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MAF707 Investment and Portfolio Assignment Answers
This report is generated with proper set of analysis and verification of certain factors occurring in business operations and behaviour of business in different markets. A proper set of analysis is required to gain the knowledge regarding strategic position of the companies in Australia. The report contains a proper set of information regarding what are the different factors that can affect the positioning of the companies. A brief discussion regarding two companies will be provided in the report indulging in the business of two different industries in Australia. Analysis regarding the ratios of the company will be shown in the report which will help the companies to prepare a proper set of strategic position in the market. Developing the strategy is one of the most important aspects related with every business. It gives the assurance that the company will move on the verge of sustainability and success.
Information regarding the companies
Two companies from different industries are chosen namely Mc Donald’s and Nike. Mc Donald is a fast food chain whereas Nike is a sports brand providing the sport shoes and apparels in the market. Both the companies have an effective set of position in the market which could be seen with the discussion regarding both the companies shown in the report.
Mc Donald’s is one of the world’s largest chains of hamburger providing the fast food across the world. Mc Donald’s have the strategy to provide quality product in the market with the effect of which it assures that its customers could always remain attached with the brand and its product (Carter, et. al., 2011). Mc Donald’s serves about 68 million of the people per day across the globe. It serves more than 119 countries and has more than 36,000 outlets all over the world. Mc Donald was founded in 1940 in United States. It was started as a barbecue restaurant. It was founded by Richard and Maurice McDonald. Its Headquarters are in Oak Brook, Illinois, U.S. Revenue of the Mc Donald’s is US$ 25. 413 Billion In 2015, Operating income of the restaurant is US$ 7.145 Billion in 2015, Net Income of the restaurant in 2015 was US$ 4.529 Billion. Total assets of the restaurant were evaluated as US$ 34.281 Billion in 2015 and total Equity was evaluated as US$ 12.853 Billion in 2015 (Marcek, 2014). Mc Donald’s have an effective set of business in various parts of Australia and many people of Australia like the products of it with the effect of which the company is generating effective set of revenue. Keeping in mind that all the customers of Australia should remain attached with the restaurants it ensures that it should provide some or the other innovative product to the target customers. Mc Donald’s have the strategy to provide the product according to the choice and preferences of the people living in the place in which it is doing the business. This process helps Mc Donald’s to attract effective number of people towards the business (Yang, et. al., 2011).
Nike is the company doing business in the shoes and apparels industry. Nike has a business in various parts of Australia and its headquarters is in Washington. It is a brand doing business across the world and serving about all the countries across the world. Nike’s main focus is towards its shoes and providing quality in the products which it is providing in the market. It ensures that people purchasing its products should remain attached with the brand and prefer to buy it products again and again (Shyng, et. al., 2010). Nike was founded in 1964 with the name Blue Ribbon Sports. Founder of Nike was Bill Bowerman and Phil Knight. Later in 1971 the name changed and it officially became Nike. Coming on to the financial position of the company, revenue of the company was evaluated as US$ 30.601 Billion in 2015, operating income of the company was evaluated as US$ 4.175 Billion in 2015, and net income of the company was evaluated as US$ 3.273 Billion in 2015. Total assets of the company were evaluated as US$ 21. 600 Billion In 2015 and Total equity of the company in 2015 was US$ 12.707 Billion. Seeing all the figures it could be evaluated that the financial position of the company is very strong (Gutjahr, et. al., 2013). Company is estimating that it could generate more revenue and should develop a set position in the market with the effect of which could sustain and guarantee its success in the market and aims at attaining competitive success in the market.
Analysing both the aspects of the business it could be evaluated that both the companies have an effective set of position in the market. It could be seen that both the companies aims at providing effective set of services in the market. They aims at attracting more and more customers towards them and spread their business in each and every part of the world with the effect of which both the companies could succeed in acquiring the market across the globe (Jorge, et. al., 2013).
