Strategic Plan For The Chronicle Gazette

Strategic Plan For The Chronicle Gazette The goal of the consultant report is to indicating the problem of steady decline in subscriptions to the paid newspaper not only in metropolitan area and affecting the whole industry. Advertising revenue has also dropped due to advertiser had diverse their ads in different way such as TV broadcast, CNN, CCTV, Internet etc. This report is to offer the management of The Chronicle Gazette a strategic vision of where the newspaper publishing industry stands today and where it is headed over the next decade also propose strategies the newspaper can investigate to survive in the new business environment. State of the newspaper The Chronicle Gazette subscription had been fallen by 35% and also advertising revenues also dropped by 28% in past eight years. Refer to Newspaper Association of Americas, newspaper circulation had start declining from year 1993 and keep go on comparing with the index of 2008, there have around 22 % of circulation was gone. [Total Paid Circulation: Source: Editor and Publisher International Yearbook: http://www.naa.org/TrendsandNumbers/Total-Paid-Circulation.aspx, accessed on 1st Feb, 2010] For the advertising revenue have starting to share progressively with internet publishing during year 1997 and the proportion of the total advertising volume had kept increasing comparing with 1997 and 2005 data, there have around 13 times increase of Internet advertisement in volume. Also from the chart we can see the newspaper advertising revenue keep decreasing and Internet advertising revenue keep increasing simultaneity hence that Internet had absorb part of the lose in newspaper ads. [Advertising Expenditures: http://www.naa.org/TrendsandNumbers/Advertising-Expenditures.aspx, accessed on 1st Feb, 2010] [Online advertisement revenue:- http://www.brianmcdaniel.org/2009/04/06/will-online-ad-revenue-beat-newspapers-in-2011/, accessed on 1st Feb, 2010] According to The New York Times Company reports 2009 Fourth-Quarter and Full-Year Results, although the groups revenues had increased from 21.8% to US$36.3M from US$29.8M but look into the details on the advertising revenues had dropped around 25.3% to 30.2% compare with year 2008. The group major revenues income healthy gains in both Internet cost-per-click and display advertising and also in other form of digital advertising to offset the other lose. [New York Times Press Release: http://www.nytco.com/pdf/4Q_2009_Earnings.pdf, accessed on 13th Feb, 2010] Referring to the Newscorp 2009 annual report, we can indicate that all the media revenue and the operating income had dropped which may lead by Global economic recession reason. The data also showing that the newspaper industry had affected obviously including The Wall Street Journal the worlds leading business publication. The Wall Street Journal had diverse their business in different area such as enhancing their publishing and advertisement in digital ways and providing different type of subscription to attract more reader and also providing specific personalize information for particular group. Improving the quality of contents and report in more in-depth to build up reader loyalty and convenience. [http://www.newscorp.com/Report2009/media/Newscorp_2009_annual_report.pdf, accessed on 15th Feb,2010] Company objective 3.1 External assessment Economic downturn forced newspaper to cut costs due to massive revenues decline as a result of global economic downturn. In October 2008, advertising revenues from New York Times Media Group had dropped 15.3% as compare to the same period in 2007. Social and cultural have no much change recently as people are still willing to pay for newspaper and having circulations. According to the Newspaper Demographic Analysis, the daily and the Sunday readership allocation pattern are mainly focus on Adults over 55 since they can have more leisure time and get used to read newspaper every day. Demographics of American Newspapers pattern can classifieds as below:- The Wall Street Journal is read by the people who run the country. The Washington Post is read by people who think they run the country. The New York Times is read by people who think they should run the country and who are very good at crossword puzzles. USA Today is read by people who think they ought to run the country but dont really understand The New York Times. [http://bitsandpieces.us/2008/07/13/demographics-of-american-newspapers/, accessed on 2nd Feb, 2010] [http://sify.com/finance/economic-downturn-forces-us-newspapers-to-cut-costs-news-default-jeguQJbdihc.html , accessed on 2nd Feb, 2010] [http://www.nnnlp.com/newspaper-demographics/, accessed on 2nd Feb, 2010] Political arena is a large influence upon the regulation of newspaper press freedom of those reported content and the business trading agreements of the region or national or in the state and also for EU, NAFTA, and ASEAN if the newspaper will press outside the state. Economic factors such as the demand and supply or the newspaper industry in both short and long terms, market positioning and the pricing also need to be considered. Social and cultural influence the perception of the newspaper contents and acceptance and what can attract reader to increase the circulation, consider the time will the reader spend on reading that and the layout arrangement of those content and the ordering. Identify the role of men and women within the society and get used to concentrate the aim of selling those people. The main factor affecting newspaper industry is Technological force Internet and other digital media. Being with the digital age, most of the information had been merge or migrate into the virtual world Internet. People can easily found the information they required for simple a click; some of the information can be accessed by free. One of the major revenue incomes for newspaper industry is advertisement which currently affected by the new challenge of Internet advertisement. Advertiser had starting to switch their advertisement from the traditional print out on newspaper to other media like TV, Fall ads, Road show on the public transportation and the Internet web-site. Recently, the pop-up advertisements from the Internet web-site are quite popular and some of the major search engine and newspaper web-site had enrolled as well. At the mean time, that advertisement income revenue had keep increasing rapidly and become the major parts of earning for those companies. The major advantages of the online advertisement is the advertiser can sell their services or product in text mode, colorful graphic mode, animated flash graphic or even can record a short video clips with sound for attracting audiences and enhance their perception and image. Referring to the New York Times president and CEO Janet Robinson said their coming business strategy is to enhance their digital platform and planning to introducing a paid model for NYTimes.com in 2011 to create additional revenue stream. Hence that other competitor in newspaper industry is exploring other publishing media to maintain their robust advertising business and attracting other new business partners. Competitive Force Porter five force analysis:- [Source from: http://upload.wikimedia.org/wikipedia/commons/thumb/6/66/Porters_five_forces.PNG/800px-Porters_five_forces.PNG] Porters Five-Force model can be use to analysis the newspaper industrial competitive environment. Threat of new entrants of newspaper publishing