Next PESTLE Analysis | Next Plc

chthonicmentioned cast Analysis contiguous PlcTagsPESTLE Analysis, PESTEL Analysis, PEST AnalysisIntroductionA PESTLE abbreviation provides and depth psychology of six of the call macro level factors which excise a dividing line and the decision which it makes (Grant, 2008). This assignment will apply the relevant factors inside the PESTLE mannequin to the international clothing retailer neighboring and its subsidiaries. Data upon which the assignment is found comes from a variety of starts including the conjunctions annual report ( abutting, 2012) and released and well as information from the donnish and lineage promote. In order to give the assignment a greater level of stress, the report will be limited to an analysis of the external purlieu in the UK.Political at that place be a wide range of political factors which affect Next at present but as well factors which whitethorn fill an repair upon the association in the future. One key political decision wh ich affects Next in the UK is the rate of tax levied by the government. This has the qualification to affect both the bottom line of the company in the form of conjunction tax but as well as the ability of customers to spend with next, linked to income tax. At present, levels of corpo dimensionn tax in the UK have been lowered in order to attempt to stimulate economical activity (Telegraph, 2012). However, given the continuing deficit, on that point is no endorsement that governments in the future will accommodate the rate of corporation tax at its certain level.Other key political decisions sum up interest rates. At present, UK interest rates stand at an all- era low of 0.5% (BoE, 2010). This may be seen as a positive factor for firms such(prenominal) as Next who ar effectively able to borrow colossal amounts of money for the purposes of great(p) expansion at much lower rates than have been previously seen. much(prenominal) borrowing may take place in the form of lon g term borrowings from banks and financial institutions, alternatively the company may choose to issue unified bonds (Arnold, 2008).Other political issues impact to the governments relatively arms length approach to Europe and remaining outside of the single currency area (FT, 2012). For a UK found clientele such as Next that has international mathematical operations in the Euro Zone, this could be seen as negative with the prospect of foreign exchange rate assays organism felt and the introduction of additional transaction speak tos which would be eliminated if the government decided to join the Euro Zone.From a much general perspective, the UK political system based upon parliamentary democracy may be seen as providing Next with a relatively low risk political surroundings in which to operate within (CIA, 2013). This may be seen as an advantage in comparison close to of Nexts ventures into potentially less shelter political nations such as Russia and those of the Midd le eastern hemisphere. As such, this makes the UK a relatively safe commercialise for Next to make further long term capital investments in where the company may think double in the case of less stable political environments. economicalA critical factor which may have an impact upon Next in the UK is the current state of the economic environment. As a business which makes use of a premium based differentiated strategy, as opposed to being a cost leader, it may be seen that swings within the economic environment have the ability to impact the fortunes of the company to a greater degree than those operate in the indispensableness and budget vault of heaven of the foodstuff (Johnson et al, 2008).From a purely statistical perspective, the course of instructions since 2007 have been an economic rollercoaster for the UK. Following the onset of the world(prenominal) financial crisis in 2007, the incidental year saw GDP growth revert to negative figures with -1% contraction in the economy. This was attach toed by even worse performance in 2009 with a -4% contraction. first levels of growth have been seen since in 2010 and 2011 with GDP growth of 1.8% and 0.8% respectively (World Bank, 2013). However, while the statistics show a slight recovery in 2010 and 2011, others within the business press (BBC News, 2012) indicate that the UK economy could continue to flat line or worse resolvent in a double dip recession. These headline figures may face to paint quite a negative picture for retailers such as Next which are mellowed-pitchedly reliant on the UK economy as a source of revenue. However, an analysis of more detailed economic data may highlight a different perspective.Tutt (2012) presents data which looks at the level of unemployment and household fluid incomes in the UK. In this case an alarming pattern is seen. On the one hand, levels of unemployment have been change magnitude in recent years with a rise from 0.86m in 2007 to 1.53m in 2011. However, conversely, the levels of disposable income of individual households during the period has consistently risen from 14,308 per household in 2007 to 16,042 per household in 2011 (Tutt, 2012). For Next and other premium end retailers this may have a key impact upon strategy. While there may be few customers able to by the products and run of Next due to go unemployment, those who have remained in employment have generally become wealthier. As a result it is likely that such economic patterns may help Next to improve its average spend per customer, even if the total itemize of customers falls.Social-CulturalThere