BHP Billiton Case Study Example | Topics and Well Written Essays - 3500 words

BHP Billiton - Case Study Example Apart from some specific small scale mining especially in high value low volume minerals, extraction of mineral resources usually requires large scale, capital intensive investments, Most projects are technologically challenging and investments are characterized by high degree of uncertainty and long gestation periods. In most developing countries except China and India, extraction industry seems to be export focused with significant scope of revenue creation but limited scope of employment generation. Mineral extraction also involves considerable threat to an ecosystem, and could have adverse social implications. Finally, mineral resources are non-renewable and often of strategic, geo-political importance. As a result, governmental influence tends to be high, which can interfere with the business operations. Owing to the huge capital investments required for extraction, this market has seen emergence of state-owned enterprises, which can depend on the government for the huge capital investments that they incur. Not all developing and least developed countries can afford the high capital investment. Therefore, this market is also characterized by the presence of large multi national corporations (MNCs), which have the financial power to make huge financial commitments. Exploration activities for minerals can not only take up long gestation periods, but can als... Exploration activities for minerals can not only take up long gestation periods, but can also result in unsuccessful attempts. Even after successful exploration, the investor needs to face the technical risk (involved in extraction at sometimes difficult sites), and market risk (demand and supply risks), political risks (nationalization). Political risks can be higher if the host country has a weal constitutional framework. This is a risky business and the investor should have the expertise necessary to handle such risks. Once investment is committed, the cost of pullout is very high (United Nations Conference on Trade and Development, 2007). Section-III About BHP Billiton The largest extractive company, BHP Billiton was chosen as the subject of this case study. Its mission, marketing strategies are explored in the subsequent sections. The mission statement of BHP Billiton is "to create long-term value through the discovery, development and conversion of natural resources, and the provision of innovative customer and market-focused solutions". BHP Billiton is a global resources company in the extractive sector headquartered in Australia. It is a dual listed company and consists of BHP Billiton Limited Group in Australia, and BHP Billiton Plc group in the UK. IN addition, American Depository Receipts (ADRs) of both companies are listed Ney York Stock Exchange (NYSE). It was created in 2001 by the merger of Australia's Broken Hill Proprietary Company (BHP) and the UK's Billiton, which had a Dutch and South African background (Wikipedia, 2009). It is the world's largest diversified natural resources company, and has significant businesses in alumina and aluminum, copper, energy (thermal) coal, iron ore, nickel, manganese,

Security And Confidentiality On The Internet Information Technology Essay

Security And Confidentiality On The Internet Information Technology Essay On 9th of November 2009 The Internet teacher requested 3000 word report related to the FETAC Internet module. This report was to be submitted by 14th of January2010. The topic of the report is Security and Confidentiality on the Internet with reference to cookies, viruses, encryption, digital signatures, firewalls, filtering software and personal privacy. Recommendations were requested. 2. Method of Procedure I found most of the information on the internet. In order to obtain the relevant information, I used Google Search Engine with keywords in English: Internet Security, Privacy on the Internet, Malware, Computer Viruses, Cookies, Firewalls, Filtering Software, Encryption, Digital Signatures, Computer Protection, Threats on the Internet. Keywords in Lithuanian: Privatumas Internete, Saugumas Intenete, Kompiuteriniai Virusai, UgniasienÄ-s, Filtravimo PrgraminÄ- Ä ®ranga, Ã…Â  ifravimas, Skaitmeninis ParaÃ…Â ¡as, Pavojai Internete. Also, some printed sources of information such as books and a periodical press in English and Lithaunian were adopted. Several pages for each topic were checked to confirm that the information was correct and fully understud. That hepled me to make conclusions and to give recommendations. 3. Findings 3.1 Importance of Subject With the progress of affordable technology more of us store more and more of our life in bits and bytes. By the end of 2009 there was more than 1,5 billion Internet users in 260 countries on every continent. The Internet is not a single network, but a vast array of connected networks situated all over the world, easily accessible by personal computers, notebooks, netbooks, smartphones, PDAs, game consoles, advanced TVs, same photo cameras or even kitchen appliances as hi-tech fridges and microwaves in a variety of ways. Today, the Internet uses gateways, routers, broadband connections, Wi-Fi spots and Internet service providers (ISPs) to make itself available at all times. Individuals and organizations worldwide can reach almost any point on the network without regard to national or geographic boundaries or time of day, there is some exceptions regarding to Internet censorship. Nowadays, it become hard to find the business without any connection to the Internet, because of its excellent source of marketing, convenience, high speed, low cost, and almost unlimited possibilities. Institutions of education, hospitals, banks, institutions of public service, providers of mobile service and internet, utility companies and of course our government has our personal information on their computers and they are connected to the Internet. With the birth of Social Networking Sites such as Bebo, Facebook, MySace, Twitter ect., we sharing our pictures, personal details, our thoughts and lives with friends and if we are not careful with everybody on the Internet. Just Facebook on its own has more than 400 million users. Even more, with new generation of Internet- Cloud Computing, individuals and business users are storing less data on their hard drives and more in the cloud- remote servers, operated by giants like Google and Amazon. However, while using the Internet, along with the convenience and speed of access to information come new risks. Among them are the risks that valuable information will be lost, stolen, corrupted, or misused and that the computer systems will be corrupted. If information is recorded electronically and is available on networked computers, it is more vulnerable than if the same information is printed on paper and locked in a file cabinet. Intruders do not need to enter an office or home, and may not even be in the same country. They can steal or tamper with information without touching a piece of paper or a photocopier. They can create new electronic files, run their own programs, and even hide all evidence of their unauthorized activity. So if we are closing and locking the door in our house to prevent criminals gain access to our valuables, we must take care of our house and life in the digital world and use all possible security and privacy on the Internet measures against the threats. WORLD INTERNET USAGE AND POPULATION STATISTICS World Regions Population ( 2009 Est.) Internet Users Dec.31,2000 Internet Users Latest Data Penetration (%Population) Growth 2000-2009 Users %of Table Africa 991,002,342 4,514,400 67,371,700 6.8 % 1,392.4% 3.9 % Asia 3,808,070,503 114,304,000 738,257,230 19.4 % 545.9 % 42.6 % Europe 803,850,858 105,096,093 418,029,796 52.0 % 297.8 % 24.1 % Middle East 202,687,005 3,284,800 57,425,046 28.3 % 1,648.2% 3.3 % North America 340,831,831 108,096,800 252,908,000 74.2 % 134.0 % 14.6 % Latin America/Caribbean 586,662,468 18,068,919 179,031,479 30.5 % 890.8 % 10.3 % Oceania / Australia 34,700,201 7,620,480 20,970,490 60.4 % 175.2 % 1.2 % WORLD TOTAL 6,767,805,208 360,985,492 1,733,993,741 25.6 % 380.3 % 100.0 % Copyright  © 2001 2009, Miniwatts Marketing Group 3.2 Personal Privacy Total privacy does not exist on the Internet, but it is possible to minimize the risks. Most security breaches are not done by technology, but by social engineering. In security, people is the most risky factor of all, yet its the one thing thats often forgotten. A company may setup firewalls, security software, locks and fingerprint scanners, but if they forget to establish and enforce a well designed security policy, they have forgotten the most important part. The easiest way to get a password from someone is just to ask! In more likely situations, an attacker may simply call random people and pretend they are a tech support person trying to fix a problem, and ask for confidential information as part of the diagnostic. Pretexting Pretexting is the way of stealing information by providing just a little bit of known information, and pretending to be someone youre not. Thats how identity thieves can call banks and, after a few tries, by simply providing basic information about the target, get all the data they want. Phishing Phishing is when you receive an email that looks like its from your bank, Paypal, online shop or another secure site you use, and asking you to login to confirm your information. It works in this way: the criminals sets up a website which looks like the genuine one and then sends phishing email to thousands of people, until they find somebody. Then when the person tries to login, his login information is intercepted by the bad guys and used to steal valuable information. Malware Malicious programs, especially Key loggers can record what keys on the keyboard you are pressing when login to secure websites, to obtain your username and password. Often Key loggers are incorporated together with Trojan Viruses, programs which pretends to be useful software i.e. antivirus or computer maintenance programs, to send stolen information to the criminals. Privacy threats on Social Networking Sites Internet users have to be very careful with the private information that they share on the web. Internet is becoming very popular way to communicate with people. Most people who give too much of private information about themselves arent aware about the risks they taking. There are people who can pretend to be your friends, gain information and use this information against you for blackmailing, psychological terror or for access to secure private pages. Conclusions and Recommendations The offenders are always inventing new methods to steal private information. We have to be aware about that, constantly refresh our knowledge about security and existing scam schemes and take all possible security measures by using trusted up to date security software. Never click a link in an email from unknown sender, never download from an untrusted