Expert Answer:MBA540 NCSU WK9 Valeo And Chick-Fil-A Financial St

  

Solved by verified expert:Which project to invest? In week nine you will cast your vote on the group presentation that you most would invest in. The voting does not affect the group presentation grade but helps demonstrate that in real life sometimes it is hard to choose between options. Be sure to justify your selection. If you do not participate in the voting this can affect your personal participation score for the project.I have attached all the projects from my classmates, please look at all of them and decide which one should get your vote and why you would invest in it. Look at it from the financial aspect, need to be at least 300 words long.
mba_540_group_b_chickfila.pptx

group_d_tesla.pptx

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HISTORY
• AROSE FROM A MEEK COMMENCEMENT IN 1964, GEORGIA
• LARGEST QUICK-SERVICE RESTAURANT CHAIN IN THE US
• STRONG SOUTHERN TRADITIONAL AND CONSERVATIVE CHRISTIAN VALUES
MARKET RESEARCH
• COMPETITION IN THE INDUSTRY (STRONG FORCE)
HIGH NUMBER OF COMPETITORS (STRONG FORCE)
HIGH VARIETY OF FIRMS (STRONG FORCE)
LOW SWITCHING COSTS (STRONG FORCE)
• POTENTIAL OF NEW ENTRANTS INTO THE INDUSTRY (MODERATE FORCE)
LOW SWITCHING COSTS – STRONG FORCE
HIGHLY VARIABLE CAPITAL COST – MODERATE FORCE
HIGH COST OF BRAND DEVELOPMENT – WEAK FORCE
MARKET RESEARCH (CONTD.)
• POWER OF SUPPLIERS (WEAK FORCE)
HIGH NUMBER OF SUPPLIERS (WEAK FORCE)
HIGH OVERALL SUPPLY (WEAK FORCE)
LOW FORWARD INTEGRATION (WEAK FORCE)
• POWER OF CUSTOMER (MODERATE FORCE)
LOW SWITCHING COSTS (MODERATE FORCE)
HIGH SUBSTITUTE AVAILABILITY (STRONG FORCE)
MODERATE PRESENCE OF CONSUMER ORGANIZATIONS (MODERATE FORCE)
MARKET RESEARCH (CONTD.)
• THREAT OF SUBSTITUTE PRODUCTS (STRONG FORCE)
HIGH SUBSTITUTE AVAILABILITY – STRONG FORCE
LOW SWITCHING COSTS – STRONG FORCE
HIGH PERFORMANCE-TO-COST RATIO OF SUBSTITUTES – STRONG FORCE
STRENGTH
S.W.O.T
• RESTAURANT AMBIANCE
CLEAN, WARM FEELING OF SERVICECAPE AND DÉCOR MAKES THE CUSTOMER FEEL
WELCOME.

CUSTOMER SERVICE
COMPANY INVESTED THE EMPLOYEES BY PROVIDING TRAINING AND HELP THEM
ADVANCE THEIR CAREER PATH.
• FOOD – CHICKEN SANDWICH
CHICK-FIL-A PROVIDED GOOD QUALITY CHICKEN MEAT PATTY MADE SANDWICH IN THE
ERA WHERE PEOPLE ARE FOCUS ON EATING HEALTHY
S.W.O.T
WEAKNESS
• ONLY AVAILABLE IN THE U.S.
DUE TO THE GEOGRAPHY ONLY BEEN IN THE U.S., CHICK-FIL-A HAS LIMITED COMPETITION
ADVANTAGES AGAINST GLOBAL FAST FOOD FRANCHISE.
• HOURS OF OPERATION
CHICK-FIL-A CLOSE EVERY SUNDAY AS WELL AS FEDERAL HOLIDAYS. THIS AFFECTS SALES
AND POTENTIAL REVENUE FOR THE COMPANY.
• FEWER MENU ITEMS
DUE TO ONLY PROVIDE CHICKEN SANDWICH, THE MENU ITEMS ARE LIMITED AND LESS
INNOVATED.
S.W.O.T
OPPORTUNITIES
• EXPANSION IN OTHER COUNTRIES
IT WILL GIVE THE BUSINESS MORE COMPETITIVE EDGE IF EXPAND IN OTHER COUNTRIES.
• EXPAND THE MENU
MORE INNOVATED MENU ITEMS TO PROVIDE MORE DIVERSITY TO ATTRACT MORE
CUSTOMERS.
S.W.O.T
THREAT
• SAME-SEX MARRIAGE
CHICK-FIL-A PRESIDENT SPARKED REACTION BY SAYING HIS COMPANY BACKS THE
TRADITIONAL FAMILY UNIT.
• COMPETITION
ONGOING COMPETITION FROM OTHER BIGGER FAST FOOD CHAINS, MCDONALD, BURGER
AND KFC, ETC.
CONCLUSION
SINCE 1964 CHICK-FIL-A HAS BEEN IN BUSINESS. TRUETT CATHY HAS MADE HIS DREAM
INTO A REALITY. OF COURSE THERE ARE SOME THINGS TRUETT CAN CHANGE TO POSSIBLY
MAKE CHICK-FIL-A EVEN MORE SUCCESSFUL SUCH AS
• WORKING INTERNATIONALLY
• EXPANDING IN ALL 50 STATES
• APPEAL TO ALL DEMOGRAPHICS
CONCLUSION CONT.
HOWEVER DESPITE ITS CONTROVERSY, CHICK-FIL-A HAS SHOWN MANY STRENGTHS
• EXCELLENT CUSTOMER SERVICE
• GOOD QUALITY OF FOOD
• OPPORTUNITY TO EXPAND
REFERENCE

AARTHUN, S. (2012, JULY 28). CHICK-FIL-A WADES INTO A FAST-FOOD FIGHT OVER
SAME-SEX




MARRIAGE RIGHTS. RETRIEVED FROM HTTPS://WWW.CNN.COM/2012/07/27/US







PROQUEST-COM.PROXY.CITYU.EDU/DOCVIEW/1860780484?ACCOUNTID=1230


READINGS, CASES, AND EXERCISES. BOSTON. PEARSON PRENTICE HALL.
RETRIEVED FROM HTTPS://WWW.FORBES.COM/SITES/ALICIAKELSO/2018/
CITYU.EDU/DOCVIEW/1030506880?ACCOUNTID=1230


BOLMAN, L. G., & DEAL, T. E. (2017). REFRAMING ORGANIZATIONS:

ARTISTRY, CHOICE, AND LEADERSHIP (6TH EDITION). HOBOKEN, NEW
JERSEY: JOSSEY-BASS.
KENTON, W. (2019, FEBRUARY 20). PORTER’S 5 FORCES. RETRIEVED FEBRUARY 28,
2019,

FROM HTTPS://WWW.INVESTOPEDIA.COM/TERMS/P/PORTER.ASP QSR. (2018, JUNE
26). STUDY:
/CHICK-FIL-A-CONTROVERSY/INDEX.HTML
BERRY, L. (2012, AUG 02). BEEF OVER GAY MARRIAGE INCITES CHICK-FIL-A
RUSH.MCCLATCHY-TRIBUNE BUSINESS NEWS RETRIEVED FROM
HTTP://PROXY.CITYU.EDU/LOGIN?URL=HTTPS://SEARCH-PROQUEST-COM.PROXY.
CHICK-FIL-A, INC. (2018). FORT MILL: MERGENT. RETRIEVED FROM BUSINESS
MARKET RESEARCH
COLLECTION RETRIEVED FROM
HTTP://PROXY.CITYU.EDU/LOGIN?URL=HTTPS://SEARCH-
HARVEY, C. P., & ALLARD, M. J. (2015). UNDERSTANDING AND MANAGING DIVERSITY:
KELSO, A. (2018, DECEMBER 20). CHICK-FIL-A IS NOW MCDONALD’S BIGGEST
THREAT.
12/20/HOW-CHICK-FIL-A-POSITIONED-ITSELF-TO-BE-MCDONALDS-BIGGESTTHREAT/#3F8DF2FF1AE7
REFERENCE

TRUETT CATHY, WHO LIVES PART TIME IN NEW SMYRNA BEACH, SAYS FAITH AND FAMILY REMAIN HIS TOP
PRIORITIES. ORLANDO SENTINEL RETRIEVED FROM HTTP://PROXY.CITYU.EDU/LOGIN?URL=HTTPS://SEARCHPROQUEST-COM.PROXY.CITYU.EDU/DOCVIEW/279969417?ACCOUNTID=1230






PETERSON, H. (2016, MAY 10). WHY CHICK-FIL-A’S RESTAURANTS SELL 3 TIMES AS MUCH AS

WHAT-ARE-CHICK-FIL-AS-OPERATING-HOURS
KFC’S.RETRIEVED FROM HTTPS://WWW.BUSINESSINSIDER.COM/
WHY-CHICK-FIL-A-IS-SO-SUCCESSFUL-2016-5
RACHEL. (2019, JANUARY 14). CHICK-FIL-A STARTS TESTING NEW SPICY
CHICKEN MENU ITEMS.RETRIEVED FROM HTTPS://WWW.QSRMAGAZINE.COM/
MENU-INNOVATIONS/CHICK-FIL-STARTS-TESTING-NEW-SPICY-CHICKEN-MENUITEMSTONEY,C.(N.D.).WHATARECHICK-FIL-A’SOPERATINGHOURS?
RETRIEVEDFROM HTTPS://THECHICKENWIRE.CHICK-FIL-A.COM/INSIDE-CHICK-FIL-A/
Confidential
Customized for Lorem Ipsum LLC
Version 1.0
Investing in Valeo
An internal presentation for Tesla executives about
Investment in French company: Valeo
City University of Seattle – MBA 540 Winter 2018- 2019
– Reginald Cherenfant – Lumen Adetou – Zane Farris – William Badu
Figure 1. Tesla accessories, Retrieved in 2019 from: https://www.tesla.com/
About Valeo
Valeo is an environmentally friendly, global automotive supplier who’s current headquarters is in
France. It supplies a broad range of technology and products to automakers and the aftermarket. The
firm has 111,600 employees in 33 countries. It has 184 production plants, 55 R&D centers and 15
distribution platforms. The company designs solutions for smart mobility, while focusing on reducing
CO2 emissions.
About Tesla
Tesla, Inc. is an environmentally friendly American automotive and energy company whose
headquarters is in Palo Alto, California. The company specializes in manufacturing electric cars as well
as solar panels and energy storage through its SolarCity subsidiary.
Figure2. Tesla sensors, Retrieved in 2019 from: https://www.tesla.com/
Competitors
Other companies in the industry are
shown in the table ranging from
Bosch with 87.3Billion of annual
revenue to Daikin applied with less
than 10 millions of revenue.
Lear Corporation -for exampleprovides high technology vehicle
seating including the air bags and
other safety features.Furthermore it
is showing how well all his
competitors are doing on the market
vs valeo revenue. Base on the table
value one can determines if valeo is
a good company to invest into .
Competitors
Annual revenue
Employees
Delphi Technologies
$4.9B
21,000
Lear Corporation
$20.7B
169,000
ZF Friedrichshafen
$43.7B
146,148
Bosch
$87.3B
400,500
Johnson Controls
$29.4B
122,000
Daikin Applied
$9.5M
189
Continental AG
$54.8B
243,311
Growth Opportunity
with Valeo
Many economic studies have shown that companies who
use green technology and selling green products are seeing
an increase in profit.
Customers have always responded positively when
companies have made environmentally friendly changes,
with green product sales alone jumping somewhere around 20
percent as of 2010.
According to German-based Roland Berger Strategy
Consultants, the global market volume for “environmental
technologies” will reach a projected $2,740 billion by 2020
Valeo.com
Ars Technica
Growth Opportunity
with Valeo
Acquiring a green company will set a positive example for
employees, boosting morale and company loyalty.
As the company grows, Tesla will be sought out by the
younger eco-friendly tech generation that prefers to work with
companies that have gone green.
Growing as a known environmentally friendly company will
make it an attractive place to work, bringing in some of the top
talent to do the jobs. Staff will feel like they are doing their part
for the earth while getting paid for it, and this can be a real
draw to the company. Having this sense of purpose will
improve the company’s performance even further.
Tesla.com
Valeo’s Value
The company’s value was affected by
the uncertainty in the economic health in
europe and has also suffered from
tougher European emissions tests and a
sharp sales downturn in China (Reuters,
2018).
Valeo market cap has dropped from
around 18 Billion USD in 2017 to around
8 Billion USD in January 2019 falling by
more than 19 percent in one day after
issuing a profit warning in october of
2018.
Valeo 5 year stock price (Google finance, 2019)
Valeo’s Value
The recent drop in the stock price has resulted in a favorable valuation when compared to both the industry and the
market (indicated by the U.S. Standard and Poor 500)
The price to book value of only one and a half is very attractive from valuation stand-point.
Valeo 5 year valuation comparison with market and industry (Morning Star, 2019)
Financial Analysis



A market capitalization of 15% of that of
Tesla’s and Twelve Trailing Months (TTM)
revenue of about double that of Tesla’s
makes Valeo an attractive investment in
this regard.
Tesla’s Earnings before interest, tax,
depreciation and amortization (EBITDA)
was -102M, mainly caused by hi R&D and
sales, general and administrative
expenses.
A big portion of Valeo’s liabilities is their
pensions and benefits obligations. In 2017
it was 1,220M.
Metric*
Tesla
Valeo**
Market Cap*** USD
51B
7.8B
Revenue (TTM) USD mil
11,759M
22,797M
Free Cash Flow (TTM)
-4,142M
168M
EBITDA (TTM)
-102M
2,935M
Total liabilities
24,418M
15,620M
Current liabilities
9,992M
8,910M
*As of December 2017
** Used historical average of 1 EUR =1.2011 USD
*** As of Fri 03/01/2019
Financial Analysis




It looks like Valeo is at a much more mature
phase than Tesla from these numbers.
Valeo is growing at a rate of over 13%, while
maintaining a sustainable operating margin
and providing a good return on equity and
assets..
Debt to equity ratio of 0.73 is extremely better
than the average for major auto industry of
2.5 (Maverick, 2018).
Valeo’s Quick and current ratios can be
considered an improvement to Tesla’s poor
and risky ratios of only 0.51 and 0.86
respectively.
Ratio*
Tesla
Valeo
Return on equity (TTM)
-43.63%
19.33%
Return on assets (TTM)
-7.64%
4.94%
Operating margin (TTM)
-13.9%
7.8%
YOY 3 year revenue growth
54.34%
13.39%
Debt to equity
2.22
0.73
Quick ratio
0.51
0.72
Current ratio
0.86
1.04
*As of December 2017
Conclusion
Combining the two companies can achieve synergy where Tesla can benefit from the access to Valeo’s physical
locations in Europe and around the world, their intellectual property, and can use extra cash flow as a step to
stabilize Tesla’s financial health; on the other hand Valeo can benefit from Tesla’s monstrous growth, and access
to a the vast number of new customers to get over its worries about not being able to expand into the future.
Valeo has been making money, and is expected to continue to do so.It’s dividend payout ratio is sustainable at
around 30% and the balance sheet looks good. Because of the lowered growth guidance anticipated by Valeo’s
management Valeo have lost over half of its value in the past two years creating an opportunity for potential
acquirer to take an action.
From a financial standpoint, Tesla does not have enough cash to support buying Valeo without having to raise
capital thus a combination of stock-cash or only stock deal would be preferred.
References 01
TSLA Company Financials (n.d.). In Nasdaq. Retrieved from https://www.nasdaq.com/symbol/tsla/financials?query=incomestatement
Tesla Inc (TSLA) (n.d.). In Investing. Retrieved from https://www.investing.com/equities/tesla-motors-ratios
COMPANY REGIONAL PROFILE (n.d.). In valeo.us. Retrieved from http://www.valeo.us/valeo-in-north-america/companyregional-profile
Valeo’s Competitors, Revenue, Number of Employees, Funding and Acquisitions (n.d.). In owler. Retrieved from
https://www.owler.com/company/valeo
Lorett, K. (2018). Why Businesses Should Go Green. Retrieved from https://smallbusiness.chron.com/businesses-shouldgreen-766.html
Press8. (2019). 5 Reasons Your Company Should Go Green. Retrieved from https://www.press8.com/5-reasons-yourcompany-should-go-green/
References 02
Reuters, 2018. Shares in car parts group Valeo slump after profit warning. Retrieved from:
https://www.reuters.com/article/valeo-sales/shares-in-car-parts-group-valeo-slump-after-profit-warning-idUSFWN1X60A0
Google finance. Market Summary>VALEO/S ADR OTCMKTS:VLEEY. Retrieved from:
https://www.google.com/search?q=vleey
Pound Sterlinglive. Historical rates for the EUR/USD, Retrieved in 2019 from: https://www.poundsterlinglive.com/bestexchange-rates/euro-to-us-dollar-exchange-rate-on-2017-12-31
Morningstar Investment Research Center, 2019. Valeo SA ADR VLEEY, provided by City University of Seattle Library
J.B. Maverick, 2018. Key Financial Ratios to Analyze the Auto Industry. Retrieved from:
https://www.investopedia.com/articles/active-trading/082015/key-financial-ratios-analyze-automotive-industry.asp
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