are many social and pagan changes taking place in the UK at present which may have a high level of impact upon the performance of fashion retailers such as Next. In many cases, as representatives of an basically socio-cultural industriousness, the fashion industry itself may be seen as an industry which is affected by such modes to a greater degree than other industries (Curtis et al, 2007).One of the key issues in the UK market, but too seen across Nexts wider European markets is the general aging of the population (Parliament UK, 2012). This may be seen as both problematic but in addition an prospect for Next. One the one hand, an ageing population may see Next having to adapt its product portfolio in an attempt to hold in that the products supplied by company appeal to this aging demographic of the population. In addition, the prospect of an aging population may to a fault see that competition for the increasingly smaller younger demographics of the market becomes more intense for Next as time progresses. condescension these drawbacks, there are also advantages linked to the issue. On consideration is that ageing populations tend to be less mobile than younger demographics, this may be a key advantage for Next given that its home delivery and online business model walk a convenient solution to the problem.Other socio-cultural factors inclu de the consideration that the UK has since World War Two become an increasingly culturally diverse nation with an inflow of diverse cultures, races and ethnicities all contributing towards the socio-cultural backdrop of the UK social system (Shepherd, 2010). For Next, this has non only external implications such as those linked to aligning product ranges to special cultural segments, in attrition, the company musty also ensure that it deals with issues such as managing diversity in the context of its own organisation. In this case, change magnitude cultural diversity smoke be seen as both a source of a competitive advantage yet also a potential source of conflict (Liff, 1997, Ivancevich et al, 2010). As EU expansion takes place and the new(a) member states become further integrated into the EU, there is a distinct possibility that the trends for increased diversity in the UKs labour and consumer markets will increase rather than decrease.TechnologicalThere is little doubt tha t new technological developments have transformed the UK business environment, especially those operate in the retail sector. Key developments may be seen as those technologies which are internet or communications based in nature, such as the wide spread diffusion of broad band (Jobber, 2007).Key technological developments such as the internet have suspended firms such as Next to develop online business models which complement traditional bricks and mortar retail establishments. Empirical evidence from the ONS (2009) on the subject shows that the growth has been almost exponential with a rapid acceptance on the behalf of customers of online shopping in both retail and other markets.Yet communications technologies have not only been used by the sector to facilitate online sales and shift away from the traditional high street place. Other aspects of new technological development have seen a range of new marketing options opened up to retailers such as Next. Most important amongst t hese are developments which have allowed retailers to interact with customers using online social networking sites such as Facebook, YouTube and Twitter. These are now seen as key ingredients in the development of a successful marketing strategy (Zarrella, 2010), largely the product of technological changes in the sector.Other technologies have simply allowed businesses to develop better relationships with their consumers and communicate in a more effective way. Take for instance the technological developments of smartphones and apps. Such technology has allowed companies to develop apps which allow consumers to find their nearest branch or check the facilities and product availability at a branch before making a visit. This allows an effective yoke to be built betwixt the purely online business model such as those operated by a company like Amazon and those falling into the bricks and clicks family (McGoldrick, 2002) such as Next who must seek to leverage the benefits of both ar ms of the business.While technology in this section has largely been presented as an opportunity, there is of course a risk factor. Many have expressed concerns over the abandoning of the high street as consumers flock to online business models. The case is illustrated only as well as latterly with the example of Jessops going into administration, a business which may be seen as falling victim to technological developments (Goodley, 2013).LegalLike all businesses, Next must conform to the legal minimum standards which are enforceable in a jurisdiction. The case of Nexts UK operations legal elements may be seen as more complex given that the company must comply with both UK law and EU law. Some of the key legal regulations which affect Next in the UK are considered belowMinimum wage legislation A key piece of legislation in the UK which affects organisations such as Next with a large total of low paid workers is that of various minimum wage regulations. In this case, the legislat ion requires UK employers to concede their employees a minimum of 6.19 per hour for those aged over 21 (Gov UK). given(p) the large number of employees of firms such as Next which are affected by the National Minimum Wage, temporary