sample essay of GSB9001

finally, the sun comes out. stop raining...

here is the essay of GSB9001, uh~not good marks, 11 out of 20. some problems with conclusion and recommendations.  the recommendations are too long, and wikipedia is not a good information source.


Executive Summary


This report first analyses the financial prospects, political situation and environment credentials of three companies- Nissan, Vestas and Rio Tinto. It shows that only Vestas has a good financial prospect. Nissan and Rio Tinto’s future financial performances are not clearly. About political situation, only Vestas has strong policy backup by government. And so far there is no policy benefit to Nissan. Rio Tinto’s political situation is the worst, it is facing two legal issues which are not good for company’s development. For the third criterion- environment credentials, all of three companies do well, either they have an environment- friendly strategy, or their production good for environment. After analysis, it recommends that Vestas should be invested, because it matches all of three criteria.

Introduction

An analyst for ethical need to consider financial prospects, political situation and environment credentials before making an investment. This report first analyses all three criterions of Nissan, Rio Tinto and Vestas. And then, it is discussing the three criterions. During the discussing, financial prospects with political supports will treat as hurdle requirement, and environment credential is less important for the final decision making. After, it will give a suggestion about which company should be invested. All the data and material in this report are from the Internet, some of them from the news, and others direct from company’s website.

Discussion

Financial Prospects

Nissan

In 2008, the financial and economic crisis has created economic setbacks for the whole car industry. Under this background, Nissan sold 3.2 million cars, but loss 2.3 billion. (BBC, 2009) And in the world wide, the major carmakers did not perform well in 2008. For the long term plan, in Nissan 2008’s CEO Statement (Ghoson, 2009), it states that Nissan is not compromising its efforts to mass- market the electric car in the future. It is a good policy for the future development of Nissan. But this policy also need to be questioned. How many people will change their car to electric car? No doubt, electric car is more environment- friendly, but it is not economical. Although an exact price has not been announced, the car is expected to cost somewhat between US $ 25,000 to US $ 33,000. (Wikipedia, 2009) It is not cheap. People love it, but can not afford it. So the demand for the electric car is doubtful.

To sum up, Nissan’s financial future is not clear.

Vestas

There are some points should be considered carefully about its financial prospect:

Firstly, as the banking crisis hit in 2008, the booming wind power sector was dealt a setback. But Vestas did very well in 2008, in its annual report, it is shown € 11 million profit. (Wikipedia, 2009)

Secondly, wind accounts for just 1 percent of US electricity use now. This is because wind power energy is hard to produce and very expensive to build transmission lines. But it will be more and more popular because it is it is abundant and provides many communities with a clean, local source of electricity (Galbraith, 2009). Besides these, the cost of energy will be lower and lower because of technology development (Wikipedia, 2009). It will certainly increase the demand for wind power.

It is clearly that, the demand for Vestas will increase, and it will grow faster in the future.

So, Vestas did very well in the past, and will do better and better in the future.

Rio Tinto

Rio Tinto’s future is confusing. It is set to report sharp falls in profit for the June half, battered by a slump in metals prices and volumes (New York Times, 2009) Rio Tinto’s profit depends on the price of ore and sales volumes. However, the price of ore is an unknown number, and the price direct influences the sales volumes. So the financial prospect of Rio Tinto is puzzled.

From the argument above, it is clear that Vestas has the best financial prospect among these three companies.

Political Situation

Nissan

So far, Nissan has no political problem or legal problem. In contrast, Nissan is under way with the Australian Government to seek ways to cut the car’s price and encourage fleet customers (Heasley, 2009). But the outcome of this negotiation is not sure.

So, there is no sufficient evidence to show there will be a policy to assure Nissan’s future.

Vestas

Vestas’ development depends on the wind power. In US, Department of Energy has estimated that wind power could account for 20 percent of the nation’s electricity supply by 2030. Also, the economic stimulus package which is passed in February 2009 may help wind industry. The stimulus should inject some federal dollars into the wind sector (Galbraith, 2009). All of these factors help to wind power’s development.

So, Vestas will growth faster in the future due to there is a strong policy to help Vestas’ development.

Rio Tinto

There are two main legal issues against to Rio Tinto now. The first one is in China, Chinese Government detention of four of Rio Tinto’s Shanghai- based employees (Maiden, 2009). China is the world largest iron ore importer, the outcome of Rio Tinto’s China crisis will certainly influence Rio Tinto’s development. The second one is in US. The result of this issue is not optimist (Davies, 2009).

To sum up, Rio Tinto is in big trouble of political situation. And this is not good for Rio Tinto’s future.

In conclusion, Vestas has the best political situation among the three companies.

Environment Credentials

Nissan

Nissan has an environment- friendly plan, because it will focus on producing electric car (Ghosn, 2009).Traditional cars always considered causing air pollution and noise pollution. But electric car is no emissions, and more quiet.

Vestas

Wind power is the production of Vestas. Wind power is considered a kind of clean power. Definitely, Vestas is good for environment.

Rio Tinto

In Rio Tinto’s website, it states that “Balance social, environmental and economic considerations in developing new product applications and technologies, as well as joint venture and supplier relationships” (Goldberg, 2009). It implies Rio Tinto’s strategy is also environment- friendly.

To sum up, all of these three companies is ecologically friendly.

Conclusion

As analysis above, Nissan has unclear financial prospects and without government support. Vestas has a bright financial prospects and also with government support. Rio Tinto faced some legal issues and its future is unpredicted. But all three companies’ strategy or production are friendly to environment.

Recommendations

To decide which company should be invested is based on financial prospects, political situation and environment. Comparing these three criteria, environment credentials is less important, because the evidences show that all the three companies do well in this perspective. The general purpose of running a company is making profit, so financial prospect is considered as the most important factor to decide which company should be invested. It can bring profit to the investors when investing a company which has good financial prospects. But it also need to be noticed that, if the company has legal or political problems that could impede its future growth, or if there is a law or government decision which incentives industry, the companies in this industry will advantageous to it. So for the final decision, it should adds up these two criteria, i.e. to consider investing the company, the investee need have good financial prospects, it had better has some political supports, or at least has not legal or political problem. So it is clearly that, Vestas should be invested since it matches each criterion. Vestas has a clear financial future and sound support by the government. Also Vestas’ production is environment- friendly. People may argue that Nissan also worth to investing, that is according to Chief Executive Carlos Ghosn (2009) predicted then that Nissan would return to a profit in 2010/11 if external conditions stayed the same. But in the real world, the financial situation is hard to predict, especial when there is no strong policy backup. So far, Nissan has not got any support by government or related organisation. Hence, investing Nissan is not advisable. As Rio Tinto is the second biggest miner in Australia, its future should not be a problem. But it has many problems now, so it had better not invest Rio Tinto.

Reference List

BBC news, (2009, May 29), The global car industry in crisis, Retrieved September 12, 2009, from http://news.bbc.co.uk/2/hi/business/8068787.stm

Davies, A., (2009, August 8), US class action against Rio Tinto clears hurdle, Retrieved September 12, from http://business.theage.com.au/business/us-class-action-against-rio-tinto-clears-hurdle-20090807-ecy8.html


Ghosn, C., (2009), CEO Statement, Retrieved September 12, from http://www.nissan-global.com/EN/ENVIRONMENT/MESSAGE/index.html


Goldberg, G., (2006, December 15), Sustainability Policy, Retrieved September 12, from

www.riotintominerals.com/files/RTMPolicy%20Sustainability.pdf

Galbraith, K., (2009, February 19), Wind Power, Retrieved September 12, from

http://topics.nytimes.com/top/news/business/energy-environment/wind-power/index.html?scp=1-spot&sq=wind%20power&st=cse

Heasley, A., (2009, August 3), Nissan turns over a new, green Leaf, Retrieved September 12, from,

http://business.theage.com.au/business/nissan-turns-over-a-new-green-leaf-20090802-e5wm.html

Maiden, M., (2009, July 10), Rio Tinto's China crisis escalates, Retrieved September 12, from http://business.brisbanetimes.com.au/business/rio-tintos-china-crisis-escalates-20090709-derw.html

New York Times, (2009, August 6), BHP, Rio Tinto June Half Profits to Plunge, Retrieved September 12, from http://www.nytimes.com/reuters/2009/08/06/business/business-us-bhp-rio-preview.html

Vestas, (2007), Strategy, Retrieved September 12, from

http://www.vestas.com/en/about-vestas/strategy.aspx


Wikipedia, (2009), Vestas, Retrieved September 12, from http://en.wikipedia.org/wiki/Vestas