source, and always type in the address of your financial sites to access them. Need to avoid to disclose sensitive information online especially to the people we dont know very well. Also we have to remember that these attacks also can be done offline. Most identity thefts are done by people simply going through rubbish bins and getting confidential data that was thrown out, like a bank statements, invoices, payslips ect. We cant do much to secure our personal data collected and stored by businesses and institutions which can also be stolen or misused, just hope that they will take same good care as we do. 3.3 Cookies What are Cookies? Cookies are a piece of text that a web server sends to web browser and are stored on a users hard disk. Main purpose of cookies is to help prepare customized web pages with our settings, interests, browsing habits. It works in similar way to loyalty cards i.e. if we bought a book in Amazon internet shop, next time when we come back to Amazon first it will offer similar books to our purchase. Cookies do not act maliciously on computer systems. They are text files that can be deleted at any time. Cookies cant be used to spread viruses. But because any personal information that we gave to a web site will be stored in a cookie some people can accept it as a threat to privacy and anonymity. To prevent misuse of information in the cookie if its stolen, information in the cookie is encrypted. How do They Work? When we visit a site that uses cookies, it can ask the browser to place one or more cookies on the visitors hard drive. It will contain our name and password, fill in form i.e. delivery addresses and basically what we do in the page. Next time, when we come back to the site the web browser sends back the cookies that belong to the site and then we will see personalized Web page with our details. Generally cookies help us to save a little bit of time. And we always have possibility to switch it off, however internet shopping web pages requires cookies to accesses them. How Could I Prevent/Manage Cookies? If we want to delete cookies we have to follow these steps: Internet Explorer: Tools /Internet options/Security /Set security level to high or custom level/Cookies/Disable. Mozilla Firefox: Tools/Options/Privacy/Cookies/Uncheck/Allow sites to set cookies Other options are to use designated Cookie Managing software or to use advanced Antivirus programs which also have the option to control cookies, to block cookies that we dont want and save only the cookies that we want. Conclusions and Recommendations I think that cookies are useful because we can get personalized information to read, do not spend time on security questions where it is necessary to enter a password, we dont have to spend time filling up same forms. Cookies do not collect information saved in the computer, it can contain only private data that we give to a website on our own free will. And if we dont want some cookies we are able to remove them from computer when we want. Some websites such as internet banking, e-shops and similar are impossible to use properly without allowing the cookies. 3.4 Viruses What is a Virus? Computer viruses are small malicious program codes, which are designed by using various techniques to hide themselves inside the executable files. Their aim is to replicate, spread between the computers using removable media or network and to interfere with computer operation: slowing down computer, damaging or deleting data, disturbing users and wasting time by showing annoying massages. Virus can be classified by several characteristic: depend on the origin, on the way how they infect computer, on the place where they hide, on the damage that they can cause However, the computer virus is only one type of the malicious software or malware, but majority of computer users referring to all malicious programs (Trojan horses, worms, rootkits, spyware etc.) as the viruses. Type of Virus Different viruses can have many common characteristics and constantly appearing viruses with new specifications or combinations. Resident Virus. Loads the replication module into RAM memory when is executed, after this virus can infect all files that are accessed by user or operating system. If the antivirus program fails to spot the virus in the RAM it can infect all scanned files. FAT Virus. The File Allocation Table is a fundamental element in the system it works like an index, keeping information where is the files stores on the hard disk drive (HDD), which sectors are empty etc. If this vital index is destroyed by virus, it makes impossible for computer to locate files. It also can overwrite the files or entire directories corrupting them permanently. Sometimes the only solution to fix the computer affected by FAT virus is to format hard disk drive. Huge downside of this is that all information on HDD will be permanently erased. Virus of Direct-Action. Sometimes referred as Non-Resident Virus, they are unlike to resident virus, not loading in to RAM memory. They try to infect the programs and cause damage at the moment of execution of infected file. Most of viruses are Resident. Overwriting Virus. Most destructible type of virus, it overwrites the information in the infected files corrupting them permanently. If you dont have the back-up copy of your files its a bad news because the only way to get rid of this type of virus is to delete infected files. Boot Virus. Also known as System Virus. These viruses infect critical section with boot code on hard disk or another