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Strategies for financial success: vestas wind systems - Essay Example

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Strategies for financial success: vestas wind systems

In the year 2007, the company’s market share was 28% which then came down to 12.6% in 2009. The company operates globally including countries like Italy, Britain, Sweden, Germany, United States, Australia, China, India, Norway, and of course Denmark. Business Strategy & R&D The company has over 30 years experience in the field of wind power. The company has successfully installed wind turbines in over 70 countries and during the year 2012, it conceded and installed wind capacity of 50 GW positioning itself as the world’s leading wind power generator. (Source: Dolcera, 2010) (Source: Dolcera, 2010) As the supply of non-renewable energy is declining, it is expected that wind power will represent a significant portion of combined energy supply. This makes the company’s future position attractive for investors. The company also plans to position itself as the leading brand in the renewable energy segment. The future of wind power looks bright as the sector is financially competitive as the price of fossil fuels will rise in the coming years with supply constraint. Also the volume of wind power is predictable and available at cheaper cost. Unlike fossil fuels wind power can be generated and controlled at local units which makes it faster compared to nuclear or goal power plants. The most notable property of wind power is that it is clean energy. The company last reported a profit of €156 million for the year ending 2010 form total revenue of €6.9 billion. The total asset of the company is over €7 billion with total equity of about €2.75 billion. In the year 2011, the company won ?940,000 Energy prize in Abu Dhabi (Rudolph, Schlegelmilch, and Bauer, 2012, pp.253-270). The company’s latest investment decision is to expand its business in US. It plans to hire about 3500 new employees in US. The investment strategy is expected to benefit the investors in US since with the expansion of the company, the sales revenue of the company would increase which will help the company to distribute wealth to their equity shareholder. Investors in US comprise nearly one-third of equity shareholders base for the company. Merger & Acquisition The company acquired WEIER Electric in the year 2005, NEG Micon A/S in the year 2004, and Windcast Group A/S in the year 2002 as a part of global expansion strategy to increase their market share. The company has adopted M&A strategy to remain competitive, to share technology, to benefit from tax incentives, to experience synergy effect in their operations. Also in the year 2011, the company acquired minority stake in the company C&C Energy Srl after picking the minority stake in Gamesa Eolica SA (GE) in 2001. Vestas also divested stakes in Volund Staalskorstene in the year 1995 due to poor performance and bleak future outlook in that company (Emmerhoff and Partyka, 2009, pp.4-15). Financial Statement Analysis During the mid of the year 2009, the company was able to bag two new orders in China with aggregating capacity of 75 MW power ...Show more
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Summary

STRATEGIES FOR FINANCIAL SUCCESS – VESTAS WIND SYSTEMS Table of Contents Question 1 4 Introduction 4 Business Strategy & R&D 4 Merger & Acquisition 6 Financial Statement Analysis 6 Branding & Positioning 8 Financing 9 Sources of Finance 9 Financial decision Analysis 10 Dividends 11 The Clientele Effect 12 Question 2 12 Capital Structure of Vestas 12 Factors Influencing Capital Structure 13 Optimal capital structure 14 Question 3 15 Developing ad Justifying Value Drivers 15 CAPM Model for Vestas Wind Systems 17 Calculating WACC for Vestas Wind Systems 18 Developing SVA Model 19 Gordon Growth Model 20 Market Efficiency and EMH 20 Sensitivity Analysis 21 Findings and Discussions 22 References …
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