Fvc Case Study 43

We evaluated our company’s position in the industry, and found ourselves in an excellent starting position to further develop our products and match them to the industry’s needs. Our market share is adequate and we can advance further with our strategy improve and reposition our products in the coming years. We have underutilized capacity, which we intend to improve, while increasing automation to reduce costs. We have plans to improve our promotion to improve product awareness and with the appropriate product lines we will increase price to improve margins and better align our high-end product image. Our current financial position is optimistic, showing our leverage (Assets/Equity) at 2.0, when our goal is to maintain 1.5-2.0 overall. By utilizing the analysis tools we are learning what elements are driving demand, how to effectively tailor our products through R&D, how best to adjust our marketing and pricing, while lowering input costs, in order to improve margins and to ensure our stakeholders are all satisfied.

A couple disadvantages we found with the acquisition would be an increase of debt or decrease in cash holdings, depending on how we decided to fund the acquisition. Some people within our company worry about the dilution of our shares. We currently have close to 63 million shares outstanding and acquiring an additional 2.4 million will not dilute our earnings. Another concern we have is how well FVC employees will be able to adapt to our company culture and size of our company. FVC is a smaller, more entrepreneurial company and we are cautious of the risk that FVC engineers work ethic and productivity could change due to working for a bigger firm with a different cultural environment. As for some alternatives to not reaching a deal, we feel as though it would be best to reinvest money back into RSE or invest in other projects. Our R&D department has been extremely weak the past two years and we could benefit from investing in that. There have not been any recent new innovations within the company, and with reinvestment into the R&D department, we are confident that new innovations will be right around the corner. RSE has had their eyes on many other companies in the industry so we will not rule out possible acquisitions of those companies as an alternative to FVC.

Winnebago operates in the luxury recreational motor vehicles industry. It’s main competitors are Thor industries, Malibu Boats, Polaris Industries, and Brunswick Corporation. These firms were chosen due to the fact that, while they may not all be in the RV industry, they sell similar products as Winnebago. Winnebago’s main line of business in the RV industry of all classes A, B, and C. Thor is the most similar to Winnebago due to the fact that all of its products are specifically in RV industry. Polaris, Brunswick offer a variety of products along with Recreational vehicles such from everything to snowmobiles to gym equipment. Malibu specializes in the boating industry, specifically small boats and boating accessories. The four competitors and Winnebago manufacture the products at their distribution centers and distribute them to to dealers who sell their products to the end customers. We have researched the luxury motor vehicle industry using the Porters Five Forces Model. The Porters Five Forces Model helped us analyze the different trends within the industry and see where Winnebago stands within them.

The framework used in this note is organized around the estimates of industry demand, market share, costs, and performance. All data

Flinder expected the merger to generate significant cost gains. RSE’s greater purchasing power would lower the cost of materials and components for FVC. RSE’s new resource-management system could be expected to reduce FVC’s in-process costs. Estimates from FVC’s accounting group had identified pretax constant-dollar cost savings of $2 million in the first year of operation and $4 million thereafter. He also recognized other synergy gains that arose from RSE’s stronger marketing clout, cross-selling with other RSE products, and its deep financial pockets. He believed that the widening-gyre project could have a broad application in nautical, aerospace, and automotive products. Based on the investment required to bring such technology to market, he estimated the economic

In that case, Sailed Air would perform in a safe zone with well-known products and respect its culture of innovative products manufacturer. However, we found that this strategy would not acknowledge the reality of the change in the market, which is the strong demand of cheaper product and the growing presence of GAFCEL. Eventually, Sealed Air could compromise its leadership by allowing GAFCEL to develop and expand to become a significant market player.

(NSY) had been providing parts and services to the Mega-Yacht Industry since receiving their initial seed capital in 2000. The Mega-Yacht industry provided an attractive opportunity for NSY. Although the industry was small by comparison, serving only 10,000 vessels, it generated in excess of $1 billion in economic activity annually, divvied amongst the new build, and maintenance, refit and repair business sectors (Mark & Mitchell, 2003, p. 48). The industry’s supporting cast included captains and crews, owners, management companies, procurement agents, yacht builders and repair entities, brokers, and local husbanding agents. Although unknown to the firm at its inception, consultants in 2002 forecasted the mega-yacht industry would see annual growth of 6%, with the potential for even better numbers in the short-term (Mark & Mitchell, 2003, p. 48).

They derived this projection through estimating savings from increased operating efficiencies and by consolidation of duplicate functions. The present value of the synergies would range from $1.71 to $2.14 billion (Assuming the cash flows to be perpetuity using a discount rate of 8.3%). However, Vulcan’s leadership scoffed at Martin Marietta’s estimate of the merger synergies. Instead Vulcan CEO, Donald James was convinced the true value of synergies would not exceed $50 million per year. The present value of this synergy estimate would be $428 million (Assuming the cash flows to be perpetuity using a discount rate of 8.3%). This is summarized in table 2 below.

The potential market for this product could represent between $263M and $350M (see Table F). Comparing to CMI’s 2007 net sales of $55M is a big potential market and as Joseph Fernandez said “A successful market introduction could double the sales of this company, as well as compensate for the decline of some existing products”.

In determining our initial strategy, we knew that we wanted to focus on the product that would be most profitable and key in on features that are important to the customer. Looking at product sales in 2008, the NiMH sold 28.0 M units and the Ultracapacitor sold only 4.3 M units. Based on these sales, the NiMH generated $280.3 M and the Ultracapacitor generated $86.2 M. In addition, when reviewing the Income Statement, the NiMH produced a profitable contribution in the years 2006 through 2008. The Ultracapacitor, on the otherhand, produced an unprofitable contribution during the same timeframe. Based on these figures, we decided to focus on the NiMH.

Our firm has set out to Internationalise its operations by opening to different facilities One in China Assembling and Maintaining Aircraft Engines and the other in Europe fabricating turbine blades for Aircraft

In order to recognize the cost synergies, Dow had one time cost of $1.3 billion spread within two years. They will achieve at least 800 million cost synergies. Growth Synergies are estimated to be between $2B and $2.6B based on expanded market portfolios, increased geographic reach and innovative technologies. Adjusting the cost synergies we calculated an equity value per share $94.63 per Rohm and Haas share.

Faced with the challenge of continuing to remain the leader in industrial valve systems, Orion Controls is required to decide whether or not to carry out product improvement redesigns. A successful redesign will secure the company an initial level of sales of 50 or 90 units to two new customers followed by the benefits of enjoying an innovator’s reputation.

Overall, the proposed acquisitions yield the company a combined entity with much better performance in term of profitability such as: