Vertical Integration Case Study

The DCF method has a lot of advantages over the Multiples approach, one would be that the DCF method considers the future of a company and values the future cash flows for every debt or equity holder. So, this method forces us to explicitly explore and analyze the fundamental factors that drive business value creation. Another advantage is the discount factor which shows us if a given company will be able to generate cash flows equivalent to its riskiness. A disadvantage of the DCF method is its complexity. The Multiples approach is usually only used to get a rough estimate how much a company could be worth.

P&G has changed their strategy to a large extent. They went from a company that was focused on brand management to a company that focuses on category management. Instead of relying completely on branding, they decided to concentrate on customer satisfaction to drive sales by restructuring SKU 's that were tailored to customer 's needs. The shift from buyers to category managers positioned P&G to identify higher selling products in each category and maximize revenue generation by demonstrating to the retailer 's that P&G brands generated more profit per unit of shelf space compared to other products in the same category. The Sale of the CRP system to IBM was a major strategic move by P&G to standardize the industry as a whole, which in turn allowed P&G and its customers to improve internal processes and

Danquis DeArmond Management 325 Saint Leo University 5/16/2016  First, we have Tax-Favored. Being Tax-Favored is favorable in tax terms for firms or companies to raise money through debt instead of going through the stock market. A company raises money through the stock market, and when that happens it is submitted to get taxed two times. This means the company’s earnings are taxed as part of the corporate income tax, after this is done normally the profits that are leftover get paid out to shareholders as dividends.

The strategies can be business level or corporate strategies. The business level strategies are the actions taken by an organization so as to have an advantage in a single market (Johnson & Scholes 2002). The corporate strategies are actions focused on gaining an advantage in multiple markets or industries. The strategic choice that an organization takes normally depends on the attractiveness of the industry and also its competitive position (Johnson & Scholes 2002). Thus, Wells Fargo applies the corporate strategy as the company has focused its operations in the banking industry.

Competitive advantage can be defined as a business having a leading advantage over other businesses within the industry in this case being the retail industry, it is also gained by means of giving the customers value for their products in terms of having lower prices and having better benefits for its customers, while insuring that the business is efficient and effective. Business Logistics Management (2016). According to TFG Full Annual Report (2011:135-137). The Foschini group logistics is in charge for the management of stock that they receive from their different suppliers.

Outsourcing, according to the dictionary definition, is ‘the contracting or subcontracting of noncore activities to free up cash, personnel, time, and facilities for activities in which a company holds competitive advantage. Companies having strengths in other areas may contract out […] aspects of their businesses to concentrate on what they do best and thus reduce average unit cost’. (Businessdictionary.com) In other words, it is just a strategy of transferring particular business functions or tasks to outside suppliers instead of completing them internally. In today’s business world, this practice is widely used by considerable number of companies, especially those operating on the global level – outsourcing enables firms to focus on their main long-term goals by relieving them from marginal activities that are being entrusted to external organization.

Amazon’s critical success factor – efficient supply chain and logistics has allowed Amazon to gain competitive advantage as fast and free delivery has lead to an increase in sales thereby incurring higher market share. This is due to the high preference of convenience by customers and their high

It is also the most common strategy for internalization of companies from emerging countries (UNCTAD WIR, 2013). The MNEs that are prompted by market-seeking OFDI invest in most of the cases in a specific country or a nearby country in order to supply commodities. Many of these markets have previously been serviced by exports from the investing MNE. The exporting has been ended due to an imposed tariff or other cost raising barrier by a host country or the market size makes local production for economical. Market-seeking investment encases multi fold benefits that the investing company can leverage.

Freeman (1984) in his book Strategic Management, states that the stakeholder approach provided the foundation for the stakeholder theory which was later used by other researcher. The basic proposition of the stakeholder approach is that the firm’s success is dependent upon the successful management of all the relationships that a firm has with its stakeholders. Jensen and Meckling (1976) argued that when viewed as such, the conventional view that the success of the firm is dependent solely upon maximizing shareholders’ wealth is not appropriate because the entity is perceived to be a nexus of explicit and implicit contracts between the firm and its various stakeholders. Clarkson (1995) in his study on corporate social performance concluded that it was unavoidable to distinguish between stakeholder and social issues that is, issue that concern more stakeholder groups. These issues may not necessarily be but quite possibly, be the same concern of the society.

The legitimacy theory is mostly suitable for corporations working in developed countries, while on the other hand, the stakeholder theory seems to be most suitable for multinational corporations working in developing countries. As per social contract theory, CSR exists due to an implicit social contract between business and society and this contract implies some indirect obligations of business towards society. According to the societal approach, firms are responsible to society as a whole, of which they are an integral part. Social contact theory is mostly suitable for organizations working in developed economy/countries. The signaling theory has been used to explain voluntary disclosure in corporate reporting.