Interpretation: In order to benchmark Vestas and Gamesa the report starts with a brief description of the companies' business model and value proposition. In addition, the 2 companies are compared form a financial point of view by analysing strategies, productivity, profit, risk, but also based on the market value.
Scope: The focus is on the renewable energy industry and more specifically on wind energy production, taking into consideration only 2 of the biggest players in the industry: Vestas and Gamesa.
Theories and models: The report analysis is based on the business model, benchmark and financial ratios in order to compare the 2 companies from a strategic perspective.
[...] Therefore Vestas should follow Gamesa's example of a better funds usage and maybe decrease fixed costs through other ways rather than firing qualified people who might have been contributing to the processes' efficiency. Appendixes Appendix Benchmark Summary Vestas vs. Gamesa Issue Weighed Score Weighed score for company for industry Weight Effectiveness Appendix Strategic Analysis At industry level Score Weight Weighted score At company level Vestas Gamesa Weight Vestas Gamesa strategy customer base Internationalization level Years in the job Years to retirement a. [...]
[...] Moreover, the operating risk is also higher for Vestas than for Gamesa. It would be expected for Gamesa to have higher risk than Vestas because Vestas' annual profit and loss results always seem to be better than Gamesa's. In addition, Vestas would be expected to have a lower financial and liquidity structural risk than Gamesa because it has less debts, higher equity, and higher liquidity (which is a measure for „marketability”: how easy can assets be sold and transformed into cash). [...]
[...] http://www.wikinvest.com/stock/Vestas_(VWSYF) 21. http://www.windpower.org/en/ 22. Bloomberg new energy finance. “Global Renewable Energy Market Outlook” Executive summary november 2011. [...]
[...] Willing to defend its market position it is essential for Vestas to retain customers. The possible reason for better performance of Gamesa could be employee involvement and efficient implementation of CRM. Since Gamesa scores significantly more in the employee factor (longer lifetime in the company what would lead to more knowledge and trainings leading to efficiency and better performance). Since Vestas is concentrating on cost reduction as well, it is seen that cuts in FC are achieved from cuts on employees. [...]
[...] Salary expenses do not have such a high impact of fixed costs as assumed. Even if Vestas does have better ratios than Gamesa, the higher risk for the first is due to the fact that the situation gets worse from year to year, meaning that Vestas experiences negative growth. It looks like Vestas has more financial resources than Gamesa but it is not as good at using them for higher returns. External analysis Looking at the industry level competition is very intense (high exit barriers, high investment needed, strong bargaining power of buyers, for instance, tendency of reverse-auctions, products are slightly differentiated owing to brands and service). [...]
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