STEELCAST - aforstudy.comaforstudy.com/doc/note.pdf · Internal Control & Audit 16. Branding 17. Threat of ... Rolex first concentrated on the quality of the ... concept without affecting

CIMA SCS Nov 17

STEELCAST

Analysis of

20 Key Issues

Gajendra Liyanaarachchi

1

Key Issues

1. Product Portfolio2. Mission & Strategy 3. Risk Analysis4. CSR5. Competition6. Production System7. Financial Management 8. Corporate Governance9. Promotion & Sponsorship10. Retailing11. Mergers & Acquisitions12. Share Price13. HRM14. Change Management15. Internal Control & Audit 16. Branding17. Threat of Substitutes 18. Supply chain19. Future strategy 20. Industry Analysis

2Gajendra Liyanaarachchi - CIMA SCS Nov 2017

1. Product Portfolio – The Story of Rolex – Benchmark

1905

The history of Rolex is inextricably linked to the visionary spirit of HansWilsdorf, its founder. In 1905, at the age of 24, Hans Wilsdorf founded acompany in London specialising in the distribution of timepieces. He began todream of a watch worn on the wrist. Wristwatches were not very precise at thetime, but Hans Wilsdorf foresaw that they could become not only elegant, butalso reliable.

THE QUEST FOR CHRONOMETRIC PRECISION 1910

Rolex first concentrated on the quality of the movements. The relentless questfor chronometric precision rapidly led to success. In 1910, a Rolex watch wasthe first wristwatch in the world to receive the Swiss Certificate ofChronometric Precision, granted by the Official Watch Rating Centre in Bienne.


1919

Rolex moved to Geneva, a city renowned internationally for watchmaking. Montres Rolex S.A. was registered in Geneva in 1920.

THE FIRST WATERPROOF WATCH 1926

In 1926, the creation by Rolex of the first waterproof and dustproof wristwatch marked a major step forward. Given the name “Oyster”, this watch featured a hermetically sealed case which provided optimal protection for the movement.

CROSS-CHANNEL CHALLENGE 1927

It is one thing to claim a watch is waterproof. It is quite another to prove it. In 1927 a Rolex Oyster crossed the English Channel, worn by a young English swimmer named Mercedes Gleitze. The swim lasted over 10 hours and the watch remained in perfect working order at the end of it


PERPETUAL MOVEMENT 1931

In 1931, Rolex invented and patented the world's first self-winding mechanismwith a Perpetual rotor. This ingenious system, a true work of art, is today at theheart of every modern automatic watch.

FLYING OVER EVEREST 1933

The first expedition to fly over Everest was equipped with Rolex Oysters.The members of the crew were highly satisfied with the performance ofthe watches

SIR MALCOLM CAMPBELL 1935

In the 1930s, Rolex and one of the fastest drivers in the world, SirMalcolm Campbell, became united by the quest for speed. On 4September 1935, at the wheel of Bluebird – and wearing a Rolex watch– this “king of speed” set a land speed record of over 300 miles per hour(approximately 485 km/h) at Bonneville Salt Flats in Utah. Sir Malcolmbroke the world speed record nine times between 1924 and 1935,including five times at Daytona Beach in Florida


EVEREST 1953

In 1953, Sir John Hunt’s expedition, in which Sir Edmund Hillary andTenzing Norgay reached the summit of Mount Everest, was equippedwith Oyster Perpetuals

THE SUBMARINER 1953

Launched in 1953, the Submariner was the first divers’ watchwaterproof to a depth of 100 metres (330 feet). Its rotatable bezelallows divers to read their immersion time

THE GMT-MASTER 1955

The GMT-Master was developed to meet the specific needs of airlinepilots. It became the official watch of several airlines, among them thefamous Pan American World Airways, better known as Pan Am. Its mostdistinguishing visual feature was the two-tone bezel which markeddaytime from night-time hours.