shifts in legislative form _or_ system of government can have a high impact upon the sector.Other key legislative issues include equal opportunities legislation and various other acts of parliament designed to ensure equality both in the work place and in the recruitment and selection process (Pilbeam and Corbridge, 2010). In this case, such legislation has a direct impact upon the processes and practises of an organisation such as Next who are required not only to design corporate polices which facilitate equality but also to script activities related to recruitment and selection should an employee call foul at a later date. The issue here for businesses such as Next is that the legislative environment often places the burden of proof on the defenda nt rather than the claimant in such cases. As such, the development of detailed HR processes and practises is critical (Bratton and Gold, 2007).Further issues relate to potential moves on the behalf of legislators to become tougher in relation to issues of tax avoidance. While Next has to date not been implicated in any of the tax avoidance scandals, there is a consideration that the actions of other retailers such as Starbucks and Amazon (Syal, 2012) may have provoked the onset of a tougher legislative environment in the future which may have an impact upon innocent parties such as Next.EnvironmentalThe physical environment is also a key issue for firms operational in any given national market and consideration should be considered two how firms treat the physical environment and the impact this has on the business, but also the impact the physical environment generally has upon a business.In general terms, the physical environment which Next operates within in the UK may be seen as relatively benign in comparison to other parts of the world which suffer from high intensity natural disasters such as earthquakes, hurricanes and forest fires. Despite such an environment there have been a number of environmental issues recently in the UK which have affected the retail sector. These have included increasing more frequent floods (Retail Bulletin, 2013) and poor sales due to snow storms and the failure of local authorities to prepare for periods of inclement weather (Hall, 2011).Other aspects of the environmental analysis require firms to consider their own impact upon the environment. In general terms, the literature (Parsons and MacLaran, 2009) considers that consumers are becoming increasing aware of the impact of businesses upon their environment. As such, if businesses are to maintain customer loyalty and avoid negative backlashes, then they must seek to minimise their impact upon the environment. In the retail sector, this may include reducing waste, rivule t more efficient transport operations and implementing ethical sourcing policies. While failure to comply with such consumer demands may result in a negative consumer backlash, with the credence of the right approach, high environmental credentials can be used to add comfort to a product or service. Such an example is seen in the Marks and Spencer (2013) and Body Shop business models in the retail sector.ConclusionHaving reviewed the key factors within the macro level environment as presented in the PESTLE framework, it is possible to come to a number of conclusions in relating the model to Next and its UK operations. On the one hand, it would appear that the external environment is a largely intriguing one for Next with the prospect of further poor economic performance and a requirement to comply with what may be seen as a relatively tough legislative environment. However, the PESTLE factors would also seem to indicate that there are some large opportunities for Next in the UK. Such opportunities include the ability to borrow at low interest rates to fund capital expansion and increased opportunities to link technological developments to changes in the social fabric of hunting lodge in order to drive more sales through with(predicate) web based platforms. Other factors such as changing technologies and increases in diversity may be seen as neither positive or negative intrinsically but still require some change on the behalf of Next. Having reached these conclusions, the final imprint of the writer is that the external environment is essentially neutral for Next at the moment and that the success of the business will be largely dependent upon whether managers of the business capitalise upon the stated opportunities or allow the challenges to see Next becoming another casualty of the death of the high street.BibliographyArnold, G. (2008). Corporate financial management. quaternate ed. Harlow FT Prentice Hall.BBC News. (2012). UK economy in double dip r ecession. purchasable online at http//www.bbc.co.uk/news/business-17836624 Accessed on 18/01/13.BoE. (2010). Bank of England maintains bank rate at 0.5% and the sizing of the asset purchase program at 200 billion. Available online athttp//www.bankofengland.co.uk/publications/news/2010/084.htmAccessed on 18/01/13.Bratton, J, Gold, J. (2007). Human resource management theory and practise. 4th ed. Basingstoke Palgrave Macmillan.CIA. (2013). World fact book UK. Available online athttps//www.cia.gov/library/publications/the-world-factbook/geos/uk.htmlAccessed on 18/01/13.Pilbeam, S, Corbridge, M. (2010). People resourcing and talent planning. 