bootable media storage that helps to start computer. When the computer starts up and the boot virus is launched, it can take complete control over infected computer and does everything it wants (steal private information, delete system files etc.) Clean bootable antivirus software required to disinfect the system. However depend on the virus this solution is not enough to clean bootable sector. Macro Virus. Macros are micro-programs associated with a file that serve to automate joint complexes of operation. Macro virus expand from applications which use macro, word document (file with extension .doc),Excel (file with extension .xls) data of Access (file with extension .mdb), Power point (file with extension .pps). When we open a file containing a virus of this type of macros are automatically loaded causing the infection. Most applications that use macros have, but many macro viruses easily circumvent this protection. Multipartite Virus.Very advanced type of virus that can perform multiple infections combining different techniques. These viruses are considered very dangerous, for its ability to combine many techniques of infection and harmful effects of their actions. File Virus. Infect programs or executable files (files with extension .ex and .com) when run the infected program, the virus becomes active, producing different effects. The majority of exiting viruses are of this type. Logic Bombs.Neither virus is considered strictly as they do not reproduce. They are not separate programs, but hides in an unmarked segment within another program.They aim to destroy the data on a computer or cause other significant damage on it when certain conditions are met. While this does not happen, no one notices the presence of the logic bomb. Its action can be extremely destructive. Trojan Virus.Trojan arent considered virus, because they dont replicate themselves. Trojans are commonly hidden in the programs that appliers to be useful, but instead opens unauthorized access to users computer. Trojans also can be installed thorough web pages with executable content (ActiveX control), email attachements. The effects of the Trojan can be very dangerous, allowing remote control from other computer (downloading, uploading, modifying or deleting files), installing key loggers and other malware, connecting computer to botnet (sending SPAM messages, perform network DDos attacks). How can computers become infected and what damage can cause? Viruses can infect computers through: Internet (email attachments, infected web pages, downloading infected files) Computer networks Removable Media Drives Virus Symptoms: The computer runs very slow Reduces the available memory The computer shuts down or freeze frequently There are programs which do not work or malfunction There is less free space on your hard disk Computer files disappear Strange messages appear on the screen. Some file are renamed or extended Conclusions and Recommendations Not everything that affects the normal functioning of a computer is a virus. Is very important to have means to detect and disinfect viruses use an antivirus program and update daily (use default settings). Scan all removable disks before use it and scan computer periodically at least once a week. 3.5 Firewall A firewall is a system that protects a computer or computer networks blocking unauthorized network access while permitting authorized communications. Firewall can be implemented in software, hardware or combination of both. Firewall is placed between protected and unprotected networks and acts as a gate to protect network or single computer, by inspecting network traffic, applying rules and allowing or denying connection. Firewall can use different techniques to do so: Packet filter (inspects every information packet passing through the network) Application gateway (applies rules to specific applications such as FTP, Telnet servers.) Circuit-level gateway(applies rules to TCP or UDP connections, when are made there is no further inspection.) Proxy Server (checks all network activity passing through network.) Conclusions and Recommendations Everyone should use a firewall against network intruders to protect computer and private information. Most of the antivirus programs and operating systems have integrated firewall software. Minor disadvantage of firewall, it can slow down Internet traffic and can be tricky for not advanced users to set-up it properly (not blocking traffic for useful programs). 3.6 Filtering Software The filtering software is designed to control what contents are allowed to be accessed on Internet. Often its installed on the computers of educational, government organizations, private companies. Filtering software is commonly used by parents to prevent their children from having access to certain web places unsuitable for minors. It also can be used as the mean of censorship in some countries. How does it work? Nowadays on the market there are many options of filtering software with various techniques and content filtering to prevent from harmful online material. The filtering programs works like that: Address blocking websites containing such content Controlling access times Accepting default address list Possible to establish your own list of addresses Assigning different profiles or different days and times(work, leisure, etc.) Controlling which services can be used at any time and for each user (mail, chat, etc.) Advantages and disadvantages of Filtering Software. Advantage of filtering software is that does not allow minor to access