LEADERSHIP 1956

Rolex watches have long been associated with those who have, overtime, guided the destiny of the world. No matter their vision, theirdomain of excellence, or their achievements, the one thing theseexceptional men and women have in common is often their watch: theDay-Date.

THE COSMOGRAPH DAYTONA 1963

Launched in 1963 as a new-generation chronograph, the Cosmographsoon gained the name that became the mark of an icon: Daytona.Designed as the ultimate tool for endurance racing drivers, theCosmograph Daytona was robust, waterproof and featured atachymetric scale on the bezel for calculating average speed.


1. Product Portfolio

• Operates with 7 models

• Each model – small range of options ( Material , bracelet etc.)

• Company rarely introduce a new model

• All 7 models were designed longtime ago

• No new models in the recent past

• Very few changes to the original design. ( Stylish & functional)

• Main Model Brawn was designed in 1970 and operates with he samedesign with minimum changes

• Each model indicates the same basic quality “ Rugged Feel”

• Target market Luxury watches suited Sport & Action ( Adventure )

• Every product operate with a Mechanical movement

• Certified for accuracy in 1920 ( Chronometer status)

• Developed the 1st Chronograph watch in 1924. This model stillaccounts for a significant % revenue


Issues

• Very limited models and options

• Over dependence on past success

• Higher risk based on traditional values and concepts

• Narrow focus based on highly Niche segment

• Lack of innovation

• Lack of focus on the developments in the market

• Lack of focus on the social change , consumerism and globalization

• Still use traditional material and basic design

• The company expects the market conditions to be static

• Resistance to change

• Same manufacturing process and systems

• Lack of improvement and flexibility

• Depend purely on the Aesthetic Quality of the Clock work


Future Strategy

• Introduce new models at a higher frequency

• Include different features in each model to facilitate change,flexibility and address different needs of customers

• Introduce new products with a different appeal based on a newconcept without affecting the existing brand values

• Introduce different models based on different target markets

( Emerging countries with economic wealth , Entrepreneurs etc.)

• Recruit new staff to obtain new ides on design and features

• Develop a benchmarking strategy to identify the trend in the market

• Develop a product range focusing on a broader market segment at amedium price range with basic qualities and material.

• Introduce new concepts beyond Polo , Aviation , racing & Yachting tocapture a wider market segment. ( Golf , Soccer )

• Develop a quartz version in the long-term with a different brandappeal and positioning.


2. Mission & Strategy

• Mission was developed in 1930

• “ We make watches for leaders , who wear them with pride ”

• Key Values

- Durability

- Accuracy

- Leadership

- Sports

- Adventure

• Target Market

Motor Racing , Aviation , Yachting

Brand associated successful people in sports who were involved in special achievements and exceptional results.


Issues

• Mission is too narrow

• The concept of identifying the customer as a leader indicate asingular Niche market

• The growth potential based on this philosophy is very limitedspecially with the present dynamic society

• The direction of the mission only signify few people with uniquecharacteristics identified in 1930

• The idea may not be relevant in he modern context

• Durability and accuracy were critical success factors in 1930.However these are basic features in watch in the present context

• The identification of a leader and recognition of such personality cancreate a confusion in the mind of a potential consumer

• The core values and the importance of a wrist watch in personal lifehas changed significantly from 1930.

• The concept of Pride in wearing a watch may not be valid in modernsociety.


Future Strategy

• Mission needs to be upgraded based on the present context of the market and he future direction of the business

• This should indicate the purpose of the business and should indicate “ What business the company is in ’’

• This should indicate practical values for Steel craft and facilitate the development of objectives and future strategy

• The following changes can be considered

• “ We create a symbol of success for exceptional people”

• The mission should indicate modern values such as performance , excitement , self actualization and achievement

• Objectives & KPI can be developed based on these values to reflect financial results , market share estimates and any innovation through patents and awards to indicate global leadership


3 Risk Management

Risk Management – Annual Report

Factor Risk Mitigation

1. Copying of Design * Copyright law

* Unique design – Difficult to copy

* Brand association – can not be replicated

2. Forgeries * Unlikely with Steel craft watches

3. Key Staff * Provide excellent remuneration and working conditions

4. Changes in Technology * Customers never change – Aesthetic appeal

* Quartz watches and technology existed before withoutan impact on sales

5. Currency Risk * Close monitoring of currency risk


Issues - Inadequate risk mitigation strategy

1.Coping of DesignSerious action is required to monitor the decisions of other companies specially the less

prestigious brands. Needs to communicate the designs and inform the consumers.