4th ed. Harlow FT Prentice Hall.Curtis, E, Watson, H, Sephton, L. (2007). Fashion retail. second ed. New York John Wiley and Sons.FT. (2012). UKs Euro trade supremacy under attack. Available online athttp//www.ft.com/cms/s/0/736bd72a-3c9a-11e2-a6b2-00144feabdc0.htmlAccessed on 18/01/13.Goodley, S. (2013). Jessops goes into administration, putting 2 ,000 jobs at risk. Available online athttp//www.guardian.co.uk/business/2013/jan/09/jessops-verge-administration-jobs-riskAccessed on 18/01/13.Gov UK. (2013). National minimum wage rates. Available online athttps//www.gov.uk/national-minimum-wage-ratesAccessed on 18/01/13.Grant, R, M. (2008). Contemporary strategy analysis. 6th ed. Oxford Blackwell Publishing.Hall, J. (2011). Snow cost Next and HMV 42m in lost Christmas sales. Available online athttp//www.telegraph.co.uk/finance/newsbysector/retailandconsumer/8240799/Snow-costs-Next-and-HMV-42m-in-lost-Christmas-sales.htmlAccessed on 18/01/13.Ivancevich, J, M, Konopaske, R, Matteson, M, T. (2010). Organisational behaviour and management. 9th ed. New York McGraw Hill Irwin.Liff, S. (1997). Two routes to managing diversity individual differences or social group characteristics. Employee relations. Vol. 19. No. 1. pp11-26.Marks and Spencer. (2013). Plan A Doing the right thing. Available online at http//plana.marksandspencer.com/we-are -doing/sustainable-raw-materials/stories/6/ Accessed on 14/01/12.Next. (2012). Annual report 2012. Available online athttp//ir2.flife.de/data/next/igb_html/index.php?bericht_id=1000007index=lang=ENGAccessed on 18/01/13.Parliament UK. (2012). Aging population. Available online athttp//www.parliament.uk/business/publications/research/key-issues-for-the-new-parliament/value-for-money-in-public-services/the-ageing-population/Accessed in 13/01/13.Retail Bulletin. (2013). Its time for retailers to prepare for the worst and adapt to climate extremes. Available online at http//www.theretailbulletin.com/news/its_time_for_retailers_to_prepare_for_the_worst_and_adapt_to_climate_extremes_07-01-13/ Accessed on 18/01/13.Shepherd, J. (2010). Englands schools are becoming more diverse. Available online athttp//www.guardian.co.uk/ fostering/2010/jan/20/schools-more-diverseAccessed on 18/01/13.Syal, R. (2012). Amazon, Google and Starbucks accused of diverting UK profits. The Guardian Newspaper. Avail able online athttp//www.guardian.co.uk/business/2012/nov/12/amazon-google-starbucks-diverting-uk-profitsAccessed on 18/01/13.Telegraph. (2012). Budget 2012 Corporation tax cut will boost UK but not enough. Available online athttp//www.telegraph.co.uk/finance/budget/9158950/Budget-2012-Corporation-tax-cut-will-boost-UK-but-not-enough.htmlAccessed on 24/11/12.Tutt, L. (2012). Market report 2012 gambling and betting. Key Note. Oct 2012.World Bank. (2012). GDP annual growth %. Available online at http//data.worldbank.org/indicator/NY.GDP.MKTP.KD.ZG Accessed on 12/01/13.Zarrella, D. (2010). The social media marketing book. California OReilly Media.Automobile field Analysis Five Forces and SWOTAutomobile Sector Analysis Five Forces and SWOT1. Overview of the railroad car sectorFive forces analysisCompetitive Rivalry between Existing Players HighCompetition between existing automobile companies is high. Although the automobile market was dominated by the three big auto manufacturers in US, Toyota and Honda in Japan, the situation is changed. With the growing demand in emerging market, the emerging competitors in China and India may drive an intensified bell competition. However, the competition could also focus on the safety, warranty and financial services etc.Threat of New Entrants MediumAlthough the entrant barrier is high for the automobile industry be mother the requirement of capital and technology, an increasing number of automobile manufacturers are emerging in China and Asia due to the economic expansion and growing demand. However, these automakers are in the development stance and may not catch up the leading technology in Japan and US, so the threat from new entrants is medium.Threats of Substitutes LowCustomers could choose to tack to exile authority other than automobile such as bicycles, buses and subways. However, the automobile is still the favourite despite the relevant high cost than other mentioned transportation means because its flexibi lity, comfort and convenience.Bargaining Power of Suppliers LowIn automobile industry, the component supplier has little bargaining spot because the manufacturer could switch to other suppliers easily. On the other hand, the components are generally low value and the suppliers find it difficult to bargain with automakers.Bargaining Power of Customers HighThe competition in the automobile industry is intense as mentioned above. So the customers have many choices on the brands and models. Customers care to the highest degree the quality, price, safety, comfort, appearance of the car. Recently, customers are also more and more concerned about the environmental effect of the automobile and the force efficiency. So the customers get more and more bargaining power in automobile industry.2. Toyota push back follow2.1 Overview of the company confederacy profileToyota Motor Corp. is one of the largest and leading automobiles manufacturers in the globe. It operates in three main business segments the two biggest are automobile and financial services whereas the third one is comprised by many smaller other divisions. It is spread worldwide as it has 50 manufacturing facilities in 27 countries and regionsToyota designs, manufactures and sales passenger cars of some(prenominal) types and utilities, trucks, tractors and material handling equipment, minivans and other car accessories. Its products can be