The Separation between Management and Ownership - Essay Example

and Section # of Company analysis I. Corporate Governance Analysis: Q: Is this a company where there is a separation between management and ownership If so, how responsive is management to stockholders Ans: Yes, indeed this is a company where there is separation between management and ownership. A private U.S Equity firm has bought a 48% monetary interest in the company. Lululemon athletica recognizes the fact that the stockholders need to be kept informed on how lululemon athletica is performing, and when will they is paid their share. This is a manner in which the stockholders also can maintain their interest in the situation. The stockholders if they have certain issue s they need to resolve they are permitted to talk to the management about it. The management is quite responsive towards the stockholders, they are all kept in touch always, and matters are discussed in high profile ways. *Q: How does this firm interact with financial markets How do markets get information on the firm Ans: The firm interacts with the financial markets, as a U.S. private equity firm, has bought a 48% minority interest in lululemon. The markets get the information thy need through these .the markets get the information of the company's position trough other companies feedback . Also ,lululemon athletica when announce divididends all arecatered to . *Q: How does this firm view its social obligations and manage its image in society Ans: This firm considers its social responsibility a very vital task; they manage their image in society, by treating their employees well. The employees are remunerated; a charge above the mini mum wage rate. Lululemon athletica offers other good services to its employees as well. This is why the goodwill of lululemon athletica circulates in the economy. Lululemon athletica has always looked at good organization and waste reduction. This is considered by them is actual elegant business. These are particularly taken care of in the production process. . Lululemon athletica is offering other good services to its employees. And so goodwill of lululemon athletica circulates within the society The programme of charitable giving is the one which actually gives the consumers back their power , their power to select from a group of locally held health charities . it is estimated that in the year 2005 lululemon athletica actully gave back almost $300,000 back to their communities . Lululemon athletica also holds , free yoga demonstration classes . further more , activties are held each year to raise funds for the department . II Stockholder analysis: Q: Who is the average investor in this stock (Individual or pension fund, taxable or tax-exempt, small or large, domestic or foreign) Ans: The individuals in this stock are the average investors; they are both small and large groups who are not exempted of taxes. Common stock and the exchangeable shares. Q: Who is the marginal investor in this stock An s: The marginal investor is the companies that are running through these plants frequently are the average investor; lululemon athletica has sold its shares upon some equity firm. They are the ones which are basically apart of the investment. IV. Measuring Investment Returns Q: Is there a typical project for this firm If yes, what would it look like in terms of life (long term or short term), investment needs and cash flow patterns Ans: This Company typically runs a specific project for the firm. This is to have maximum investment, pay the share holders more than the minimum, and pay their employees more than the minimum. This company wants to sustain over the longer term of the business. Q: How good the projects are that lululemon athletica has on its books currently Ans: They look pretty good, lululemon athletica plans to expand its franchises further more, which means more recruitments will need to take place. And alongside that they would definitely have to plan and establish departments respectively . lululemon athletica is alos a basically apparel company that is inspired by yoga . They are in the zeal to create such elemntary products for their target consumers that they would be able to enhace their healthy life styles , live longer and lives filled with more and more fun . The company Also realizes the fast pace globalization which is taking place in todays world . Now in order to achieve these targets lululemon athletica further , sets its limits and pushes itself into more of technical fabrics . these are more functional designs Setting the bar in technical fabrics and functional designs, lululemon atheltica has also initated in working with athletes and yogis , in communities which exist locally. LuLuLemon atletica has done this to work with yogis and athletes in local communities for continuous research and product feedbackthis will also help the company change and keep their products and service innovative to fit all trends of the market as well as the conusmers . the company was basically founded in British Columbia , in the state of Vancouver in 1998 . lululemon athletica is now plnnaing and implementing and aggressive expansion althrough communities in North America and also globally . -Q: Are the projects in the future likely to look like the projects in the past Why or why not Ans: The projects in the future will also be in partiality somewhat similar to the old ones and idea, but yet be different at the same time. These future projects will be tend to be of similar nature in the sense that they will continue with their motive of, serving the community of consumers with technological advancements in the field of yoga and therapy. But they tend to expand, which will mean that the Product lines may be variant in nature. The company is planning expansion; this expansion n tends to target the whole north of America V. Capital Structure Choices - what are the