can be define as low to medium since the scale economies in the production and sales of newspaper had took advantage by the major newspaper distributor. Some famous brand of advertisement will only post on the popular newspaper and never shown in others. Product differentiation cannot take part in it newspaper industry since the product itself is indifferent and non-standard one. The major entry barriers in newspaper industry is the entry capital is relative high although government have no or less barrier to such industry but the equipments such as camera, printing machines, video recorder are expensive. Also the benefits of associated in newspaper industry is low and also the current distribution channel is almost occupied by other major newspaper. The amount of daily copies is high so the cost per copy of the major newspaper is low and its hard to compete with them. Small entrepreneurs have difficulty obtaining supermarket shelf space for their publishing because large retailers charge for space on their shelve and gave priority to the established publishers that can pay for the advertising needed to generate high customer demand. Switching cost is low since the readers had build up loyalty with the current subscribed newspaper and take comfortable of their printing layout and its hard for them to switch to read another newspaper easily. Bargaining power of customer is relative high since there have many other sources to get information from others like Internet, free newspaper which distribute on the street or cafà © and also from train station. Also its un-different and non-standard product which reader can easily found another similar product in the market like NY Times, WSJ, etc. Customer affect an industry through their ability to force down prices and inter-related because they purchases a large proportion of the newspaper and they have potential to integrate backward of the newspaper contents. Alternative vendors of newspaper are plentiful because newspaper is standard or undifferentiated, customer can choose among many newspaper providers and switching to read other newspaper cost is very little or zero. Once the paid newspaper is unimportant to the final quality and customer can be easily substituted it with free newspaper distribute among on the street daily so it make The Chronicle Gazette revenue keep de clining. Bargaining power of suppliers can be classified as medium to high since the important input for issuing newspaper like paper and ink supplier is dominated by a few companies only buy they sells to many. Meanwhile paper, ink and printing factory are unique which had built up a strong relation in between thus switching costs existed. Supplier are able to integrate forward or backward compete directly with their present customers like newspaper company can forward to investee in newspaper or other publishing firm or vise verse. Threat of substitute product can classify as high since we may notice that the up-trend of online publishing a rapidly increase and the cost-performance ratio comparing with traditional print out newspaper are relatively low and also the content update are most in time and interact. According to Michael Porter, Substitute limit the potential returns of an industry by placing a ceiling on the prices firms in the industry can profitably charge. Extent that switching cost is low so substitutes may have strong effect on industry. Customer are switching they platform to read the news from traditional paper printed newspaper to the online version or other free distribute newspaper and sharing the profit in the industry. Rivalry among industry is high since we may note that the newspaper industry wide revenue trend is down and not only in The Chronicle Gazette, it also affects New York Times, WSJ as mentioned. Referring to the New York Times Company 2009 Full-year report, their total revenues were down 11.5% which show that the top U.S. newspaper is also affected by economic recession and also the new internet revolution. Some type of competition such as price cut is typically highly destabilizing are likely to erode the average level of profitability in newspaper industry like Apply Daily firstly launch in HK and just sell at $2 when other traditional selling at $5 which erode the whole industry profitability. [Internet user trend :-http://www.c-i-a.com/internetusersexec.htm, accessed on 15th Feb,2010] 4. Internal assessment 4.1. Organizational processes and structure 4.2. HR capabilities Publisher The publisher is responsible for all of the operations procedure of the newspaper in both editorial team and business team. The main duties and aim of the publisher is to monitor that the newspaper run financially healthy and smoothly. Editor The editor is responsible for all the content of the editorial newspaper and monitoring the budgets and cash spent by the editorial and other supplementary of the newspaper. The publisher and editor usually is the same person. Editorial page editor The editorial page editor is responsible for the editorial page, supplementary page and also the op-ed page for the newspaper. Those pages are the letter printed on the editorial pages like letters to the editor, columns by syndicated columnists and guest columns by local people or oversea senders. Managing editor The managing editor is the person who handle and monitor the day-to-day newspaper production and also for the online version as well. City Editor The city editor also called the metro editor whom is in charge of the news coverage of the metro-area in which the newspaper is located or distributed. This position is the most important staff for collecting and analysis the news happened in that area. The city editor usually got the largest portion of staff and assigns most of the local news reporters within a organization. Chief copy editor The chief copy editor is in charge of the newspapers copydesk. The people on the copydesk read news stories and sometimes stories from other sections like through internet to make sure they are written according to the newspapers industry standards legally. The chief copy editor can make the final decisions about the copy contents and who is in charge of the staffing of the desk. Copy editor The copy editor especially well trained to read the stories that other have written and make sure they conform to the rules of grammar and style. A copy editor also performs headlines writing and performs other duties that help produce the newspaper every day. Photo editor The photo editor is not a photographer although he/she is often the case that the photo editor is a promoted from photographer previsely. Photo editor assign photographers and helps select the most outstanding photos that the newspaper will prints. Photographer The photographer takes pictures of local or oversea news events for the newspaper. Photographer have a variety of assignments each day. Larger newspapers have sports photographers focusing on those event. But in order to cut cost, most newspapers photographer will assigned to shoot not only sports stories and sometime will assign for special event shooting.. Graphics editor The graphics editors is the head of the graphics department sometimes also the art department. This editor is in charge of all of the graphics and illustrations produced for the newspaper and online version. Graphic reporter The graphic reporter perform researches and designs informational graphics that support news stories for the newspaper. A graphic reporter is an expertise in graphic forms as well as 3D flash animated graphic and must be able to associate the information that can be used to build graphics. Reporters Reporters are assigned to all the sections of the newspaper to gather news from anywhere. They gather information about events and subject that the newspaper editors had choose to cover. Reporters must know how to find the useful information, skill for interview people, professional sight for observe events and write the information they gather in a way suitable to the paper. 