Introduction 1.1 Purpose The purpose of the report is to evaluate Sims Metal Management Limited performance and provide recommendations to support a financially justified growth strategy for the planning horizon over the next three years. 1.2 Scope The report is consisted of a summary of findings during the research and the recommendations of the proposed growth strategy, and also includes the relevant analysis leading to the recommendations under appendices. 1.3 MethodologyThe report applies a number of different techniques and models during the evaluation and analysing process. Those include Porter’s five forces, SWOT analysis, ratio analysis using traditional decomposition approach, capital budgeting model (included Weighted Average Cost of Capital), and dividend policy analysis.
1.4 Company Description Sims Metal Management Limited operates in the metal recycling industry. The company engages in ferrous secondary recycling, non-ferrous secondary recycling, secondary processing, and recycling solutions businesses. Its ferrous secondary recycling activities comprise the collection, processing, and trading of iron and steel secondary raw material; non-ferrous secondary recycling activities consists of the collection, processing, and trading of other metal alloys and residues, principally aluminum, lead, copper, zinc, and nickel bearing materials; and secondary processing activities include the melting, refining, and ingoting of certain non-ferrous metals; and the reclamation and reprocessing of plastics.
The company also provides recycling solutions, such as the provision of environmentally responsible solutions for the disposal of post-consumer electronic products comprising information technology assets recycled for commercial customers. Its recycling solutions include negative value materials, such as refrigerators, and electrical and electronic equipment. It operates primarily in the United States, Canada, Australia, New Zealand, Papua New Guinea, India, Singapore, Hong Kong, South Africa, the United Kingdom, Sweden, Belgium, the Netherlands, Germany, Hungary, Poland, the Czech Republic, Austria, and Croatia.
The company was formerly known as Sims Group Limited and changed its name to Sims Metal Management Limited in November 2008. Sims Metal Management Limited was incorporated in 2005 and is headquartered in New York, New York. Summary of the report2.1 Company’s Missions, Visions and Strategies As to suggest an appropriate strategy for the future growth of the firm, the company’s missions, vision as well as the current strategies are necessary to be understood clearly.
Recall that the core mission of the firm is to provide end to end quality products that are environmental friendly, while its vision is to be the largest and best respected leading firm in manufacturing and recycling industry. Metal Management Limited current strategies are focused to obtain increased utility of quality product that are environmental friendly from existing customers, increasing its operations into and out of North Queensland, and maintaining inflation adjusted operating cost structures. 2.2 External Environment Analysis Looking at the recent performance of the major stock exchanges, such as Dow Jones Industry Average and FTSE 100 Index, we can confidently state that the global economy has been recovered from the Global Financial Crisis since 2009, although there are some concerns over the economic development and sustainability in US and Europe.
In contrast, Australians are enjoying their growing economy with considerable GDP growth rates and increased retail turnover over the years. However, the growing inflation rate is sending a signal that the heating economy should be cooled down since a series of stimulus package implemented by federal government during 2008-09.
Meanwhile, global fuel and oil price has constantly increased over the last three years. Because of the political turbulence in Middle East countries, a further increase in oil price is strongly expected in the market. In addition, the strengthening Australian dollars negatively affect on the export sales, when translating the offshore earning s denominated in Eurocurrency.