75 words response to two peers Only

ALL WORK MUST BE ORIGINAL, NO PLAGIARISM. YOU ARE ONLY TO RESPOND TO WHAT TH TWO PEERS WROTE AS IT PERTAINS TO THE MAIN DISCUSSION AND ADD TO WHAT THEY WROTE. 75 WORDS EACH FOR THE TWO PEERS

For this Discussion topic, you will select an organization in which you have an interest; for example, you may be interested in learning more about your chosen organization’s financial statements for research or investment purposes. Or, your reason for choosing your organization can simply be due to the ready access to data.

Review the financial picture and the current company success/trouble in the marketplace. You may include the financial statements as an attachment, but the main focus of this discussion response is to present a picture of the company and talk about success using the numbers as a base. Include the following data points in your response as a base and include additional information as you deem important to the response:

Main Response

  • Company Name and relevant information.
  • How did the numbers provide information to you as a base about areas of success, opportunities for improvement?
  • What other factors did you research (i.e. recent relevant events, for example a merger or an expansion) to increase your understanding of the numbers.
  • Is this company operating under the principles of Conscious Capitalism?
  • If you were to be called in as a consultant to the company leadership, what recommendations would you have to increase company success using the numbers as a base?

Response to Peers

  • Select at least two peer response and conduct additional research to add depth to the information that is posted. Include insights that you have gained from reading the peer post and from the additional research you completed.

Peer #1

Company Name and relevant information.

I decided to look up the corporation Andeavor (ANDV) because they recently purchased the corporation that I work for and because their financial statements are public. They are an oil refining, retail and wholesale company.

How did the numbers provide information to you as a base about areas of success, opportunities for improvement?

After quickly glancing over their income statement from their latest 10Q I instantly noticed that they had a much more profitable quarter compared to last year. Their net income went from $50 million in the first quarter of 2017 to $172 million in the first quarter of 2018. This is a big improvement and mainly due to an increase in revenue. I also noticed that their total assets increased by $268 million for a total of $28.8 billion mainly due to an increase in property plant and equipment. Andeavor’s cash account at the end of the 2017 first quarter was $2.3 billion. At the end of the 2018 first quarter it was only at $433 million. This is because they spent a majority of their liquid cash on the acquisition of the company I was working for. They purchased us for around $6 billion.

All of this shows that Andeavor is a huge company. They have a lot of operations going on throughout the country, they are buying up other similar companies and they are making lots of money.

What other factors did you research (i.e. recent relevant events, for example a merger or an expansion) to increase your understanding of the numbers.

The big news about Andeavor after the acquisition was that they were going to be a giant company before long. I saw several articles about them having ideal operations to become extremely profitable and that they were planning to start doing business in other countries. That did not end up being the biggest news though. After my company was purchased by Andeavor I thought that they were too big to be purchased but I was wrong. Marathon Petroleum announced that they would be buying Andeavor for more than $23 billion. Andeavor’s price per share shot through the roof and if this merger goes through they will be the largest U.S. oil refining company.

Is this company operating under the principles of Conscious Capitalism?

Oil companies tend to get put under a lot of scrutiny because their business involves burning fossil fuels which adds to climate change concerns. However, Andeavor appears to be responsible with their operations and wealth. They appear to make a huge effort to comply with all applicable laws and regulations. They appear to be acting with honesty, integrity and high ethical standards. I have not seen or heard anything that would make me think otherwise in the three years that I have been here. Not only that but they are also committed to the environment, their employees and the communities in which they live and operate. I constantly get emails about volunteer opportunities and pictures of employees volunteering. They seem to be passionate about acting in an environmentally responsible manner and making our communities a better place to live. I have seen large amounts of money donated to certain charities/communities. They also have strict safety rules in place and have an impressive safety record at the refineries.

If you were to be called in as a consultant to the company leadership, what recommendations would you have to increase company success using the numbers as a base?

This is a hard question because they are a multiple billion dollar company. They have tons of experts to help them improve at their disposal. If I were hired to make recommendations I suppose I would start by having them stop spending so much money on Andeavor advertisements. If the Marathon acquisition goes through, which it likely will, they will no longer be named Andeavor and all of those marketing expenses will go to waste.

