Altadis Strategy: Management Assessment Answers
1) Summarize Altadis´strategy and give your opinion on that issue
2) The report offers an economic valution of Altadis. What do you think about it? Would you change anything in that valuation? You don´t need to make any number. Just to give your opinion on the above questions.
3) How does the above strategy fit with the offered evaluation?
Answer:
1.
Summarization of ALTADIS Strategy:
ALTADIS is a cigar manufacturing company. There are so many plans in the company to make profit. If the cigars are sold in the various countries of the world, then the profit can be made. Strategy which is adopted by the company, has been given below-
Cash flow driven-
The fiscal opinion has been reduced by the ALTADIS Company. It was an opinion regarding the cigar division of France. For the product, rate of tax has been reduced. The price of the cigar has been increased by the manufacturing company. The price has been increased in the French market. In French market, the volume of blond cigar has been reduced by them. It has been reduced in two consecutive years. So, there is declination in the annual selling of cigar by almost 2%. From the shareholders of ALTADIS, the shares are being purchased by the company. By it, the total remuneration yield is being increased in every year. Company is growing with the revenue of almost 6%.
Valuation-
The shares are being purchased back by the company in every year. Millions of money is being returned to the shareholders by the company. The dividend is also being declared to shareholders by the company. In every year, the total remuneration of the company is being increased. In the company, the estimation of remuneration is almost 600 million euro.
Radio Analysis-
The entry of the ALTADIS Company has been done into the emerging market. Large discount is being provided by the company on their EBITDA and EBIT. Business of the company is being done by this policy. The ratio of the earnings of the company is decreasing continuously. It is happening due to the lower fiscal funds and leverage value.
2.
The strategies approved by the ALTADIS Company should improve:
After viewing the strategies of the company, the research analyst took the decision regarding the performance of the company during the year. According to them, the company could perform better during the year. It happened due to the continuous declination of the annual sales of the cigar. In the French market, the negative performance of the cigar sales should be counter balanced by the company. There is a continuous fall in the revenues of the cigar company by 4.1%. There is declination in the EBDITA of the company by 5.2%. In the French market, there is declination in the sales volume of the cigar. It is the reason of the declination of EBDITA. To improve the revenues of the company, the sales volume of the cigar should be increased. It should be done in the French market. The operating result of the company will be decreased by the continuation of this situation. According to the research analyst, the company should improve the sales volume of the cigar to generate the revenues.
3.
Evaluation of the strategies-
To get fund in the company, the purchasing of the shares back from the shareholders should be stopped by it. In the share market, the share price of the company will be increased by it. More revenues will be generated by the improvement in the sales volume of the product. The price earnings ratio of the company will be increased. A huge amount of the profit can be earned by the company by which more funds will be generated in the company.
References-
1. Kwok, Benny K. B. (2008). Forensic Accountancy (2nd edition). LexisNexis. ISBN 978-962-8972-76-0.
2. Pratt, Shannon; Robert F. Reilly; Robert P. Schweihs (2000). Valuing a Business. McGraw-Hill Professional. McGraw Hill. ISBN 0-07-135615-0. Hmegrii
3. Anderson, Patrick L., "Value of Private Businesses in the United States," Business Economics (2009) doi:10.1057/be.2009.4
4. Bucks, Kennickell, Mach, & Moore, "Changes in US Family Finances from 2004 to 2007: Evidence from the Survey of Consumer Finances," Federal Reserve Bulletin, February 2009
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