4.3. Financial position Revenues are down across the board caused by information is now freely available to the public through the internet. Traditionally news and advertisement are mainly publish in newspaper since newspaper is the major source for getting news around the state or worldwide and also including the advertisement. But nowadays, those information can be freely access through internet and to be more up-to-date information can be reach easily in many other interacted presentation like real time camera of the news location, promoting product with movie clip and sound demonstration and also for example mobile phone, manufacturer starting to use Flash 3D to model the real phone with all feature for reader to try out the new feature and functions of the phone in order make purchasing interest. Advertising market had being share with Internet and other media like television pay TV etc 4.4. Marketing/sales capabilities The recent marketing trend switching to publish news and other advertisement through Internet and other interactive media. Sales revenue source had switch from newspaper copy to internet base in recent few years. Referring to the New York Times 2009 annual report, newspaper advertising revenues had dropped dramatically and lucky they had develop an online version and trying to adopt the loses from newspaper advertisement and luckily they had get successful reflected by their annual report. The Chronicle Gazette already had a sales team for handling customer advisement and we only have to restructure those them and make necessary investment on those equipments required for digitalize publishing through Internet or television. Sales capabilities are possible as Chronicle Gazette got strong customer base and both parties had need to keep abreast of the latest technology and also can adopt another segment of customer in order to widen the vision and services base. Also its the only way can make survival in this industry as its the trend of the coming future. 4.5. Operational capabilities Operational capabilities can be viewed by value-chain analysis to determine the competitive advantage of Chronicle Gazette, since Chronicle Gazette is a leading newspaper in a major metropolitan area and reaching paid circulation of 225,000 customers and ranked as first-rate newspaper over the years which mean they had built up a strong loyalty with reader. Considering the outbound logistics which approach the newspaper can be distribute on time to the retailer and also can deliver the internet version simiutainstly for subscriber. Inbound logistics like material- paper and ink can deliver to printing factory on time to reach Just-In-Time production is the aim. Operation can be make more efficient like utilize the use of Internet and E-mail to deliver the reports and photos to central office for press release in order the shorten the time and cost. Quality of the reported contents and advertisement must be reviewed by chief editor before press release, organize a clear workflow for e ach department to avoid any job duplicate and make it work with procedure smoothly. Currently Chronicle Gazette have no online version, IT capability require to implement and fund may require for investage in IT equipments like servers, internet access, web-site designer and cam-recorder etc., security issues may also need to consider since some confidential and privacy content may easily expose through internet and somehow each subscriber got different limits of access authority which related to their payment level or country. 4.6. Strengths and weaknesses Here is the SWOT analysis listed the evaluation of those opportunities and threats in the business environment. Strengths Opportunities Stay at the leading newspaper in major metropolitan area. High circulation rate and won awards for their hard work over the years. Loyalty built up with readers. Traditionally style enjoyed with readers. Setup online version to compete with other newspaper. Providing discount subscription fee for online user to attract customer. Weaknesses Threats No online version of newspaper. No animated graphic and video clip features. Release time restriction due to its printed material. Insufficient on online publishing experience. Online page layout may not be accepted by old customer. High investment for IT equipments. 5.) Marketing Strategy Recently Chronicle Gazette only sold at retail stores, counter and shop which covered in major metropolitan area and being a leading first-rated newspaper in those area. Providing web based newspaper for online subscription with discounted price. Providing some free news headline to attract customer and web-surfer to read in-depth and make them hungry for details thereby to become a subscriber. Also offering classified subscription for subscriber to select what they want to see and removing other unwanted news materials by their account. Setting up a loyalty program for contact base subscription such as subscribe for 2 years will have 20% discount and 1 year with 10% discount offer from Chronicle Gazette. The 24 hours online version of Chronicle Gazette can be update periodically like 2 to 3 hours for the latest news which can have additional photos and video clips for more details. In order to take care of the blind people, vocal news report can be also available in the online version. Customize page layout can be personalize to display what they want in the main page and also welcome for subscriber to provide suggestion and new for the editor. Student subscription in very attractive price and arrange delivery service to their school after the peak hour so that we can utilize the uses of our transportation team and also can maintaining worker have available job to draw the social responsibility out. Additional student supplement post can be attached which those report can be directly related to student or submit by school tutor and student. Q A forum and some education quiz can be containing in the supplement for enhancing the knowledge of student. Meanwhile we can provide the market requirement for specialist and business trend analysis for student to plan their future job direction. Those attractive package offered to student can build up loyalty and attract them for subscription after graduated. Strengthen with the connection with Newspaper Association of America for those domestic and oversea newspapers, commercial radio and television broadcasts which have a great opportunity for corporation. Those representative can share the hardship in their group and other organization may providing suggestion and experience to get survival. All sales strategies through this multi-channel/direction approach with different price strategies can utilize our current asset and production capacity and showing that we have care in all level of people. 