Reference

Andeavor 10Q (2018). Retrieved from: https://www.sec.gov/Archives/edgar/data/50104/000005010418000103/andv1q201810-q.htm

Peer #2 Response

Company name and relevant information.

Southwest Airlines was incorporated in 1967 as a low-cost airline between Dallas, Houston, and San Antonio, Texas (Southwest Airlines Co SuccessStory, n.d.). It started out as an airline that traveled point-to-point and offered one class travel; and, it still sells directly to customers, offers no baggage fees, and utilizes smaller secondary airports that are faster and cheaper than hub airports (Koch, 2017). Today it is a passenger airline that provides air transportation in the US and near-international markets (History of Southwest Airlines, n.d.). It is the premier low-cost airline in the US because of its low airfares, safety, and customer care services (Southwest Airlines Co SuccessStory, n.d.). The company has demonstrated dramatic growth in revenues, stock market value, and earnings per share consistently for the last 45 years (Koch, 2017).

How did the numbers provide information to you as a base about areas of success, opportunities for improvement?

As of the end of the 2017 fourth quarter, Southwest finished strong with high profitability (Southwest Airlines Reports Record Fourth Quarter and Annual Profit; 45th Consecutive Year of Profitability, 2018). Its strong profits, cash flow, and financial position enabled it to sustain high returns on invested capital and deploy capital wisely (Southwest Airlines Reports Record Fourth Quarter and Annual Profit; 45thConsecutive Year of Profitability, 2018). The company made progress in modernizing its fleets, investing in facilities and technology, and returned value to shareholders in excess of free cash flow (Southwest Airlines Reports Record Fourth Quarter and Annual Profit; 45th Consecutive Year of Profitability, 2018). The numbers from the financial statements showed that Southwest’s total operating revenues for the fourth quarter of 2017 were $5.3 billion, operating income was $773 million, operating expenses were $36 million, and total net income was $1.9 billion which set a quarterly record (Southwest Airlines Reports Record Fourth Quarter and Annual Profit; 45th Consecutive Year of Profitability, 2018). The company was able to return approximately $1.9 billion to its shareholders in 2017 through the payment of dividends and the repurchase of common stock shares (Southwest Airlines Reports Record Fourth Quarter and Annual Profit; 45th Consecutive Year of Profitability, 2018).

The numbers from the financial statements show that Southwest is positioned for long-term success because it operates with a low-cost structure and achieves high returns on capital due to an efficient operational strategy and unique business model (Southwest Airlines, Strategically Position for Long-Term Success, 2018). It is well positioned strategically and financially compared to its competitors, management keeps the company’s balance sheet strong, and management is financially conservative (Southwest Airlines, Strategically Position for Long-Term Success, 2018).

Southwest’s best opportunities for improvement are in the long-haul business travel because it is the fastest and biggest growing segment in US travel and is an area that Southwest is small in (Tully, 2015). There is a lot of market share for Southwest to go after (Tully, 2015). To enhance its operational performance and remain competitive, Southwest will need to expand its operations internationally (Southwest Airlines Will Focus on Expanding Its International Operations in 2016, 2015). Also, Southwest needs to improve its fuel consumption by modernizing its fleet, such as including weight reduction, engine wash, use of winglets, and fuel planning because it ranks third in fuel efficiency behind other airlines (Cederholm, 2014).

See Southwest Airline’s attached financial statements.

What other factors did you research (i.e. recent relevant events, for example a merger or an expansion) to increase your understanding of the numbers.

The other factor that I researched to increase my understanding of the numbers was Southwest’s One Report which is a comprehensive integrated report that includes financial information and Southwest’s plans for international expansion to increase growth (2016 One Report, 2016). Southwest is expanding internationally to open up new route possibilities and forecasts growth to increase approximately 37% (Southwest Airlines eyes expansion & codeshares for international growth: CAPA Latin America Summit, 2017). The airline plans to add technology and airplanes to its fleet to expand into more international markets (Southwest Airlines eyes expansion & codeshares for international growth: CAPA Latin America Summit, 2017). Southwest will continue to measure its international growth and design a long term strategy for its international markets (Southwest Airlines eyes expansion & codeshares for international growth: CAPA Latin America Summit, 2017).

Is this company operating under the principles of Conscious Capitalism?