divided into 2 main categories, conventional and hybrid fomites. The company sells its products under Toyota, Lexus, Hino and Daihatsu brandsThe company is also engaged in the financial industry as it provides financing to its customers and dealers. It is also involved in housing, marine, e-commercial, ITS and biotechnological activities.Toyota sells its vehicles in more than 170 countries and regions worldwide. Toyotas primary markets are Japan, nitrogen America, Europe and Asia. It is headquartered in Toyota City, Japan and employed around 316,121 people as on March 31, 2008Strategy AnalysisToyotas strategy can be summarised under three key principles growth, efficiency and stability. These are the three priorities the companys management will pursue to achieve future sustainable growth and increase the economic value. harvest-time will be achieved through continuous investment mainly in hybrid vehicle segment to meat the increasing demand. Efficiency is mainly focused on cost management and further reduction in order for the company to be able to provide high quality products in low-priced prices and maintain its competitive advantages. Stability will be ensured by maintaining a solid financial base. Within the economic downturn it is important for Toyota to maintain suitable liquidity in order to continue to finance its investments in research and development of new technologies, which is an integral and essential part of the companys advantages.Peer GroupAs Toyota operates in the global market its competitors come from all around the worl d. Its study competitors are BMW AG, DaimlerChrysler AG, Fiat S.p.A., Ford Motor Company, General Motors Corporation, Honda Motor Co. Ltd., PSA Peugeot, Renault S.A., Volkswagen AG and many othersSWOT AnalysisStrengthsWeaknessesStrong overall financial performanceStrong reputation and qualityStrong position is Asian marketenquiry and developmentProduction pipeline system and cost managementDiversified product portfolioFinancial services are still undevelopedHuge expenses on pensions and post-retirement benefitsOpportunitiesThreatsIncreasing demand for hybrid and environmental-friendly carsExpansion in emerging Asian marketsFinancial and other non-auto division developmentNew car modelsGlobal economic crisisStrong competition in automotive industryYen and US dollar exchange ratesTight environmental regulations on carbon emissionsProblems with specific components of sold cars. (Recent brake problem)2.1. Key Financials Analysis31/3/200931/3/200831/3/200731/3/200631/3/2005 sales207,85 2.40264,120.58202,821.01178,294.05173,443.60 run(a) Income-4,667.5222,809.8218,959.8415,919.5115,192.39Net Income Available to Common-4,423.7917,259.0513,923.6211,629.6310,950.45 essential Assets292,725.95324,979.61275,051.76242,604.35227,515.08 gist Liabilities185,398.39199,132.47169,488.89148,104.55138,230.49Common Equity101,865.07119,249.79100,242.1589,502.9484,563.86Net cash in feed in Operating Activities14,724.726,357.627,783.522,136.222,144.6* IMPORTANT First year to report losses* Stable increase in sales Decline in 2009 greatly affects income* Severe decrease in cash flow from direct activities, nearly 50%* Very big difference between sales and operating income points out severe cost expenses for the company. As this differences is constantly increasing it is not far from the truth to say that Toyota is gradually loosing its competitive advantages in cost efficiency against its competitors.* General trend in key financial s shows a steady and permanent increase until 2 008 and a sharp fall in 2009, due to severe problems of economic recession and its great impact on automobiles industry.This trend applies for almost all financial s, pointing out that the companys performance as a whole followed a movement like this.2.3. Multiples analysis31/3/200931/3/200831/3/200731/3/200631/3/2005 hurt To Earnings-22.439.1914.7415.2511.23Price To Book0.971.322.041.971.44Price To Cash Flow7.414.837.837.805.87Price To gross revenue0.50.70.81.00.7* Multiples follow companys general trend, namely increase until 2007 and then decreasing sharply* Consistent with overall picture of company, multiple analysis show the economic downturn of the entity from 2007 onwards* Point to mention negative P/E ratio. Markets expectation about company looks very slim. The economic crisis, alongside with its severe problems generating income and its recently damaged reputation, create really unfortunate future prospects for Toyota. The negative P/E ratio and specifically its magnitud e (-22) implies that nobody is neither willing to pay to buy the companys share nor expecting any profit generation.* Very sharp decline as well 31.62 units is something extremely noticeable. If we focus on decline itself, it shows an extremely speedy unfavorable turn of the market towards the company.2.4. Companys performance31/3/200931/3/200831/3/200731/3/200631/3/2005 advantageousnessReturn on Equity-3.9814.4914.6814.0013.60Operating Profit Margin-2.258.649.358.938.76Asset UtilizationTotal Assets Turnover0.710.810.740.730.76Net Sales % Working Capital28.93180.701412.6229.7815.30 trainEBITDA / Interest expenditure20.9486.1977.33153.70146.20 foresightful Term Debt/ Common Equit62.6350.4052.9253.4155.44Valuation InvestmentEarnings Per Share-1.415.434.343.573.32Dividend Yield Close3.212.821.591.401.63LiquidityQuick Ratio0.810.770.760.810.87 flow Ratio1.071.011.001.071.15* Negative profitability in 2009* Fluctuating sales/working capital as a result of fluctuation if investments ( working capital)* Gearing