6. Steps for The Chronicle Gazette to deal with challenges The step for The Chronicle Gazette might take in order to deal with the challenges can have the following:- Short-term plan which react within one year: Implement the online version of chronicle Gazette and consult with I.T. specialist for setting up the first release. Investigate on those equipments and make necessary funding and financial plan. Strengthen the current Sales Marketing team to adopt the new challenges and providing I.T. training and explanation for all staffs. Reduce the redundant staffs and suggesting early retirement for elderly staff with attractive scheme. Promoting saving of office electricity, paper and other equipments and cut some un-necessary expense from staff which will not affect their normal report activities and operation. Promoting direct sales of the newspaper with delivery service together with the discount price. Attracting more customers for pre-payment to increase the company cash flow for further implementation. Introducing the coming online version and interactive advertisement for old and current advertiser and show them the coming trend and advantage for those advertising media and plan for coming development. Launching a free copy version to increase the customer base and coordinate with advertiser to providing their product discount coupons to achieve win-win situation. Increasing the content of the newspaper such as putting additional recruitment ads, Buy sell, student special column etc to widen the reader base. Distributing the newspaper oversea with localize news and report which seek for a way to develop oversea market. Contact those colleges and university to promoting student version newspaper with supreme discount price with delivery service to increase the reader base and build up the future loyalty. Long-term plan which react for two to five years: Review all the department staff job nature and review their education background and working experience to evaluate their job performance and provide necessary opportunity to increase his/her productivities. Aim to cut down the operating expense by 10% to 30% gradually. Re-structure the organization and management team to work more efficiency and know how to work smart in all level of staff. Increase more customer base through different media like the online version and distribute version. Also trying to sell the newspaper for oversea customer. Special free newspaper distribute in crowd business area like Metro, Headline to attract customer/readers. Advertisement revenue may increase in such distributing channel. Enhancing the online version of Chronicle Gazette with fully graphic base and containing real time video news report. Online translated version can be enjoyed by different country people. Vocal version can be implementing for blind people and showing how we approach to take the social responsibility. Attracting different advertising agent and provide them for continuously advertisement placement with discounted price. New report topic and keep expanding into state-wide and foresee the trend to entry to worldwide market instead of regional newspaper. Employing some young people for form a young group for innovation, brave topic publishing. Closely work with the young people trend in order to think and make creation for sharing with readers. Both short term and long term strategies need to implement together which can help Chronicle Gazette to gain back to lose portion of revenues and develop many other income source. I.T. affect not only in the newspaper industries and it affect the entire world already. Currently we stay with information age which most information can be found easily through internet so we must provide reader a correct way and attitude to analysis that information and to recognize the validity. 7. Conclusion Chronicle Gazette revenue downturn due to the losses of the advertising income. Advertiser switching their advertise media from the traditional newspaper to other broadcasting and Internet. In order to capture the lose market share, Information technology required to implement for online version of newspaper and capture back the advertiser to use or service and wide distribution channel. Both short term and long term strategies plan are helpful to make Chronicle Gazette survive and even getting better than before. Keep an eye for the market trend and innovation is the key point to make the business success. To broaden sources of income and reduce expenditure are already true to make the business more successful.

Dow’s Bid for Rohm and Haas Essay

Dow started as a manufacturer of commercial bleach in 1897, and was founded by Herbert Dow. He merged his company in 1900 with Midland Chemical, which lead to diversification of his portfolio to agricultural and food products. In 1912, Dow started to pay dividends every quarter without any reductions or interruptions. By doing so, they were the only Fortune 200 firm that established these figures. Dow became a major player in the M&a field, since they acquired between 1983 and 2007 95 business, took stakes in 58 firms and divested 166 businesses. In 2006, Dow’s CEO Andrew Liveris announced the ‘Dow of Tomorrow’ strategy, which consisted of two pillars. One was pursuing an asset light approach to its commodity business. In order to do so, he signed a JV agreement with a subsidiary of the Kuwait Petroleum Company, named Petroleum Industries Company. Dow and PIC signed a Memorandum of Understanding, which generated Dow a $7.2 billion after tax revenues. Second, Mr. Liveris wanted to build a high-growth and high-value added performance business. In order to achieve this objective, Dow agreed to purchase Rohm and Haas. This acquisition had the purpose for Dow to become a producer of high-value chemicals and advanced materials. Why does Dow want to buy Rohm and Haas? As mentioned in the introduction, CEO Andrew Liveris announced the ‘Dow of Tomorrow’ strategy. This included becoming a high growth and high-value added producer of specialty chemicals, with less cyclicality. Rohm and Haas fitted the picture perfectly, since they were an advanced material and specialty chemicals company, operating in 27 countries. Besides the interesting company profile description, there were several other reasons  why Dow was interested in the Rohm and Haas company. Most important reason was that the acquisition would make Dow reduce its cyclicality and increase its growth prospects. Expanded product portfolios, increased geographic market, improved market channels and innovative technologies will obtain the expected growth and cost synergies. Forecasts predict additional growth synergies values between $2.0 and $2.6 billion and $0.8 billion costs synergies, including shared services and governance, manufacturing, supply chain and work process improvements. Besides the above-mentioned advantages, Dow and Rohm could be a global leader in specialty chemicals and advanced materials if they combined forces. Also by combining their R&D, the development of new products and innovations could be stimulated. So overall, Rohm and Haas fitted the picture projected by Andrew Liveris perfectly. Rohm and Haas supported Dow’s commitment to maintain their highest standards in pursuing and selecting growth opportunities to satisfy their long-term shareholder values. Was $78 per share a reasonable bid? In order to draw a conclusion of the reasonability of the bid, we need to valuate Rohm and Haas as a firm with and without the synergies created by the acquisition. If this total value exceeds the $78 share price, Dow will pay the price, since it will be beneficial for them. The benefits of the synergies can be calculated by dividing it between the two firms on a multiple or 50/50 basis. The excel file attached to the assignment contained a WACC of 8,5% based on a tax rate of 35%. In our analysis, we also calculated a WACC with a tax rate of 26%, since this was the average tax rate. This leads to a WACC of 8,7%. As a basis, we took 2% growth. Rohm and Haas had at time of the acquisition 195,200,000 shares outstanding. From the balance sheet of Rohm and Haas 2008H1, we took the values of cash and debt (long and short term debt). Both inputs were needed in order to calculate the share price. Below, you can find how we calculated the share price for the situations with and without synergies. The synergies involved consist of two different types, namely growth and cost synergies. Growth synergies include expanded product portfolios, increased geographic reach, improved market channels and innovative technologies. These synergies are expected to create between 2 and 2.6 billion dollars, which gives an average of 2.3 billion. Second, potential cost synergies consist of purchasing synergies, shared services and governance, manufacturing & supply chain improvements and work process optimization. These synergies are expected to generate 0.8 billion dollar. The values of these synergies combined totals a 3.1 billion dollar gross benefit, which is a netted by deducting the 1.3 billion cost of implementation, leaving a value of 1.8 billion dollars. In order to make the most suitable valuation and draw the best conclusion for the reasonability of the share price of $78, we take the original and revised forecast into account. Both cases are also used for the sensitivity analysis to be as specific as possible. Below are the sensitivity analyses of Rohm and Haas for the original forecasts. Based on our assumptions, share price of Rohm and Haas is $55.79 without synergies and $65.01 with synergies. These values differ a little from the share price we found in our valuation analysis, however this is due to rounding and number of decimals difference in WACC and growth percentages. Lowest value without synergies is $47.10 with a growth of 1% and a WACC of 9% and a highest share price of $95.58 with a growth of 3% and a WACC of 7%. If we now look at the original forecast with synergies, we see an increased share price, which is logical, since value is created by the synergy. The share price of Rohm and Haas is $65.01 based on the growth rate of 2% and a WACC of 8.7%. The share price differ between lowest value of $56.32 and highest value of $104.80, based on the same input as with the analysis with no synergies. In both cases, the share price is below $78 so if Dow offers this price in both situations, the will not profit from this acquisition. However, we will still perform the 50/50 and multiples valuation in order to see which is the best in the situation if Dow is obliged to acquire Rohm and Haas. Looking at  case were synergies are created and using the 50/50 method, we get a share price of $55.79 + ($65.01 – $55.79)/2 = $60.4. As we already mentioned, this price does not match the $78. Now using the gross profit of Rohm and Haas as a percentage of the gross profit of both companies combined, we get a multiple of 26.11%. Using this 0,2611 multiple, the appropriate share price is $55.79 + (0,2611 * (65.01 – $55.79)) = $58.20 Again, this is below the share price of $78, which makes the outcomes of both methods unfavorable for Dow. Now let us look at the revised forecast. Since this is a post-crisis forecast, predictions were lowered, which lead to a lower overall value. Hence, this will be reflected in our sensitivity analysis by lower share prices. Below are our findings. As already predicted, share prices are lower in the revised forecast due to the crisis adjustments. For the sake of the case, we will also perform a 50/50 and multiples calculation. If we look at the 50/50 share price, we get a share price of $41.38 + ($50.60 – $41.38)/2 = $45.99. The multiples basis will give us a share price of $41.38 + (0,2661 * ($50.60 – $41.38)) = $43.79. Reviewing both forecasts and within these forecasts both with and without synergy, we can conclude that a share price of $78 is not reasonable. This conclusion holds in the case of 50/50 and multiples calculations. Major deals risks and allocation We will pay special attention to Exhibit 4 when examining the major risks and their respective allocations. The first risk comes from the item 1.01 describing the financing of the deal. Dow will issue a fixed amount of $4 billion in convertible preferred stocks to Berkshire, Hathaway and Kuwait Investment Authority. This amount is independent of the current stock price of Dow, meaning that a drop in Dow’s share price would need more shares to pay for the deal, decreasing the relative voting rights of current shareholders. To be even more precise, in paragraph 2.1a it states that no matter what happens Dow has to pay $78 dollar per share at the time of the merger, transferring all the financial  risk to Dow. Furthermore, a large part of the deal is financed with a $13 billion loan, issued by a consortium of 19 banks lead by Citigroup, Merrill Lynch and Morgan Stanley, increasing their leverage ratio and overall risk of the company. These high debt values come with high interest payments, leaving fewer cash to meet its dividend obligations. In a possible economic downturn this problem becomes larger, increasing the probability of not meeting their dividend payments which have not been changed for over 97 years. A further interesting statement is the ticking fee to ensure the deal would close. When the deal is not closed before January 10, 2009, the payment per share will increase with 8% annually, translating to a higher deal price of approximately $3 million more per day until the deal is closed. In addition if the deal is not closed before October 10, 2009, Dow has to pay $750 million termination fee. This will, again, transfer all the risk to Dow if the deal cannot be closed before October 10, 2009. In paragraph 3.1 the Material Adverse Effect clause states that Dow is allowed to withdraw from the transaction if the business, operations or financial conditions of Rohm is hit by a material adverse effect. This seems fair but there is a large set of exceptions made in the clause for which Dow cannot withdraw from the transaction, including the following events: any event which affects the chemical industry, macro economy as a whole, the financial, debt, credit or security market, any decline in Rohm’s stock price or any failure to meet internal or published projections. So, in case of an economic downturn mainly Dow is affected and not Rohm. Roam and Haas are even protected from a decline in their share price. Thus, these statements will, again, transfer almost all the risk to Dow Furthermore, Dow takes on another risk by relying on the joint venture with Kuwait’s PIC to finance $7 billion of the deal. They do not take into account the possibility that this joint venture could fail due to i.e. a downturn in the overall economy. If it fails it leaves a gap of $7 billion in their financing plan, exposing Dow to even more risk. Finally, the overall high price and ticking clauses make it a risky deal when compared to the expected synergies. The probability of achieving all expected synergies is a magnitude smaller than the probability of high costs, which is certain. It leaves Dow exposed to a possibly large loss when the expected synergies are not met in the future. The only risk that Rohm and Haas face is the possible termination of the deal from their side if the deal is i.e. taking too long. They have to pay a $600 million termination fee if the decide to do so. Other than that, considering the mentioned risk allocations from above, the total risk of this deal is mainly resting on the shoulders of Dow Chemical. CEO recommendations To give a complete view of the options that both CEOs had at the time we will first describe the situation they were in.   