Southwest Airlines operates under the principles of conscious capitalism. The company is always evolving to meet the needs of its employees, customers, and the communities in which it serves (Dunbar, 2015). Southwest practices a triple bottom line approach by placing equal value on people, profit, and planet (Dunbar, 2015). The company doesn’t just focus on profits but creates value for all stakeholders by creating win-win situations for its employees, customers, suppliers, its communities, and the environment, which results in less employee turnover, lower overhead costs, exceptional customer experiences, higher profits, and sustained growth (Schawbel, 2013).

If you were to be called in as a consultant to the company leadership, what recommendations would you have to increase company success using the numbers as a base?

Southwest Airlines’ operating expenses increased by 5.9 percent or $991 million for 2017 when compared with 2016 (Southwest, 2017). The increase was due to increases in fuel prices and landing fees (Southwest, 2017). As a consultant, I would recommend that Southwest use derivatives to hedge the risk against rising fuel prices (Cederholm, 2015). I would also recommend that Southwest retire their old airplanes and modernize their fleets to newer airplanes that will improve fuel efficiency. Adding new winglets and new engines will stretch fuel usage and accommodate extra passenger seats (Hogue & Shine, n.d.). For airports that charge high amounts in landing fees, I would recommend that Southwest consider secondary airports (Stellin, 2010).

References

2016 One Report (2016). Retrieved from http://southwestonereport.com/2016/

Cederholm, T. (2014). Must-know: Southwest’s initiatives to improve fuel efficiency. Retrieved fromhttps://marketrealist.com/2014/07/must-know-southwests-initiatives-to-improve-fuel-efficiency

Cederholm, T. (2015). Efficiency, lower fuel costs reduce Southwest’s unit cost by 4%. Retrieved fromhttps://marketrealist.com/2015/01/efficiency-lower-fuel-costs-reduce-southwests-unit-cost-4

Dunbar, M. (2015). Southwest is still America’s greatest airline. Retrieved fromhttps://consciouscompanymedia.com/sustainable-business/southwest-is-still-americas-greatest-airline/

History of Southwest Airlines (n.d.). Retrieved fromhttp://avstop.com/History/HistoryOfAirlines/southwest.html

Hogue, M. & Shine, C. (n.d.). Max appeal: Discover why Southwest Airlines is adding a new 737 to its fleet. Retrieved from https://www.dallasnews.com/business/economic-snapshot/2017/09/23/taking-max

Koch, R. (2017). How Southwest Airlines created a mass market for air travel. Retrieved fromhttps://www.entrepreneur.com/article/287095

Schawbel, D. (2013). John Mackey: Why companies should embrace conscious capitalism. Retrieved from https://www.forbes.com/sites/danschawbel/2013/01/15/john-mackey-why-companies-should-embrace-conscious-capitalism/2/#448089603307

Southwest (2017). Retrieved from http://investors.southwest.com/~/media/Files/S/Southwest-IR/2017%2010-K%20Final%20Filed%20879.pdf

Southwest Airlines Co SuccessStory (n.d.). Retrieved fromhttps://successstory.com/companies/southwest-airlines-co

Southwest Airlines eyes expansion & codeshares for international growth: CAPA Latin America Summit (2017). Retrieved from https://centreforaviation.com/analysis/reports/southwest-airlines-eyes-expansion–codeshares-for-international-growth-capa-latin-america-summit-372404

Southwest Airlines reports record fourth quarter and annual profit; 45th consecutive year o of profitability (2018). Retrieved from http://investors.southwest.com/news-and-events/news-releaseses/2018/01-25-2018-113046083

Southwest Airlines, strategically positioned for long-term success (2018). Retrieved fromhttps://seekingalpha.com/article/4147565-southwest-airlines-strategically-positioned-long-term-success

Southwest Airlines will focus on expanding its international operations in 2016 (2015). Retrieved fromhttps://www.forbes.com/sites/greatspeculations/2015/09/25/southwest-airlines-will-focus-on-expanding-its-international-operations-in-2016/#6c5af96f2c02

Stellin, S. (2010). Seeking a place at airports. Retrieved fromhttps://www.nytimes.com/2010/01/26/business/26slots.html

Tully, S. (2015). Southwest bets big on business travelers. Retrieved fromhttp://fortune.com/2015/09/23/southwest-airlines-business-travel/

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