increase in 2009 at the same time with high decrease of interest cover* Stable and quite low liquidity2.5. Cash Flow analysis31/3/200931/3/200831/3/200731/3/200631/3/2005Cash Flow Operating Activities14,724.726,357.627,783.522,136.222,144.6Cash Flow drop Activities(12,265.3)(34,254.0)(32,727.4)(29,704.4)(28,591.6)Cash Flow Financing Activities6,967.46,242.77,565.67,716.83,917.0Effect of exchange rates-1,294.04-749.27218.18604.94232.09Net Cash Flow8,132.86-2,402.992,839.91753.58-2,297.85* Severe decrease in cash flow from operating activities, nearly 50% which vividly affects its operating income* Extreme decrease in investing activities around 70%, probably caused by cash shortage and policy change. The company issued a new project with main goal to improve profits and cover operating expenses and as a result we see a large negative impact in new investments.* Financing activities exhibit a stationary trend over the past few years indicating the stable fin ancial policy of the entity.* Adverse effects of exchange rates during the last two years indicating the risk the company runs because of the Yens depreciation to the U.S dollar and the Euro.2.6. Stock functioningThe companys share performance seems to move according to the index, with the trend to over perform it constantly. We can see the decline of the shares price, which started right before the end of 2008, following the global economic recession. At the turning point, which is in the beginning of 2009, we observe a relatively high trading volume, probably indicating the forthcoming upward movement. It is also really significant to point out the extreme high trading volume observed during the first months of 2010, followed by a new decline of the shares price. This reflects the problems that Toyota is facing nowadays. There is a considerable lack of trust from the market towards the company which is mainly caused by its severely damaged reputation and loss of quality.3. Ford M otor Company3.1 Overview of the companyA . Company profileThe group operates in two segments Automotive and Financial Services. For the automotive segment which consists of Ford, Lincoln, Mercury and Volvo has a main operating activity in manufacturing, sale and service of component for cars and trucks.The Financial services segment is included of financing, insurance and leasing regarding to cars, trucks, industrial equipment, construction equipment and other activities. The company has operation in North America, South America, Europe, Africa and Asia- Pacific.B. Strategy Analysis One FordThe Company has initiated the new strategy called One Ford which has detail as followo ONE TEAM focuses the significant of team work in order to reach the automotive leadership. The measurement is satisfactory of business partners, employees, investors, and related companies.o ONE PLAN The cardinal-step plan has been established which composed of balance between cost structure and revenue develo p new product follow customer preference develop balance sheet status and finance the plan and cooperation around the world to leverage companys resources.o ONE GOAL That is to create an kindle and viable company with profitable growth for all.Ford has started the restructuring business process before the economic crisis which the Company has reduced the excess capacity, closed some unprofitable plants and lower excess workforce. In addition, Ford has improved the product line in term of higher quality, more safety, use less energy and more economic.* Affordable Fuel Economy Focusing on deliver terminate efficiency engine to the market. For example, the 2010 Ford Fusion is now Americas most fuel efficient midsize sedan for both the hybrid and conventional gasoline models.* Electrification strategy plan to bring pure batteryelectric vehicles, next-generation hybrids and a plug-in hybrid to market quickly and more affordably over the next four-spot years.* Safety leadership Ford go t totaling 16 models picked from the Insurance Institute for Highway Safety which more than other brands.* EcoBoost Engine delivers significant gains in fuel economy along with a great performance drive feel.C. Peer GroupFords peer group is Daimler AG, Fiat Spa Honda Motor Company Limited, Motors Liquidation Company, Nissan Motor Company Limited, Toyota Motor Corp and Volkswagen AG.D. Fords SWOT AnalysisStrengthsWeaknessesl Wide geographicOperate throughout the world and has a strong market in North America, Europe and Asia. Sales of each region of 2008 are 49%, 39% and 12% respectively. The well diversified market of ford reduces the risk of economic problem in specific area.l Brand royaltyFord has renowned reputation about quality and also owns other renowned brands such as Lincoln, Mercury and Volvo.l Quality carFord owns totaling 16 models of car that rated as safety car by the Insurance Institute for Highway Safetyl Product RecallExperienced many recalled products due to the qu ality of defective cruise control switch which may cause fire. Even though there is no fire cases reported but the Companys reputation is negative affected.l Negative operating resultl Low gross marginGSKs long-term debt increased by 115.5% in 2008, which may lead to problems such as minatory interest payment, risk of having too little working capital and even increasing possibilities of bankruptcy.l Too much long-term debtThis may lead to problems such as heavy interest payment, risk of having too little working capital and even increasing possibilities of bankruptcy.OpportunitiesThreatsl Expanding