Shortly after the deal announcement the financial crisis started, causing an overall recession including in the chemical industry. Dow was hit on many fronts: overall share prices dropped with over 50%, a fourth quarter loss of $1.6 billion, quarterly sales decline of 23% and a drop in operating rate to 44% in 2008. Forcing Dow to close off 20 facilities and firing over 5000 employees. Furthermore, after the joint venture deal was closed with KPC’s PIC, the failing oil prices and overall recession caused KPC to terminate the contract by paying a termination fee of $2.5 billion to Dow. This caused a gap in the financial plan for the merger for Dow, decreasing their stock price even further and degrading their rating to BBB. As mentioned before, Dow was not the only one affected by the economic recession. Rohm was facing a poor performance as well, forcing it to fire over 900 employees, freeze spending and a 20% decline in sales. Considering the above, Dow refused to close the deal with Rohm and Haas after approval from the European Commission and U.S. Federal Trade Commission. Arguing that the recent macro-economic developments are material adverse effects, enabling them to terminate the deal. Options and recommendation for Dow’s CEO, Andrew Liveris Considering the situation as described above, Liveris had three different options: continue with the termination of the deal, close the deal for $78 per share or renegotiate with Rohm and Haas to agree on different terms. If Dow continues to terminate the deal it will go to court for the approval by the judge. It needs to win in court otherwise Dow is forced to commit to the deal. Given the statements enclosed in the material adverse effect clause, the chances for Dow to win are pretty slim. If Liveris opts to close the deal for $78 per share he will need a lot of additional cash. Considering the economic situation, and the fact that the joint venture failed, acquiring this amount of additional cash will be very hard. The possibility to acquire more debt through the already existing bridge bank loan from 19 different banks is pretty small considering the low credit rating of BBB. If he does succeed in acquiring more debt he will probably not be able to meet the net-debt-to-total-capitalization restriction in the covenant. This is, according to the first loan of $13 billion, required to be lower than 65% which they will not be able to meet, thus not creating incentives for the banks to lend more money. Considering the above, terminating the deal will not be possible and closing the deal for $78 per share lacks financing. The best option Andrew Liveris thus has is to renegotiate the merger deal and buy some time. He will then be able to look for other sources of financing or renegotiate the already existing bank loan. One possible option could be to sue KPC for terminating the joint venture and claiming the $2.5 billion, which in turn could finance the termination fee. Considering that this will destroy the relationship between these two companies this would not be recommended. Options and recommendation for the CEO of Rohm and Haas, Raj Gupta The situation for Raj Gupta is a bit simpler: either sue Dow for not completing the deal or renegotiate with Dow to postpone the deal. Both having different advantages and disadvantages. The first option is to go to court and continue the case that Dow has to complete the deal or otherwise pay the termination fee. Considering the  exceptions stated in the material adverse effect clause that macro-economic effects and effect on the chemical industry in general are excluded from this clause, Gupta will have a strong case and is likely to prevail in court. Committing Dow to the deal or otherwise paying the termination fee of $750 million. The second option is to renegotiate the deal with Dow. The most important disadvantage considering this option is that it would almost certainly come to a deal which is less favorable for Rohm and Haas when compared to the original deal. Which term should be reconsidered? For example, a lower price per share would decrease the expected value for the shareholders. Shareholders will not vote for such a deal, especially the Haas family who owns 30% of the company and is waiting to exit for $78 a share. The only option, although shareholders will not be amused in the least, is to delay the due date of the deal, preserving the harmony between the companies. Even if Gupta will win in court, the possibility that the deal will go through considering the financing problems of Dow is still small. Rohm and Haas will in this case only receive the termination fee of $750 million. Gupta obviously wants the deal to go through and so do the shareholders of Rohm and Haas, enabling them to exit the company and receiving a high premium while doing so. Terminating the deal will negatively affect both companies and their shareholders. Therefore it would be better for Gupta to facilitate any possibility that the deal will go through, even implying a possible decrease in price per share. Our recommendation thus is to renegotiate the deal, making sure that it succeeds. The premium for the shareholders might be lower but both companies can benefit from the acquired synergies and shareholders can still opt to exit. Resolving the legal dispute Considering the above, it would have been in the best interest of both companies to renegotiate the deal. However, Rohm and Haas decided to continue their trail against Dow Chemicals. The judge will therefore make a decision based upon the facts presented to him. Based on the facts alone, the most likely option for me, William B. Chandler  the Third, Chancellor in the Delaware Court of Chancery, is to enforce the merger contract between the two parties. In particular, the specifics of the Material Adverse Effect clause in paragraph 3.1 state that the MAE clause does not include the following events: â€Å"any event which affects the chemical industry, macro economy as a whole, the financial, debt, credit or security market, any decline in Rohm’s stock price or any failure to meet internal or published projections.† To be more specific; the argument according to Dow that the recent material developments have created unacceptable uncertainties on the funding and economics of the combined enterprise, justifying the termination of the deal, is overruled by the ‘specific performance’ clause in paragraph 3.1. Therefore, the ‘specific performance’ clause, as requested by Rohm and agreed upon by Dow, is binding and hereby enforced. The merger will be executed as planned. Dow will have several different options to solve the financing issue, cutting dividends, renegotiating debt and other means to generate cash could be used. If the deal is not closed before January 10, 2009, as stated in the contract, Dow will pay a ticking fee of 8% per annum. Dow should have been more careful drawing up the contract as it is signed and before me today. Since the possibility of an economic downfall is especially stated in the deal clause, I will make no exception and hereby conclude that the Dow will meet all deal requirements as stated in the contract. Every penny has to sides, if you risk it, you could lose it. Thank you. *slams the hammer*