Strategic positioning analysis of companies in industry
MC Donald’s is a largest and fastest growing fast food chain all over the world. It believes in providing quality product to the target and aims at acquiring the market worldwide. There are many people available in the market that prefer and know Mc Donald’s for its hamburger. People all over the world prefer to purchase Hamburger from Mc Donald’s as they hamburger is the USP of Mc Donald for which it is known by each and every people present in the market (Pitts, et. al., 2015). There are more than 75% of the Mc Donald’s restaurants that are operated by the independent locals in all over the world. The product line of Mc Donald’s is almost same with each and every country as it believes in provide the same flavour and maintaining the dignity among the people in all the countries. The business model of Mc Donald is a franchise based model which believes in strong corporate trading. Mc Donald have the effective set of strategies so as to attract the people towards its product with the effect of which it insures that it would sustain in the market and would be able to generate effective set of revenue in the market. Mc Donald’s have various strategies which would help it attain competitive advantage in the market and helps in ensuring that the business would be able to grow on the verge of success and sustainability (Cox, 2015). There are various competitors available in the market like KFC, Pizza Hut, and Dominos which gives a tough competition to the brand. But Mc Donald’s keeps on building some or the other strategy so as to make sure that it could fight back with these brands in an effective manner.
Coming on to Nike, it is another company which have a big name in its industry. Nike also ensures that it could attract more and more customers towards it by providing effective set of services in the market. It is necessary that Nike should have effective set of strategy so as to maintain its position in the market. The main focus of Nike is on the sports shoes and believes in providing quality product to the target people present in the market. Main focus of Nike is on advertising so as to attract as much a people towards the brand (Duan, et. al., 2014). Puma is the main competitor of the brand which gives a neck to neck competition to Nike. Therefore it becomes necessary for Nike to develop certain set of strategies so as to maintain its position in the market with the effect of which it could attain competitive success in the market. 37% of the people all over the globe prefer to purchase the products of Nike and Nike is set to be at the second position in the market. It is necessary for Nike to develop more strategies with the effect of which it could ensure that it will be coming on first position and would be prefer by more people present in market (Guan, et. al., 2012). Maintaining a market position is one of the most important aspects attached with the company and company should work on it so that it could maintain a trust in the mind of the customers in an effective manner. Enhancing the promotional tactics would help the company to move on the verge of success and sustainability and will help in gaining effective set of position in the competitive market.
Financial analysis- including ratio analysis to explain financial health/ strength of the firms. At least past 3 years financial 3 history needs to be analysed
4 Years Financial Data of Mc Donald’s
Analysis: Above is the data showing various ratios of mc Donald’s with the effect of which an analysis of the financial position of the company could be made and a set direction could be provided in context with the effectiveness of a company. Return on capital by the company in year 2012-2013 was 26.19% and in the year it was evaluate as 41.43%. Therefore it could see that the company was able to build an effective set of position in the market. It is evaluated that the company has grown it value in the market with the effect of which it was found that the company is able to grow its market position (Dichtl, et. al., 2010). It was found that the company has increased its return on capital from 26.19% to 42.43% in the market.
Operating profit of the company evaluated in 2012-2013 was 4.96% later it was evaluated as 6.72% in 2014-2015. It was found that the company has grown its operating profit from 4.96 to 6.72% which is a very effective change. It is necessary for the companies to enhance its operating profit as it will help the company to stabilize its profit. This is necessary for the employees to sustain in the market with the effect of which company would be able to grow and would be able to attain competitive advantage in the market (Hobbs, et. al., 2012).
Gross profit ratio was evaluated as 45.83% in 2012-2013 and in 2014-2015 it was evaluated as 49.42%. It could be seen that gross profit ratio have increased in a subsequent manner. It is necessary for the business to increase its gross profit ratio. Gross profit ratio is the ration which helps in generating the net profit of the company and helps the company to attain sustainability in the market with the effect of which company could attain competitive advantage in the market (Yang, et. al., 2011).
Operating assets turnover ratio was found to be 4.44% in 2012-2013 and in 2014-2015 it was found to be 7.22% which was a huge change for the company and is important for the company with the effect of which it could sustain in the market. Current ratio was evaluated as 1.98% in 2012-2013 and 1.65% in 2014-2015 which was seen to be low for the company and could affect the market of the company (Marcek, 2014).
4 Years Financial Data of Nike
Analysis:With the financial analysis of various factors attached with Nike it was found that return on capital employed of Nike was found that return on capital employed of the company was 9.80% from 2012 to 2013 and later after the analysis it was found that from 2014 to 2015 return on capital employed of the company was 16.18% which is a benefit for the company.
Operating Profit of the company was found that it was 2.80% in 2012-2013 and later it was found that it was 6.20% in 2014-2015, it was found that company was in the profit (Yang, et. al., 2011).
Gross profit ratio of the company was found to be 14% in 2012 to 2013 and in 2014-2015 it was found to be 15.90%. Which is important for the company as increase in the gross profit is a positive sign for a company.
