruitment- The human rights are same for all people. Whether there are different types of people living here but the rights are equal for all of them. In Christmas time, all people get holidays and pay. The Indian people have rights to celebrate their festivals like Dalai, Did for Muslims etc.

Nobody can stop them to celebrate their festivals because every person have their human rights. Maori people and kiwi people enjoy their festivals like Christmas, Easter egg, English language. Indians, Chinese, Muslims, Asian they all people have their different languages but English is the one of them language which we can only speak n work, universities, restaurants and in businesses. NZ businesses and universities are prefer to speak only English language. The other languages are helpful for uneducated people who comes from overseas and who’s don’t know much about English language.

After sometimes, The population of international people become maximum in new Zealand. Different countries of people like European, Asian, Indian and Chinese works in popular businesses and they make different types of acts, businesses. They does more development in new Zealand economy. Element 2 Monitor and evaluate new processes and technologies. 2. New processes and methods that are relevant to existing and potential business operations are monitored and evaluated in terms of their potential contribution to business development. Question 2. 1 (PC 2. ) – Outline three new processes and methods that are impacting on current business operations – Evaluate the potential contribution of these to business development in New Zealand Kyoto protocol- Kyoto protocol is government policy. Government make this policy because they want to reduce CO. By this Kyoto protocol policy, government gave the suggestion to public to use buses more than car , so the CO can be less. By using this policy, New Zealand environment got a fresh air that’s why all international people love to stay here in this clean, fresh environment.

Economic changes- In Auckland, transport company provide better buses to students, parents and old people. The drivers learned the way to talk and behave with students , old people. Transport group work by government policies and where ever the students want , they can sit . After sometime, some people face difficulties about the buses fares. They change their transport system and they started to drive their own car. Teenagers have habits to buy new design cars and all families Social changes- in Auckland, the percentage of older people is becoming high than previous time.

They have gold cards for buses, that’s mean they can travel free anywhere. People are understanding more about environment that’s why they don’t use their own cars. They love to travel by buses and trains. Assessment PART A 2. 2 Technologies that are relevant to and may impact upon current or potential business operations are identified, and are evaluated in terms of their potential Question 2. 2 (PC 2. 2) Using the ‘Air New Zealand Domestic Bag-Drop System’ case study: Identify at least 3 technological factors that may impact on businesses.

Evaluate the potential contribution of these technologies to business development in New Zealand Bag drop- Air New Zealand provide a bag-drop service to passengers. In previous time, passengers had to wait whole time for place their bags in planes. Now the exposed collector conveyor collect their baggage. Passengers have to put their bags with their names tags and timing and they can take their place in planes. The bag- drop service reduce the time and cost of staff, Customers. This service is really easy and faster for passengers and old people feel comfortable to travel anywhere.

Silver pop service- Air New Zealand provide a silver pop service to passengers. This means air new Zealand send an email by post to passengers about their flight timings. They shows their all information about weather details, flight prices on Backbone or twitter . This is easy way to inform the public about this. POLL online payment system- Air new Zealand provide the technology of online payment. This means customers can pay online for their flights. Too many customers feel uncomfortable to go travel agencies and buying tickets, but this is the easy way for all of them. They can book their flights at their homes or anywhere.

This processing is really easy and it takes only few minutes to complete. Some people feel flights. Element 3 3. 1 A. Competitor markets- In NZ, Evolve company have transport and that is providing train, buses, taxies to NZ. B. Their products and services- Evolve transport is providing different types of products and services. In every town and street, they provide buses, taxies and trains. The services of Evolve is really good and drivers has good experiences to drive safe and good behavior with passengers. Evolve transport provide the services on mime and in every station or bus stand passengers can see the correct time for travel. . Their market share- Evolve transport Auckland , which runs the city urban passengers trains, almost doubled its annual profit last year after its change the way it does business. Evolve provides a rail services under a contract with Auckland transport. Now in every station, there is a ticket machine and every person buy a ticket by their own self before they travel by train . Its save too much time and staffs cost. Evolve get benefit by this services. Evolve market share is going very profitable ND they are making more trains and buses. 3. 2 A.

Evolve transport is getting good profit in New Zealand. Evolve transport is making more new trains and buses because they are getting good money by passengers and services. They want to promote more their business. Evolve transport is providing excellent products and services. In previous time, there was no ticket machines on platforms but now Evolve transport provide ticket machine and every passenger can buy ticket by their own self and its save money for Evolve transports staff. B. The role of Evolve transportation in urban is increasingly being recognized by Auckland towns.

Evolve transport creating a fresh and maintain environment in buses and trains so passengers can take fresh and good breath and they can feel comfortable there. Evolve transport has been a partner in many cities where transportation has played a key role in improving quality of live and in urban renewal. Evolve transportation is using diesel for trains but now they are providing new electric trains, so pollution can be zero % for environment. Is providing safe Journey to passengers. Evolve transport is providing properly trained operators not to only drive well but to handle customer situations.

They also does the ‘going for green’ programmer to enhance customer service and make sure riders feel safe getting on board. Evolve also beefed up its Para transit training programmers as well given significant amount of customer interaction in that service in order to make sure riders have good experience. Evolve plans to roll out more safety and security training programmer which helps to control dangerous situations, including a training programmer for safety managers on how to handle a bus hijacking. 3. 4 Evolve transport is a development company in Auckland.

Evolve has opened a eater company as well. Their team deliver the water treatment solutions which improve the quality of life in communities around the world. Their sustainable carbon and water footprint initiatives help clients respond to stakeholder expectations to reduce environmental and resource impacts. Clients and public trust them to ensure safety and good results for health. Evolve has environment cleaning company as well. Evolve environment company clean the wastage in Auckland. Element 4 4. 1 Joint venture- Evolve have two companies in Auckland- Evolve transport and Evolve water.

Evolve transportation company is providing buses, taxis and trains service in Auckland. Evolve transport needs to takes a good hard look at public-private partnership models for funding . Evolve have to do partnership with another cities and Evolve have to start their trains. North shore city have no any trains service, so Evolve should have to provide their products and service there. Soft and hard networks- Evolve transport have great products and services. The business of Evolve is going profitable and Evolve can do partnerships with another transportation companies like go west.

Evolve transportation company can learn new wings in different ways to work with another companies. Evolve transportation staff can get more knowledge about services, profits, sales. In previous time, Evolve transport was providing only ticket services but now they stared to use AT HOP card for buses and trains. Introduction of new partners- Evolve transport is doing business profits according to passengers and Evolve transport have become partner with another company. The shareholder of evolve transport and transfer have been working towards a merger between the companies for the past two years. The creation of this new company is a

“Due diligence” is a somewhat technical phrase used to describe a range of assignments, legal obligations, reports and investigations which take place in business, manufacturing and law. Its most frequently heard version is the one pertaining to business, where “duediligence” refers to the steps taken by venture capitalists before investing a round of capital in a startup, the ongoing investigation as to how the funds are being distributed, or the precautionary steps taken by a larger company in deciding to acquire a smaller company.

Sometimes the phrase is referred to as a capitalized proper noun: Due Diligence. The precise definition of “due diligence” varies between firms and organizations. In manufacturing for example, certain environmental requirements must be met, which are verified in an Environmental Site Assessment called a “due diligence report”. It consists of a checklist of specifications and sections for open commentary. Ads by Google |IT Due Diligence Experts |Information & Communications Technology Due Diligence. Munich | | |www. oach. de | |Due Diligence Checklist |Industry proven 600+ pt checklist available for immediate download | | |www. birds-eye. net | |Due Diligence |Worldwide offices Know-how, experience & resources | | |i-factanalysis. om/due_diligence | |M&A Cross-Border |Mergers & Acquisitions Business Sales, Invest in Europe | | |www. eleusis. eu | |Free Trading Webinar |Learn how to use technical analysis to make better security trades. | | |www. equis. com |

In venture capitalism, due diligence involves looking into the past and present of the people and structure of a company requesting venture funding. For instance, venture capitalists are wary of investing in companies that lack people with credentials or a proven track record. Depending on the overall level of caution in the investment environment at the time, a duediligence investigation may be more or less stringent. Typically a venture capital firm will have a dozen or more investigators whose task is to research specific details of the personal history of people in the company.

With the Internet, researching a person’s past associations and experience has never been easier, much to the delight of investment communities. Of course, due diligence is not a panacea against investment failures. Even a company made up of well-educated high achievers can falter due to unpredictable market conditions, unforeseen competition, or technical setbacks. Due diligence generally refers to the background checks conducted after a venture partner has already made a decision about the company.

Typically, partners will prefer to invest in companies led by people they already know are very trustworthy, and probably have been given funds in the past. In law, due diligence refers to precautions that are supposed to be taken by a person or company in some context. For example, did the company thoroughly check their product beforehand to ensure it was non-toxic or was not a strangulation hazard? If they do not, and bad results come of their negligence, they can be held criminally liable.