Houzit Homewares Essay

Company Introduction For this particular marketing assignment we are looking at an organisation based in the leafy suburb of Brisbane. The business is a home wares stores chain by two friends and business partners who have invested quite a huge sum of money and are running the business smoothly, but as always see the need for more growth and more profits on balance sheet. The strategies of the business have to completely match or outlive that of the rivals of the business so as to meet and obtain any growth. The current size of the organisation is not as big as some of the rivals in the area. The chain compromises of 15 stores and has a big head office and a management centre at Milton. Staff is also not as huge as some of the other hotels in the area. The strengths of the business are casual professional attitude to dealing with customer which many of them love as it gives them a feeling of home away from home and other strength of the business is the good repute that it has built over the years in the homewares world with its quality fittings etc. The weakness of the business being some of the rivals have better shelf products and have better prices and better visibility and presence in the market. Houzit business, in order to further the profits and help more financial and presence growth would have to take some steps and apply some marketing strategies and tactics in order to gain that profitability. Organizational Review This assignment is divided into two tasks: Task 1 is the preparation of a report and Task 2 relates to the development of a marketing plan for Houzit. Houzit is considered to be a famous chain of homewares stores in Brisbane offering wide range of bathroom fittings, mirrors, bedroom fitting and decorative items to its customers. The analysis of each of the aspect of the company overview is provided under the following heads. Strategic direction and Organizational objectives The strategic directions of Houzit can be ascertained from the company’s vision and mission. Houzit is a national retail brand that is satisfying the home makers’ needs by providing them unique, wide variety of quality homeware products with an easy payment procedure. The mission of the company asserts that the organization is planning to move towards enlargement of its business by ensuring its presence in all the major cities of Australian market by the year 2020. The basic focus of the company is on three parameters: Quality, Unique items and Selection The following are the stated objectives of the organization (Houzit): To bring an annual sales increase of $ 5 million by moving the sales figures from $15 million per year to %20 million per year during the next three years period. To enhance the list of loyal customers from 10,000 to 15,000 Considering Brisbane as a potential market, brand recognition need to be established so that one out of every 3 people will recognise the Houzit brand in a random survey that is conducted in 18 months’ time. Current size, capabilities and resources of the organization Houzit has completed almost five years of its operations. This part basically relates to the characteristics of each of the store that is under the platform of Houzit. Current size of each of the Houzit store: 1000-1500 m2 Capabilities: Each of the Houzit store has a capacity to generate the following sales breakup Bathroom fittings: 30% Bedrooms furnishings: 35% Mirrors and decorative items: 20% Lighting fixtures: 15% Resources: 15-20 fulltime employees along with number of casual workers Gaps between the objectives and the current capabilities and resources Gap analysis serves as the tool that will help to decide between multiple marketing options (Precision Group, 2009). The objectives that are set by Houzit are difficult to be achieved with the current capabilities and resources. It is because company has limited number of employees. In addition to it, the focus with which company operates to have its stores as bright and comfortable for shopping is not in alignment with the legislations that are put forth by the government. In this manner Houzit will have a gap between the objectives set for the company and the current strategies, capabilities and resources of the company. Opportunities With the help of external environment analysis, a company will be able to  develop a list of opportunities and threats that are provided by the environmental factors (David, 2006). This section of task 1 highlights the two major opportunities for Houzit along with their analysis. The first marketing opportunity that will be chosen to meet the demand in growth of overall business all across metropolitan Brisbane and as well as other parts of Australia would be mobility business, which encompasses the help of mobile apps and mobile webpages and desktop apps and desktop dedicated pages to online commerce of the business to be visible and appealing to the customers all around. They cannot just live by having a website and no online store in this modern day and age where everything from a small pin to an aircraft is being traded online. Most successful business people know where they fit in. It’s important because knowing what you have to offer determines how you approach the business. And one of the early questions for the business starter is one of growth: most of the small companies that get noticed in the media are of the fast-growing variety. But fast growth also means higher risk – the cash flow problems of a fast-growing business can be the same as an insolvent company. So decide if you want to grow fast – which will mean taking debt or giving away equity – or whether you are happy with manageable size and predictable revenues.   There’s nothing wrong with a conservative strategy: think of all the lawyers, accountants, retailers and tradies who may only employ two or three people but they are successful because their skills, products or technology are such that they can create a premium. So, having decided what the business owes you, and what kind of growth you will need to achieve it, you will need to do what the best business people do: plan. The clichà © goes that businesspeople don’t plan to fail, they fail to plan. Harsh but true. Even a one-page business plan is better than winging it. Making a plan and committing it to paper forces you to focus not only on your strengths, but your weaknesses. Since Houzit does not have any online presence whatsoever leaving aside their only presence in yellow pages and online address directory. So, after having realised that their current online presence is unable to generate any  business online which is budding day by day in every sector of life, we should contract a company specialist in building webpages and mobile apps and mobile webpages Mobile SBMS to create a totally new website. The new website will need to allow for growth in the e-commerce sector as well as providing the ability for continual updating of the website to showcase new products, services and their ever growing portfolio. This is only going to come across as a reality if the business is ready to provide the backend services in the warehouses on a large scale as if the demand outstrips the supply, it is going to bring about negative reputation from the customers and in today’s world online reputation is something that the business strive on. The outcome is an e-commerce website designed with the Mobile branding behind it, incorporating all 3 arms of their business. The time frames for the project have to be extremely tight and the company that should be employed to do the job should be the one which can be trusted upon in terms of punctuality and efficiency. The second marketing opportunity is to offer more and more unique products than rivals of Houzit in home ware sectors which cannot be attained while they are making the products in Australia on a small business line. The current trend in home wares is toward handmade rather than mass produced items and this creates an opportunity for getting started in import. Import will solve two sides of the business and will serve both the marketing strategies right as this will help in meeting the backend demand that would be generated by having online presence and increasing e-commerce business. There are things to consider before you go ahead and start buying. The first thing to do is to find out if you are legally allowed to import the product into Australia and if you need a permit. Some materials are banned or will need special treatment. For example, some items need to be quarantined and fumigated due to possible pest contamination. * Items made with plant or animal products such as bamboo plates or bone carvings. * Packaging materials are often made of wood and plant materials. * Decorative touches to your products may be made of plant materials. You need to list what materials were used in the making of the product so that you can have them properly treated. ICON has a list of import requirements for all  commodities including what documentation you will need. Sourcing and manufacturing and controlling the quality of home wares can be a big job. Each item that you choose is subject to different standards and import regulations. Does it meet the Australian Safety Standards? Drawstrings on blinds can be hazardous. There could be lead in your chinaware or even in the paint that it was decorated with. Have them assessed for safety. What about the duty payable? Some tariffs may be reduced depending on where your item was made but that requires a certificate of origin. Customs need your records including product list, insurance and freight papers so they can calculate the duty payable and ensure smooth Customs clearance. You also need to be sure that your goods have the correct classification so that the right amount of duty is paid.

Hunter College Acceptance Rate, SAT/ACT Scores, GPA

Located in Manhattans East Side, Hunter College is a large public university with a 36% acceptance rate. Part of  CUNY, Hunter has done well in national rankings because of its strong academic programs and relatively low cost of attendance. High achieving students should check out the Macaulay Honors College which offers tuition waivers, special classes, and many other perks. Hunter College has an impressively diverse study body, and the schools location in New York City offers students a world of cultural, social, and professional experiences. Interested in applying to Hunter College? Here are the admissions statistics you should know including Hunters acceptance rate, average GPA, and average SAT/ACT scores. Acceptance Rate For students who entered CUNY Hunter College in the 2018-19 academic year, the acceptance rate was 36%. This means that for every 100 applicants, 36 received acceptance letters and 64% were rejected. As these numbers suggest, Hunter has a selective admissions process. Admission Statistics (2018-19) Number of Applicants 31,030 Percent Admitted 36% Percent Admitted Who Enrolled 23% SAT Scores and Requirements All applicants to Hunter College must submit either SAT or ACT scores. The SAT is by far the most popular exam. For students entering the university in the 2018-19 academic year, 88% submitted SAT scores. Hunter College SAT Range (Admitted Students) Section 25th Percentile 75th Percentile ERW 570 650 Math 580 680 According to the colleges admissions website, the average combined SAT score for students who entered Hunter in the fall of 2018 was a 1300. When we compare that number to national SAT score ranges, we can see that the majority of Hunter students are among the top 20% of all test-takers. On the evidence-based reading and writing test, the middle 50% of Hunter students scored between a 570 and 650. It follows tht 25% scored a 570 or lower, and 25% earned a 650 or higher. Scores on the math section were slightly higher. The middle 50% of students scored between a 580 an 680. This tell us that 25% scored a 580 or lower, and students in the top quartile scored a 680 or higher. Requirements Hunter College does not require the optional SAT essay, nor does the college require applicants to take any SAT subject tests. ACT Scores and Requirements Because such a small percentage of Hunter applicants take the ACT, the college does not publish score ranges for the applicant pool. The colleges admissions website states that the average ACT composite score for matriculated students was a 28. Hunter does not require the ACT Plus Writing, nor does the college require applicants who take the ACT to also take any SAT subject tests. GPA Although Hunter College has a low acceptance rate, you do not need to be a straight A student to be admitted. According to the admissions website, the average high school GPA was a 3.5. Most of the schools data is presented using the type of 100-point scale that is popular in New York State high schools. The colleges 2017 Factbook reveals that 26.2% of students had an adjusted high school average between 90 and 100. 25.1% scored between 85 and 89.9. Another 21.3% scored between 80 and 84.9. The average high school GPA for students who are admitted to the Macaulay Honors College is a 3.9 (94 on a 100-point scale). Self-Reported GPA/SAT/ACT Graph Graph of Hunter College Applicants Self-Reported GPA/SAT/ACT Data. Graph Courtesy of Cappex.   The admissions data in the graph is self-reported by applicants to Hunter College. GPAs are unweighted. Find out how you compare to accepted students, see the real-time graph, and calculate your chances of getting in with a free Cappex account. Admissions Chances CUNY Hunter College receives thousands of applications, and well over half of applicants are unsuccessful in receiving an offer of admission. To get in, youre probably going to need grades and test scores that are above average. In the graph above, the blue and green dots represent accepted students. Note that there are some red dots (rejected students) and yellow dots (waitlisted students) hidden behind the green and blue in the middle of the graph. Some students with grades and test scores that were on target for Hunter did not get in. At the same time, some students were accepted with test scores and grades that were below the norm. These seeming inconsistencies are because the CUNY application used by all of the CUNY campuses is evaluated holistically. Hunter College and the other CUNY schools want to see high grades in rigorous courses and strong test scores, but they also take into consideration your application essay. Sources: Graph courtesy of Cappex; all other data from the National Center for Education Statistics and the Hunter College admissions website.