different kinds or types of financing that this company has used to raise funds Where do they fall in the continuum between debt and equity The company has used various kinds of financing to raise funds, debt and equity financing at the same time was being done. They have raised funds with through advertising in the market. Furthermore, they have been able to raise funds by selling of shares and stock in Toronto and Nasdaq Share Market. - How large, in qualitative or quantitative terms, are the advantages to this company from using debt - How large, in qualitative or quantitative terms, are the disadvantages to this company from using debt There are many disadvantages to the company for using debt. But the key fact o be observed is that by selling the business to an equity firm, the business intends to share profit or loss. So that is not such a tremendous issue. - From the qualitative trade off, does this firm look like it has too much or too little debt Too little debt. VI. Optimal Capital Structure Q: Based upon the cost of capital approach, what is the optimal debt ratio for your firm Ans: It is reasonable Q: Bringing in reasonable constraints into the decision process, what would your recommended debt ratio be for this firm Ans: Acid test ratio Q: Does your firm have too much or too little debt o relative to the sector Too little o relative to the market VII. Mechanics of Moving to the Optimal Q: If your firm's actual debt ratio is different from its recommended debt ratio, how should they get from the actual to the optimal In particular, Ans: In order to get to the actual and then to the optimal the company would need to apply the right strategies and manners of calculating the total debt and the dis advantage, the company has to face being in that debt. by employing the factors of production high o should they do it gradually over time or should they do it right now They should do it now. Q: should they alter their existing mix (by buying back stock or retiring debt) or should they take new projects with debt or equity They should practice the especial one . type of financing should this firm use In particular, - should it be short term or long term It should be as soon as possible VIII. Dividend Policy Q: How has this company returned cash to its owners Has it paid dividends, bought back stock or spun off assets An : The employees get salary above their basic pay .hey return cash to stockholders (assuming that they have excess cash) IX. Valuation -Q: What type of cash flow (dividends, FCFE or FCFF) would you choose to discount for this firm Ans. FCFE Ct growth pattern (Stable, 2-stage, 3-stage) would you pick for this firm How long will high growth last High growth seems to last in the equity this firm How does this compare to the market The market value is also growing increasingly high in the long run . value - What is the "key variable" (risk, growth, leverage, profit margins...) driving this value X. Possible Restructuring - Is the firm a possible target for a takeover or shareholder activism Is it facing some financial stress Yes it is The firm a change in the amount or composition of its debt How would you recommend changing it A firm can easily change that by, changing the modern debt. - Is a change in the business mix warranted What acquisitions or divestitures do you recommend How Can be achieved - No change in the business mix is warranted. There is no such thing as the perfect mix of business that upon implication of which all ill is great. This business mix basically caries from product to product and business to business. In form of acquisitions my recommendation would just be to acquire more and more retail outlets. These should be at prime locations only wherein e knows maximum number of consumers. In reference to diversification, my recommendation would be to diversify within the present product lines. Can needed changes be made without a change in management or control How would these be affected - If you were hired to enhance value at this firm, what would be the path you would choose If , I were to be employed to enhance value at this firm , the path I would choose would be firstly , looking at how well we are being advertised . for the sale of products , and ad's related to these id rather use local communities athletic Stars in order to influence the consumers , to buy these products . More and more strategies I would have implied in relation to employee motivation. "Conclusion " The company Lulu lemon athletica is presently functioning, at a very good margin in the consumer market, although not too many details about their specific marketing outlays, and specific product market were available. But from the information that was made available it is pretty much explanatory that, the company is presently in the growing stage. All its products are in the introductory as well as the growth stage of the Product Life cycle. The company needs to analyze its financial position in depth so that they would be better able to sustain their company long term. The company further needs to expand in different jauners in order to be able to appeal to the public in general, and not only a specific niche. As, it is company policy not to take models fir their products who are not individuals leading their proposed life style. They should be open enough to invite models from all walks of life. So that the consumers would feel more at ease. Financially the company seems to be doing well. But the company will have to pay attention to its debt and equity state of affairs if it wants to start expanding aggressively. Keeping their debts low would be ideal for the company at this point in time. The company should also look for alternatives in order to bring more money onto the business platform. Rather than just borrowings. Works Cited 1. Official website of lulu lemon Athletic. Inc http://www.lululemon.com/about/media/news/73. Read More