Business Valuation and Analysis Altadis

Questions: 1) Summarize Altadisstrategy and give your opinion on that issue .2) The report offers an economic valution of Altadis. What do you think about it? Would you change anything in that valuation? You dont need to make any number. 3) How does the above strategy fit with the offered evaluation of Altadis? Answers: 1. Altadis strategy Altadis is a multinational marketer and manufacturer of tobacco, cigarettes, and cigars. In order to be successful in the market, the company has adopted various strategies. The company has implemented the strategy of restructuring, share buy backs and increased focus on the emerging markets (particularly Morocco, North Africa, and Middle Eastern countries) to get ahead of competition. In addition, the company has also implemented strategies to sell more of its products in countries where the prices of cigarettes are higher such as Spain. Further, the company has planned on logistic and cigar divisions due to high growth rates in these segments. With better market forecasts and improved product mix, the company plans to enhance its financial valuation and growth strategy (Brigham and Ehrhardt 2013). The reason for adopting these strategies is to improve the financial valuation of the company that is underpinned by its substantial shareholder remuneration. With the systematic buy back of shares, the company would be in a better position financially. This would increase the wealth of shareholders as well as enable the company to have substantial financial reserve that can be invested back in the business (Bodie et al. 2012). 2. Economic valuation of the company The economic valuation helps in determining what the businesss worth is. The report presented presents numerous methods of financial valuation of Altadis and is based on many assumptions that have an influence on the valuation undertaken. The company aims at withdrawing the shares from the market that can be only viable if the company has excess cash reserve. From the financial evaluation presented and the assumptions made regarding the market trends, it can be said that the company is in a better position as compared to its competitors. The net profits and earnings per share indicate that the company is improving on its financial strengths. Since, the company employs a substantial shareholder remuneration policy; this causes the company to incur huge expenses in the form of dividends. Therefore, by adopting buyback policy, the company can save these expenses which can be re-invested in the business (Titman et al. 2015).Further, for economic evaluation Consumer Price Index is taken t hat may not truly represent the market conditions, therefore, a more robust price index needs to be selected. 3. Effectiveness of the selected strategy Altadis strategy of share buyback and capitalizing on increasing markets of developing countries fits well with the financial evaluation presented in the given article. Since, the company employs a substantial shareholder remuneration policy; it causes the company to incur huge expenses in the form of dividends. Therefore, by adopting a buyback policy, the company can save these expenses which can be re-invested in the business. Further, from the comparative analysis of its competitors position in the market with that of the Altadis, indicates that the company has more cash reserves and enjoys greater share prices. With further adoption of a buyback strategy, the company can increase its market share as well as goodwill in the market (Brigham and Daves 2012). References Bodie, Z., Kane, A. and Marcus, A., 2012.Essentials of investments. McGraw-Hill Higher Education. Brigham, E. and Daves, P., 2012.Intermediate financial management. Nelson Education. Brigham, E. and Ehrhardt, M., 2013.Financial management: Theory practice. Cengage Learning. Titman, S., Martin, J.D. and Keown, A.J., 2015.Financial management: Principles and applications. Prentice Hall.