2. ForgeriesIts always possible with Asian countries. The company should appoint a team to insect thesales outlets and obtain information around the world specially on emerging markets toidentify the impact.

3. Key StaffIdentify the facilities provided by competitors and ensure a clear benchmark. Develop apositive relationship with key staff to identify the future expectation.

4. Changes in TechnologyNeed to monitor the trend in the market. Cannot depend on the past success because thetechnology evolve over time. The new generation prefer style and fashion than accuracy.

5. Currency RiskMonitoring is inadequate. The company should examine the impact with a clearmeasurement and focus on heading the risk with appropriate techniques and derivatives.


Future Strategy

• Inadequate identification of risk factors – Should include- New Product Development- Social Change- Competition

• Risk Categorization and ranking. The risk Factors should be rankedbased on the likelihood and consequence in order to developeffective risk management strategy

• There should be a clear policy and a strategy to manage the risk• The company should identify the Gross Risk and Net Risk based on

the Risk Tolerance limit considering the company policy on riskmanagement

• There should be a specific person responsible to manage the risk .This should be integrated with the organizational structure .

• The risk Factors should be integrated to the respective decisionmaking framework

• new unit with a New director on Risk & Compliance can beestablished to ensure effective risk management and control.


Factor Likelihood Impact Total Rank

1. Coping the Designs 3 4 12 3

2. Forgeries 3 5 15 3

3. Skilled Staff 2 5 10 5

4. New Technology 4 4 16 2

5. Currency Risk 5 4 20 1

Assume the Risk Tolerance limit is 14. This indicates that the company willdevelop strategy to manage the risks above 14 points and ensure the total risk onany factor is less than 14.


Risk mapping


4. CSR

5 key areas

1.Health & Safety• Every staff member receives a formal training after recruitment• Training focus on the Risk associated with dealing with very small watch parts• This emphasise on eliminating hazardous substance being mixed with water or air

2. Sourcing Policy• Suppliers are selected after complying with ethical & legal guidelines• Leather is obtained from sustainable species and from animals framed humanly

3. Energy consumption• Focus on minimising energy consumption through efficient lighting and systems• Equipment is serviced on a regular basis to minimise waste of power

4. Employment• Operate with a very successful apprentice system• Management meets staff representatives on a regular basis to ensure staff satisfaction

5. External engagement• Supports variety of charities• Matches funds raised by staff on donations and related activities 19

Gajendra Liyanaarachchi - CIMA SCS Nov 2017

Issues

• The training will not ensure health & safety of staff who are exposed tovariety of occupation related hazards and issues

• Extensive time used in observing and fixing very small parts can lead toproblems with the eye sight and headaches

• This can create a permanent stress and post employment health problems• There should be clear evidence regarding the processes followed by suppliers

in sourcing the relevant material• The company should operate with clear information regarding the use of

leather and the treatment of animals• The company should operate with a standard for energy consumption• There should be a industry benchmark on the best practice considering the

use of energy.• The company indicates life time employment. The motivation of staff should

be evaluated• The objectives of staff representatives should be transparent and represent

the view of the entire staff.• The nature of external engagement should be examined.• The contributions to charities should be transparent• The nature fund raising by staff should be examined and audited based on

the expected standards


Future Strategy

• There should be regular medical tests for staff who deal with stressfuloperations by fixing small parts and components

• There should be a proper insurance schemes for staff during and afteremployment for occupational stress and related health problems

• The staff should be provided with flexible time frames for work and adequatebreaks during the work to minimise health related problems.