pages of violence, pornography, racism. In a work place it prevents employees of wasting their time and resources for personal proposes (chatting online, social network pages, etc.). Main disadvantage is over-zealous filtering. Par example, in some filters attempts to block the word sex would block words such as Essex and Sussex and etc. Internet censorship in some countries limits freedom of speech for different reasons and that is not a good thing. Some Filtering Software examples. Netnanny, Mobicop, DansGuard, CleanFeed,Web Sence 3.7 Encryption Its a method to convert the characters of a text that can not be understood unless it is read with the corresponding key. Used to protect the integrity of secret information if it is intercepted. Encryption is also used when data is sent via secure intranet (VSPN). Encryption is used for electronic commerce to protect credit card information. How does it work? The keys are the heart of the encryption. The keys are complex mathematical formulas (algorithms) used to encrypt and decrypt information. If someone encrypts a message, only one with the appropriate key can decrypt the message. Algorithms are used to perform a hash function. This process produces a unique MD5 for this message. The MD5 is encrypted with the senders private key resulting in a fingerprint. Conclusions and Recommendations Everyone who has and important or secret information (banks, hospitals, government, universities, e-commerce sites) they have to keep this information in secret from fraudsters. In recent years, it was few cases when portable computers of government organizations with secret information were lost or stolen. Laptops (portable computers) became more and more popular and most of us have some kind of personal information on our computers. So it is very important to have that information encrypted, in case of losing it. 3.8 Digital Signatures A set of data in electronic form attached to or associated with others which are used to identify the signatory, which allows you to check the provenance, authenticity and integrity of messages exchanged over the Internet. There are two types of electronic signatures: basic and advanced. The basic does not guarantee the identity of the signer, neither the veracity of information received since the sending does not ensure that the issuer has made it known to us, while the advanced signature identifies the signer and detect any subsequent change of data that could occur. The digital signature is a specific techology signature and created by the so-called System Asymmetric key cryptography and it works like that : The holder has two keys : public key and private key ,private key is only known to the issuer and is associated to the information you send .while the person who received only know their public key . Two keys are needed and complement each other to get the encrypted message appears as the original . When we want sent private information the information is encrypted by system which use mathematical operations so the information becames encripted ( strange numbers and letters) so the message only can be deciphered by the people who know the instruction and have a public key Conclusions and Recommendations It should be used by the organitations which have an important or secret information as banks, universities, hospitals, etc., these organitations should use digital signatures in order to avoid the risk of fraud .they have to be sure about the authenticy of the sender.

Early American Literature :: essays research papers

Early American literature consisted mainly of diaries, journals, short stories, and Indian creation stories. Since some of the language used was of older English and other languages, early American literature was difficult to read.The first story I read was Spanish Explorers in the New World. This story was a journal of Cabeza de Vaca’s travels and discoveries in the New World. After having a shipwreck, he and his fellow sailors were made slaves of the Indians. They walked barefoot, bleeding and ate raw meat for food. He also described how one tribe took over land. De Vaca gave detailed accounts on how the Indians lived which I found interesting. The males lived in the estufas, while women lived in the house. For a proposal, the male would weave a blanket and place it before the female. Spanish Explorers In The New World was interesting because of the detail with the Indians as opposed to other stories which involve no action.The second piece of early American literature I read was The General History. The Jamestown colony as plagued from the beginning by unfortunate circumstances. While out exploring, John Smith was captured by the Indians. After being brought to many chiefs, John Smith was brought to the emperor of the Pamaunkee. The emperor had planned to kill John Smith at first by placing his head against a rock and bashing it in. Then Pocahontas, the emperor’s daughter, threw her head in the way and prevented his death. The emperor then decided to let Smith live and to have him as a slave. This story also had more action than some other which I read which does make it interesting, but every once in a while it is difficult to understand due to the Old English. This story was insightful into the lives of one tribe of Indians near Jamestown.The third passage I read was an excerpt from The Bay Psalm Book. In this the Puritans had re-edited the Bible and tried to simplify its words. Their version was modified to rhyme and to have what the Puritans referred to as "plainness.

Letter of advice on how customer service in BA can be improved

I am writing to offer you some advice on how customer service in BA can be improved. Your Chief Executive, Mr Willie Walsh, suggested I write to you because he was impressed with my suggestions about monitoring and evaluating customer service. The four areas I will focus on are: 1. Improvements to quality 2. Reliability 3. Improvements to the organisation 4. Improvements to employees There are many ways in which you can improve the quality of your service in BA. Firstly I believe the introduction of extra staff training will highly benefit your company and in turn help improve your customer service. For instance all staff should be trained to deal with difficult customers; this can be very disruptive to the clientele and furthermore create a negative image for BA. If all staff is trained in this area it will mean that procedures can run smoothly and disruptive customers can be dealt with effectively. As well as this staff should be trained in helping people with special needs such as elderly, disabled, or young children. It is important that they are treated the same as regular customers and treated with due care and attention. This will attract attention to your company as people will know that your company is customer focused and has high levels of customer service for all types of people. Moreover you could introduce policies such as the introduction of new rules that will set higher expectations from your staff. This can include approaching as many customers as possible and asking them if they need any assistance in areas such as check-in. This will improve customer service levels as you can ensure that everyone is following the rules that have been set and in turn you can add more rules and regulations that will ensure that all staff is doing the same thing throughout your business. To each individual team you can set monthly targets, this will allow you to monitor the section and then create more objectives you plan for them to reach. This will benefit customers because each group of people will have objectives that they need to achieve and will be monitored throughout their progress to ensure the highest quality customer service is provided. As I suggested in a letter to your chief executive Mr Willie Walsh, the use of mystery shoppers and surveys will highly benefit your company in terms of customer service. These two methods will identify areas where there are problems and will allow you to put in the correct measures so this can be improved. For example if a mystery shopper identified that the staff were unfriendly, this will mean you can put in place training and/or aims and objectives and allow you to fix this issue. This will make your customer service more reliable because it will mean that it is aimed at certain aspects that have been pointed out as being under par. However it is also necessary for management to focus on customer service. This will help keep staff happy as they know that the management care about the service provided to customers and will in turn encourage them to adopt the same style. As well as this it can also improve levels of customer loyalty, this is because customers will feel that they are being treated very well and the staff are ensuring that the customer’s needs are met to the highest standard. This will not only boost the amount of return customers but also give BA the reputation of being customer focused. This will also attract customers that usually use other airlines increasing the popularity of your business and in turn the reputation of BA will grow. This will lead to increased sales as there will be a high volume of customers and consequently this will create increased profits. Finally I believe it is imperative that you train and develop your staff as this will allow you to gain the most from them. It will improve the levels of customer service they provide, and mean that they are more confident with their job roles. Secondly they will be motivated to work hard and self evaluate their performance. If each and every member of staff does this it will improve the whole of BA’s performance and make it become a more successful company. For instance if a member of staff has been trained in customer service, they will be confident when communicating with the customer and providing information (such as ticket information, baggage information), when they are positively rewarded by the customer (through language and expression) they will feel motivated to work even harder and will become critical of their own work and make sure it is to the best quality, and if not then try to improve it. This will mean that staff will constantly try to achieve the best that they can and provide excellent service. In comparison, a member of staff who has not been trained in customer service will be unsure about the way they should talk to the customer and will therefore feel unconfident with the work they are being asked to do. This will lead to them not being motivated to work hard which will make the quality of their work even worse. All in all this will mean that BA is being represented badly through its staff.

Innovation Essay Essay

Tom Scott and Tom First founded Nantucket Nectars in 1990 as a small side-business on Nantucket’s Straight Wharf. A peach fruit juice drink that Tom First discovered while visiting Spain inspired him and his partner to embark upon the journey of building their juice company. After only six years, the two entrepreneurs built a business that was generating $29,493,000 per year in revenue and $969,000 in EBITDA. With remarkable success came exciting opportunities, as well as challenging decisions. Specifically, Tom and Tom were faced with the dilemma of taking the company down one of three roads including: taking the company public via IPO, selling the business, or continuing to grow and run the business independently. Tantamount to these decisions, the founders had additional questions on their minds – How should the company be valued? How could they ensure price maximization? How would the negotiations be handled? Could they engage potential buyers without existing employees find out? At the end of the day, the decision was more personal than anything. It’s never easy for an Entrepreneur to rationalize â€Å"selling out† after they’ve spent so much time building and developing their baby. Nevertheless, it’s often the best decision. In this paper I will explore the Pros and Cons of selling Nantucket Nectar, along with how to determine an appropriate value for the company. The first option to be explored was remaining independent. One of their concerns was management involvement of any potential strategic partner, or buyer. Tom and Tom wanted to run the company, if possible. If they remained independent then they would still be the autonomous owners of Nantucket Nectars and they wouldn’t have to worry about listening to anybody else telling them how to operate, or grow the company. Also, a benefit of remaining independent was the preservation of the company’s brand which was built upon two entrepreneurs, Tom and Tom. They used their story as part of the branding and the market enjoyed it. Selling out could create some negative public relations. Remaining independent was an opportunity to remain in control of their public image. Independence isn’t entirely positive, though. A negative aspect of remaining independent would be the lack of distribution support – their growth capabilities would be limited. In contract, if they were to sell to a larger organization with robust infrastructure they could enlarge their footprint more rapidly. Another con of remaining independent would limit the founders from entering into new ventures that might be more appealing to their sense of entrepreneurialism. Remaining with Nantucket Nectars, to some, could be stifling. Regardless, it would certainly limit their ability to grow from within. Capital was less readily available to Tom and Tom and the support of a larger scale investor could bring some immediate excitement. Another con of remaining independent is the insulation against catastrophic events, or litigation. As a small, independently owned business there is typically more risk involved from a litigation standpoint. Although companies are insured, the sheer expense of seeking legal counsel has a greater negative impact upon smaller businesses than larger conglomerates like Tropicana, or Pepsi, who have large departments of in house counsels. The second option available to Nantucket Nectar is to sell the business. In reviewing their financial performance (see Exhibit 1), we notice that the business has had several years where they were profitable. Their EBTIDA was strong over the past two years (1995 & 1996), thus making them more marketable. From a seller’s perspective, this might be n favorable time to sell. Also, a benefit of selling is the immediate influx of cash that would be available as a result of the buyout. Tom and Tom would have financial independence which, for an entrepreneur, can be the greatest state of being. This would afford them both an opportunity to regroup, reenergize, and focus on new business ventures. Many entrepreneurs enjoy the early â€Å"start-up† phases of the business cycle. Of course, selling a business has its drawbacks, as well. First, the buyer often requires that the management team from the acquisition target stay on board for a specific period of time and achieve certain key performance indicators before receiving the entire payout. Often, there is a lump sum delivered up front, and then incremental payouts upon achieving KPI’s. This could be frustrating to Tom and Tom, as they would relinquish all of their independent decision-making powers and have to take the back seat as employees. Typically, this is not a comfortable position for entrepreneurs to take. Also, Tom and Tom built up a loyal and talented staff of employees at Nantucket Nectar. Acquisitions are typically driven by synergies and, as a result, certain employees could be terminated in pursuit of cost savings. Finally, Tom and Tom would have to deal with the fact that their company culture would be at risk. Often, the buyers culture engulfs that of the company being acquired. The third option available to Tom and Tom is taking the company public, or an IPO (Initial Public Offering). The most obvious advantage of going public is that Nantucket Nectar would have an immediate influx of capital available due to the sale of its stock. With excess capital available, they could purchase assets for distribution and manufacturing, invest in advertising and marketing, and continue to fuel the expansion of the business. Going public also creates a type of currency in the form of its stock that Nantucket Nectar can use to make acquisitions. In addition, they will likely have access to capital markets for future financing needs. As is typically the case, Nantucket Nectar’s debt-to-equity ratio will improve after the IPO, allowing them to obtain more favorable loan terms from lenders. Another benefit of going public is that Tom and Tom may be able to retain a certain degree of control. If they opted to sell common stock to venture capitalists to raise money rather than doing an IPO, the purchasers would probably require some decision-making authority. As entrepreneurs, Tom and Tom would have a hard time relinquishing decision making authority. 