University of Southern California Ford Case Study in Corporate Finance HW Hello, hope all is well. I wrote those 3 case studies for the same class last semester but most rewrite new ones as I am repeating the course so please alter the words for me as I don’t have the time! Ben & Jerry’s case
Fundamentals of Corp Finance
There are numerous evidences that suggest that Ben & Jerrys was not essentially
maximizing on the shareholder value. One of the things that indicate so is the fact that the
organization that at one point the management would chose to sacrifice the short term profits in
pursuit of social gains. This way then the shareholders value was not maximized at this point.
The other evidence is also the fact that in one of their talks, they admit their inability to make
There is also evidence that indicates that Ben & Jerry have also been able to effectively
maximize on shareholders value. One of them is the fact that by January 2000, the organization
had been able to open over 170 stores across the United States and even overseas. This therefore
means that there is more profit and therefore shareholders value is maximized. The fact that they
are able to give donations to the community is also an indication that they are making enough to
give out at least.
Social conscious decisions at Ben & Jerry can actually benefit shareholders in a number of
ways. One of the ways is that by engaging in aspects such as donations it is able to advertise
itself not only to the forums being donated to but also to the general public as well. In the end,
shareholders benefit more when these customers buy more of their products as a result of the
social conscious decisions.
If I were at the board of Ben & Jerry, I would have voted against a takeover at $36/share for
one particular reason. The fact that the company offering so would do away or restrict the
companys social commitments and interests is very alarming. This is essentially like doing away
with the companys tradition and essentially rendering Ben & Jerry unknown to its loyal
1. Ford didn’t issue too much dividends to shareholders during the growing period. Most of the
net income was reinvested into growing projects/acquisitions. There are few nice reasonable
targets in the market to merge or acquire at the moment, so therefore the investment project is
stuck. The family shareholders prefer dividends to share the profit rather than repurchasing stock
from the market. However, if the dividend issued too much, it would cause a heavy tax burden.
Therefore, Ford chose to hold the cash to benefit the shareholders.
2. Ford wants to enhance the stock price to beautify enhance executive officers performance
.Actually, Distributing cash is a method to give some incentive to make the shareholders accept
VEP. That is, shareholders can receive some profit immediately. However, its also a mechanism
for Ford to exchange a less value of money into and centralize power among the shareholders.
There are no good targets to do the acquisition so the efficiency effectivity of holding money is
not good now. Establish Cash Reserves. Invest in more in Ford for Business. Maximize Capital
Expenditures. Buy Another Business. Set Up Retirement Accounts. So there many options to go
and be effective but this will only benefit for the shareholders value to maximize their profit
with each of their share. So Ford should be responsible and take action and prioritize
responsibilities and roles int he company for growth which I believe they should do to stay
engaged for better long term success. There’s obviously many ways to take action but to be
innovative that’s the plan for action.
Reynolds case assignment
Fundamentals of Corp Finance
A business model is basically how an organization is able to make money. It is
basically an explanation of how an entire organization is able to deliver goods to a
customer at an effective cost. The business model at Reynolds is basically hybrid as
they are able to do a number of aspects to get money. First of all, they engage in
marketing in which they advertise their brand. The company also has distribution
mechanisms in which it is able to reach customers such as the ones done to the
A financial model is basically a tool that is created in order to look at the financial
position of an organization into the future. It basically acts as a forecast of the business
into the future. Reynolds financial model is basically a consolidation model. In a
consolidation model, different business units are added into one single model. A
consolidation sum simply is an addition of all the other sums of business units. In
Reynolds case the different products represent different business units. Foam dishes,
plastic bags and food storage bags are added together to get one sum.
The biggest risk factors to the business model are loss of any of Reynolds key
manufacturing activities and changes in consumer preferences, lifestyle and
environmental concerns. Loss of manufacturing would be a big risk factor because then
there will be no items to supply to consumers and be distributed which are one of the
pillars of the hybrid business model. Change in consumers taste would also be a big
risk because then Reynolds would not have any customers to advertise to instantly.
In the financial model, competition and pricing measures, and economic downtowns
in the target markets are the biggest risk factors in the model. Competition and pricing
measures are a threat because with it, the amount of profit in each unit drops. Economic
downturns also affect the financial model because the number of people or customers
buying products reduces hence an effect in the model.
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