market in emerging marketFord has a plan to expand its sale in the emerging market which has great buying power in the future.l Eco-friendly engineFord has high reputation in the eco-friendly engine such as hybrid engine which has very promising market.l Fuel efficiencyFord found another opportunity in the market for fuel-efficient in small and middle car.l High competitionDue to new co mpetitor, lower demand and excess capacity.l Economic crisisEconomic crisis and regression in USA where is the main market of Ford caused severe effect to the Company.3.2. Key Financial AnalysisSource ThomsonFinancialScaling figure 1,000,000 USDCurrency USD12/31/0812/31/0712/31/0612/31/0512/31/04Net Sales or Revenues146,277.00172,455.00160,123.00177,089.00171,652.00Operating Income3,518.008,031.00-8,167.007,010.0010,681.00Earnings Before Interest And Taxes (EBIT)-4,885.006,792.00-6,689.009,354.0011,669.00Interest Expense On Debt9,682.0010,927.008,783.007,643.007,071.00Net Income Available to Common-14,681.00-2,764.00-12,615.002,441.003,634.00Total Assets215,773.00276,459.00275,337.00264,891.00294,447.00ST Debt Current Portion of LT Debt63,972.0061,052.0062,456.0059,904.0066,433.00Long Term Debt90,716.00107,478.00109,593.0094,428.00106,540.00Total Liabilities231,889.00269,410.00277,643.00250,812.00277,525.00Common Equity-17,311.005,628.00-3,465.0012,957.0016,045.00 Net sales decre ased from 2007 about 15% as the economic crisis in the State which is the main market of Ford. The Company has had actual losses from operation since 2006. Ford has high outstanding of long-term loan which may causes liquidity deficiency or bankruptcy if the Company still has ceaselessly loss in the future. As a result of net losses from operation since 2006, Ford has had negative shareholders equity since then.3.3. Multiples AnalysisMONTHLY HISTORICAL food market PRICESY2008Y2007Y2006Y2005Y2004January6.648.138.5813.1714.54February6.537.917.9712.6513.75March5.727.897.9611.3313.57April8.268.046.959.1115.36May6.808.347.169.9814.85June4.819.426.9310.2415.65July4.808.516.6710.7414.72August4.467.818.379.9714.11September5.208.498.099.8614.05October2.198.878.288.3213.03November2.697.518.138.1314.18December2.296.737.517.7214.64.5 Year5 YearVALUATIONY2008Y2007Y2006Y2005Y2004Y2003Growth RateAverageP/E Ratio (High)-1.36-6.93-1.4112.949.6334.66-1.042.57P/E Ratio (Low)-0.16-4.75-0.906.647.011 3.16-1.01P/E Ratio (Close)-0.35-4.81-1.126.778.1332.00-1.011.73Price/Sales0.040.080.090.090.180.18-0.800.10Price/Book Value-0.322.62-4.141.141.742.62-3.940.21Price/Cash Flow0.441.241.760.701.111.35-0.671.05Price/Working Capital0.000.000.000.000.000.00-0.167.78TARenderChart.png* P/E ratio turned to be negative since net losses from operation since 2006 and also the market price has continuously decreased from 8.58 in the beginning of 2006 to 2.29 at the end of 2008.* P/B ratio had negative value in 2008 from the negative book value of Ford.3.4. Companys performanceWorldscopeCurrency USDPROFITABILITY RATIOS12/31/0812/31/0712/31/0612/31/0512/31/04Return On Invested Capital0.251.921.952.953.32Operating Profit Margin2.432.943.125.026.54ASSETS UTILIZATION RATIOSAsset Turnover0.630.600.590.590.58Net Sales Pct Working Capital10.626.215.6811.0641.64LEVERAGE RATIOSEBITDA / Interest Expense-0.500.62-0.761.221.65LT Debt Pct Common Equity-76.88233.49316.381,268.121,229.66LIQUIDITY RATIOSQuick Ra tio1.051.081.121.081.03Current Ratio1.211.251.301.251.19 Profitability ratios do not show the devout performance as Ford has had net loss from operation since 2006. Leverage ratios also go in the same trends as a result of negative equity and high outstanding balance of long-term loan. Liquidity ratios present that Ford still can generate cash to supply its working capital but if consider to the long-term debts Ford may cannot provide enough cash to support its debt payment since these ratios are still in the low range compared with its debt outstanding amount.3.5. Cash flow analysisSource ThomsonFinancialScaling Factor 1,000,000 USDCurrency USD12/31/0812/31/0712/31/0612/31/0512/31/04Net Cash Flow From Operating Activities-179.0017,074.009,609.0021,674.0022,591.00Net Cash Flow From Investing Activities3,143.006,457.0024,862.00-7,462.008,567.00Long Term Borrowings42,163.0033,113.0058,258.0024,559.0022,223.00Inc(Dec) In ST Borrowings-5,120.00919.00-5,825.00-8,591.004,937.00Reduction In Long Term Debt46,299.0039,431.0036,601.0036,080.0036,021.00Net Cash Flow From Financing Activities-9,104.00-5,242.0015,273.00-20,651.00-14,226.00 The Company cannot generated sufficient cash from operation and had negative net cash flow from operation. Moreover the Company had to pay interest expenses for loans and had high net cash paid for financing activity.3.6. Stock market performance Ford shares have been traded lower than SP500 since 2001 until 2010. Especially since 2006 that the operating results had continuous substantial losses.4. Honda Motor Company Limited4.1. IntroductionHonda Motor is one of leading automobile manufacturers in the world. The company develops, manufactures and markets automobiles, motorcycles and power products. The company also provides financing services to the dealer and customer for the sale of products. Honda has global operations in areas including North, South and Central America, Asia, Middle East, and Europe with its headquarter at Tokyo i n Japan.Strategy analysisHonda Motor has three strategies. They are Staying Close to Customers, glocalization and five region strategy. Staying close to customers mean the maintenance of the