1 Initial public offerings have negative aspects, as well. First, going public is not inexpensive. Multiple areas of expertise are required to execute the process, including lawyers, accountants, and consultants. This could get expensive for Nantucket Nectar. Another disadvantage of going public is that public companies operate under close scrutiny. The prospectus reveals substantial information about the company including transactions with management, executive compensation and prior violations of securities laws. This may be information the company would prefer to keep private. In my opinion, the most difficult thing for Tom and Tom to deal with would be the decision-making process. From the case study, we see that they are informal, salt-of-the-earth individuals. Taking the company public would mean that they would have to become more formal and less flexible due to the shareholders. They would no longer have complete control of the company. They would have to share in the decision making process2 VALUATION As an adviser to Nantucket Nectar, there are several approaches that can be taken toward determining the worth of the business. Ultimately, the value of the business is whatever a buyer is willing to pay for it. From a negotiating standpoint, Tom and Tom need to determine what they believe is the value in order to set an expectation upon engaging in negotiations. Multiple companies are expressing interest due to the boom in the New Age beverage market and Nantucket Nectar’s competitive advantages. The first thing to understand when determining the value of a business is their brand equity. Nantucket Nectar has a lot of value in the brand they’ve created and the value drivers, as determined by Tom and Tom, are listed in Exhibit 2. Nantucket Nectar created a fun and memorable story – the â€Å"juice guys† are unforgettable. The value drivers go beyond financial figures found on the P&L, balance sheet and cash flow statement. They are the intangible assets that management has built on their own – also referred to as Goodwill. Goodwill is seen as an intangible asset on the balance sheet because it is not a physical asset like buildings or equipment. Goodwill typically reflects the value of intangible assets such as a strong brand name (ie Nantucket Nectars), good customer relations, good employee relations and any patents or proprietary technology. 3 These intangible assets can be the most important valuation drivers to consider when placing a value upon a business. I used several methods to determine the value of Nantucket Nectar. First, I utilized the Market Approach. The Market Approach is a multi-step process. In the initial step, we compute the average Price-Earnings (P-E) Ratio for as many similar businesses as possible. Then, you multiply the average P-E Ratio by next year’s forecasted earnings. I used 26. 9x (see Exhibit 3) as the P-E Ratio and multiplied it times $2,234 (see Exhibit 4), which is Nantucket’s forecasted earnings for 1997. The value equals $60,094,600. This would be a good starting point for Tom and Tom to being their negotiations. The second method I used is the Capitalized Earnings Method which is the Net Earnings divided by the Rate of Return. However, I used the forecasted earnings for the upcoming year, $2,234,000. I used a discount rate of 12% based upon the rates utilized in the Discounted Future Earnings model (see Exhibit 5). If we divide $2,234,000 by 12% it gives us a value of $18,616,667. More than likely, this is the number that an investment bank would place upon the business, as a starting point for negotiations. I also calculated the book value of Nantucket Nectar, and then integrated â€Å"goodwill† for the value drivers in Exhibit 2. The book value is $12,747,000, however I don’t believe the goodwill is correctly accounted for. This need to be reevaluated. Nantucket Nectar would be selling their business, on a large part, due to their intangible brand value. This could justify a 2x or 3x multiple times book value, to arrive at an adjusted book value rate. My recommendation to Tom and Tom would be to sell their business and use the Market Rate approach towards determining the value. I think this is a fair way to view the business because it helps to frame the perspective in a similar light to other companies who have follow a similar course within the same business segment. I would not advocate an IPO due to the scrutiny the shareholders will place upon the business. I believe selling the business presents an ideal scenario because they could negotiation the level of involvement they want in the future while, at the same time, they would have enough cash to pursue other entrepreneurial ventures. Exhibit 2 – Value Drivers (determined by founders) Great product: great tasting, all natural product Ability to exploit small, rapidly changing market opportunities Current Management Team A more appealing story than any other juice beverage company (great material for a company with a large marketing budget and more distribution power) Value of the brand: quirky, eccentric and memorable A stabilizing cost structure Geographic expansion capabilities: current sales base and future sales base Access to the 18-34 market Management’s knowledge of and experience with the single-serve business: ability to add value to large player rolling out new single serve products Last good access to single-serve distribution in the New Age beverage market Guerrilla marketing skills Best vehicle for juice companies to expand into juice cocktail category without risking their own brand equity