Operating assets turnover ratio of the company was evaluated as 4.44% in 2012-2013 and afterwards it was evaluated as 7.22% 2014-2015 which will provide the benefit to the company in an effective manner. This shows that the financial position of the company is very strong and the company is moving on the verge of sustainability and success. It is necessary that the business should develop the effective set of strategies so as to grow the business and to attain competitive advantage in the market (Gutjahr, et. al., 2013).
Recommendation for investment and explanation
Every business indulging in the international market has to insure that it should bring some or the other new things in the market. Every new thing attracts the people present in the market towards it as people in the market gets attracted frequently towards the new products or services introduced by the company. Therefore to bring some or the other new thing in the market it is necessary that the business should invest some of its money in the development plans and innovative ideas so that it could sustain in market and can assure its success in the market (Duan, et. al., 2014). Mc Donald can invest in the new markets of food chain; there are various options available in the market. Pizza is one of the aspect that is not been introduced by Mc Donald. Therefore investing in pizza would be an effective plan for Mc Donald with the effect of which it would be able to attract more people towards its products and services and would be able to attain competitive advantage in the market. It is a totally different product for Mc Donald as it is never been provided by it. It will also require huge investment. Investing wisely would benefit Mc Donald with the effect of which it would be able to assure its effective return on investment in near future (Loh, 2010).
Nike has a great market potential and believe in innovating some or the other new set of idea for the target people. It is necessary that Nike should invest in some of the other activity so as to insure that it could enhance its market and could beat its competitor in the market. Nike needs to focus upon the various promotional activities with the effect of which it would be able to ensure that it could spread the information in the market (Dichtl, et. al., 2010). Investing an effective set of amount in various promotional activities will attract the people towards the product of Nike. Advertisement is one of the factors which require huge investment but have a great impact on the mind of customers. It is necessary that the business should focus upon the promotions of its products; it should do as much as promotions of its new launches so that people could get influenced towards the product and help the company to move on the verge of sustainability (Hobbs, et. al., 2012).
Both the recommendations given to the companies are beneficial with the effect of which companies would be able to make certain positive changes in the products and process of the products. Investing in such things would benefit the company and will help in enhancing the sale of the products in the market with the effect of which revenue will increase. This will provide the opportunity to attain competitive advantage in the market.
Ethical behaviour should be shwon by a professional fund manager
Ethics is considered as the most important element for every business and it must be followed by each and every organization. Likewise it is essential for both the organizations Adidas and Coca Cola to abide with all the rules and regulation that is prescribed under ethical perceptions. By following all the ethical practices will help in maintaining the goodwill and sustain the position of the organization in same manner as it is now (Cruz, 2015). Fund manager of an organization is liable to manage the activities that have involvement of the fund by which it is to make sure that company is following proper rules and regulation regarding the ethics and no any regulation breaches.
The fund manager of the organization is full responsible to make satisfy their customers in proper manner by providing them good quality services with full honesty. Here is a term Steward that means to serve the customers and profession in proper manner. An organization’s fund manager is also responsible to manage the incoming and outgoing of fund in an organize manner by which the financial stability of the company could be maintained and in future it would not have to face any financial crisis. Intelligibility within organization and the work is must to possess for the organization and it can be possible only because of fund manager (Peifer, 2014). He has all the liability to maintain the intelligibility into the working environment.
There are several issues related with the funding of the company like it is essential for an organization to keep secure all the financial data and information which not need to share with any unknown person because if the personal financial data of the company leaks then the sustainability of organization starts declining. So, it is important for the organization to keep personal information in safe place with tight security (Litschka, et. al., 2011). There are many perspectives of ethics is explained and they all needs to be followed by the fund manager in order to maintain the sustainability of the company. Fund manager is the only person who can acquire the trust of the company by managing its fund in appropriate and organize manner because only with the help of money a company can think larger and would only be capable to attain the large goal by which it can increase its goodwill and competitive advantage into the present market scenario (Peifer, 2014).
It is essential for each and every organization to make discussion about its financial stability and evaluation could be done in perpetual manner by which these both companies Adidas and Coca Cola can attain the highly competitive advantage in the present scenario. To expand the market it is essential for the companies to make proper investment at proper places that could be helpful to achieve the higher place. In present scenario technology and innovation plays an important role for the companies to achieve whatever they want to. To applying innovation with latest technology is helpful to attain the competitive advantage and attract more customers. Ethical consideration is another important perspective that needs to be followed by the each and every organization in order to maintain the sustainability and increase its position into the market.
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