• There should be regular audit of the suppliers.• There should be unit responsible for conducting random audits on sourcing in

the form internal control and audit to ensure sustainable practice• The company should operate with a clear energy management strategy and

targets• The current technology and the energy used should be benchmarked with

industry best practice• There should be a standard for carbon emission and continuous

improvement• Steel Craft should demonstrate a clear policy for external engagement on CSR

policy• This policy should be clearly documented and available for the key

stakeholders• The staff should not be allowed to raise funds without a clear initiative or

plan of Steel craft. The sources of funds should be disclosed and documentedto ensure transparency. 21


5. Competition

• Any player in the luxury wrist watch market will be a competitor for Steelcraft• There can be new competitors entering the market by providing exclusive

material and precious stones to add value to the consumer• Quartz technology is improving with the introduction of luxury version with

precious material and create a direct threat to the Aesthetic watch market.

1.Laine

- Subdued image- Sponsors Opera in major cities- Many features. ( Glass back watch operates with a transparent mechanism fromthe front and back which provides a better appeal to the wearer on the Aestheticmovement)

2. Balarra

- Bright & eye catching watches- Strategic partnership with the maker of the Worlds fastest car and watch carriesthat name

• Vast majority of luxury watches are Quartz which is easier and cheaper tomanufacturer. These watches are highly accurate due to the computer circuitpowered through a battery. 22Gajendra Liyanaarachchi - CIMA SCS Nov 2017

Issues

• SteelCraft do not indicate a clear strategy to benchmark competitors

• The company has ignored the development in the market and operates withinternal standards on quality and the number of models

• The designs of the company has not changed for a long periods of time

• There is very limited innovation and creativity

• The company over depend on the existing customers and repeat purchase

• There is limited initiative to attract ne customers

• The company depend on the traditional retail network for the sale ofwatches. This creates a very limited integration with the customers anddirect knowledge regarding the trend in consumption

• The company has no investment in Quartz technology and indicate lack ofoptions based on future risk management and scenario planning

• The Company has operated in a static market and expect the future to besimilar to the past.

• There is no market intelligence and the company operates purely based onthe past strategy and the trusted combination .


Future Strategy

• Develop a competitor intelligence unit to gather information oncompetition and strategy

• Profile the competitors based on the impact on variety of targetmarkets on luxury wrist watches and features.

• Identify the possibility to develop a Quartz watch with key luxuryfeatures based on a different brand name to target a larger marketsegment.

• Categories the competitive offers based on the 7 models andexamine the position of each model of Steelcraft in the market

• Identify the possibility of developing a strategic alliance with a globalYacht manufacturer or a similar company with very high reputationto build a co branding strategy.

• Examine the possibility to acquire a company which cater formedium priced luxury watches to capitalize on emerging markets.

• Identify the sourcing strategy of competitors in order to improve thevalue chain of the company.

• Ensure continuous improvement in the technology to preventcopying of the company designs by the competitors in the market.


6. Production System

• Operate with a single factory in Hilands East City

• The process combines latest technology using computer numericalcontrol . ( CNC)

• The heart of the watch “ brass base plate ” required 53 holes to bedrilled very precisely through highly specialised system

• A highly skilled craftsman should integrate 350 parts of the watch

• The process indicate an excellent combination of technology and skill

• A product moves through many process which is monitored througha highly specialised software package

• 1000 people work in the factory with individual work stations toensure quality and concentration.

• Each process required very strict quality control guidelines

• Each watch is a master piece . Therefore the staff and the companyare highly responsible for the quality , accuracy and performance .


Issues

• Higher risk due to the dependency in one factory

• 1000 staff operate in the single factory. This creates a very high business risk based on possible accidents , hazard.