qualities of a small company, set aside value product with flexibility and efficiency as a small company does and maintain global reach and technology advantage as a large company does is the drive to the future growth of Honda. Glocalization means the effort to launch subsidiaries in regions that could best meet the demand of local customers and expand the subsidiaries as the local demand increases. Five region strategy requires the operations focus on five areas the world. They are North America, South America, Europe/Middle East/Africa, Asia/Oceania and Japan. The management decisions are served to suit the situation in different areas. The advanced RD capacity equips the Honda to provide flexible products to adjust the need of these regions.Business activitiesThe company operates through fo ur business segments the automobile business, motorcycle business, financial services, and power products.The automobiles business division manufactures passenger cars, multi-wagons, minivans, port utility vehicle, sports coupe and mini vehicles. Hondas automobiles use gasoline engines of three, four or six-cylinder, diesel engines and gasoline-electric hybrid systems. Honda also offers alternative fuel-powered vehicles such as natural gas, ethanol, and fuel cell vehicles. In 2008, the company sold 3,925,000 units of automobiles.The motorcycle business produces a range of motorcycles, including scooters, electric-motor-assisted bicycles, sports bikes and large touring cycles. Hondas motorcycles use gasoline engines developed by Honda that are air or water cooled, two or four cycled, and single, two, four or six cylinder. In 2008, the company sold a total of 9,320,000 units of motorcycles.Honda offers a variety of financial services to its customers and dealers through its widespread finance subsidiaries.Hondas power products manufactures a variety of power products including power tillers, portable generators, general purpose engines, grass cutters, outboard engines, water pumps, snow throwers, power carriers, power sprayers, lawn mowers and lawn tractors (riding lawn mowers). Honda also manufactures the major components and parts used in its products, including engines, frames and transmissions.Peer GroupThe globalization of the Honda motor makes it face the global intense competition. The competitors include Ford Motor, Nissan Motor, Toyota Motor, Volkswagen etc.(in the automobile sector) and Yamaha Motor, Harley-Davidson etc.(in the motor vehicle industry).SWOT AnalysisStrengthsWeaknessesl Global diversificationThe company operates a total of 397 subsidiaries, and 104 affiliates all over the world.l Leading market position and good brand imageHonda is one of the largest vehicle and motorcycle manufacturers over the world with strong brand strength.l Strong Research and Development capacityThe large investment in RD could equip Honda the capability to differentiate itself in the intense competitive market.l Declining Market Share in SectorEvident of decline in unit sales and lost of market shares in the automobile industry.l Low employee productivityHonda has a weak proportion on the number of employees and the revenues.OpportunitiesThreatsl Growing demand in Asian marketHonda has taken measures to occupy the huge potential Asian market.l Growing demand in hybrid electric vehiclesThe companys emphasis on hybrid technology innovation will capture market trends as an opportunity to enhance its market share.l Global competitionThe competition would result in price pressure and thus reduce the profitability.l Tightening emission regulationsThe emission standards will cause Honda to occur more costs in product development, testing and manufacturing process design.4.2. Key Financials AnalysisSource ThomsonFinancialCurrency JPYScaling Factor 1000000 JPY31/3/200931/3/200831/3/200731/3/200631/3/2005Sales10,011,241.0012,002,834.0011,087,140.009,907,996.008,650,105.00Operating Income189,643.00953,109.00851,879.00730,889.00630,920.00Net Income Available to Common137,005.00600,039.00592,322.00597,033.00486,197.00Total Assets11,579,494.0012,439,610.0011,964,917.0010,533,995.009,187,808.00Total Liabilities7,449,150.007,753,539.007,359,399.006,320,785.005,828,513.00Common Equity4,007,288.004,544,265.004,482,611.004,125,750.003,289,294.00Net Cash Flow Operating Activities3836411126918904525576557746624l The operating income reduces salientally, approximately 80% from the previous years result. This result is caused by the severe decline in the sales and the consequently increase in inventory cost.l Before 2009, all the s are in a healthy and steady upward trend. But in the fiscal year ended at 31st march 2009, the volumes all experienced a dramatic decline. They are caused by the sales plunge.l The declines trends are due to th e economic recession caused by the financial crisis because the demand in Japan, US and Europe shrank. The automobile industry faces a severe challenge and most companies in the sector reported unsatisfactory results.4.3. Multiple analysis31/3/200931/3/200831/3/200731/3/200631/3/2005Price To Earnings30.78.610.3Price To Book1.01.11.61.5Price To Cash Flow4.64.26.8Price To Sales0.40.40.70.70.6l Although the P/E ratio increases significantly, its not a good sign. The increase in P/E ratio is not due to the high expectation of the investors and the fundamentals such as growth opportunities. Instead, the soaring P/E is the result of the plummeting earnings to common shareholders.l The price to book ratio and price to sales declined in 2008 and 2009, indicating the declining