• The motivation of staff can be a problem in the long-term due to the monotonous nature of the work and the limited human interaction

• Higher possibility of system failure due to the automated control

• The parts and work in process is moved by staff pushing trolleys. This creates a higher risk of injury and damage to the sensitive parts and possible loss of small components.

• Inventory management can be an issue with the storage of precious metal such as gold and valuable stones.

• The process indicate limited supervision on staff working pattern and hours which can create dysfunctional behaviour.

• The process do not indicate a specific standard labour hours for a particular watch. The various models require a different resource allocation. The chronograph required more labour hours and higher resource utilization This should be accounted through effective management accounting.


Future Strategy

• Steelcraft need to identify another alternative option for production. Thiscan be another small factory to minimise the risk of over dependency onone production facility.

• The second factory can accommodate around 250 workers to provide analternative facility and minimise the exposure towards risk. A fire to thefactory can destroy the entire production system and the business processof Steelcraft

• The company should establish Total Quality Management to ensuremaintenance of Zero defects throughout he process. A defect can be veryexpensive due to the use of 350 parts and allocation of expensive labourhours.

• There should be an effective reporting system based on the material usageto ensure control and efficiency

• The staff should be allowed to integrate with in social platform in-betweenproduction to ensure the quality and the long-term availability of the skiedstaff.

• There should be a clear system of testing covering every assemble processto ensure quality and the reputation of the company.


7. Financial Management

Steelcast 30.09.17 H$m P&L

2016 % Rev 2017 % Rev Growth

Revenue 4723 5556 17.6

Cost of sales 2198 46.5 2415 43.5 9.8

Gross Profit 2525 53.4 3141 56.5 24

Other Operating Exp 1773 37.5 2305 41.5 30

Operating profit 752 16 836 15 11

Finance cost 150 3 138 2.4 (8)

Profit before tax 602 12.7 698 12.6 16

Income Tax 169 3.6 195 3.5 15

Net profit 433 9.1 503 9 16


Steelcast Balanced Sheet2016 % Rev 2017 % Rev Growth %

Non Current AssetsGoodwill 150 3.1 150 2.6Other Intangible Assets 212 4.4 197 3.5 .PPE 3840 81 3890 70 1

Current AssetsInventories 254 5 279 5 10Debtors 727 15 855 15 17.6Cash 632 13 647 12 2

Current LabilitiesCreditors 266 5.6 284 5 7Tax 161 3 185 3 Net current assets 1186 1312 11Total Assets 5388 114 5549 100 3

EquityShare capital & Premium 2000 42 2000 36 Retained earnings 1830 39 2105 38 15

LiabilitiesLoans 1500 32 1380 25 (8)Tax 58 1 64 1 Total Liabilities 5388 114 5549 100


Steelcast 2016 2017

Profitability

GP 53% 56.5%

OP 16% 15%

NP 9% 9%

Gearing

IC 5 6

D / TA 28% 25%

Liquidity

CR 2.8 3.5

QR 2.1 3.2

Cash / TO 13% 12%

Efficiency

STD 28 42

DD 56 56

CD 44 43

Market

ROSE 11% 12.2%

ROCE 14% 15.2%

ATO .88 1 30Gajendra Liyanaarachchi - CIMA SCS Nov 2017

Financial Analysis

• The revenue increased by 17.6 % and net profit increased by 16% in2017 compared with the last year. This indicate growth potential anda positive impact on the share price

• Debtors indicate an increase of 17.6 % compared with the last year.This can be the reason for the increase in revenue. The companyshould examine the risk of creating bad debt with this strategy.

• The other operating expenditure has increased by 30% in the sameperiod. This needs to be investigated.

• The reduction in Operating expenditure by 10% will result in a costsaving of H$230m. This will increase the operating profit by 28% andNet profit by 33%. This will create a significant impact on profitability.(1% reduction in Operating expenditure will increase the operatingprofit by 2.8% and Net profit by 3.3%). This will create a higher netprofit and increase the share price based on better earnings.


Revised results with 10% reduction in Operational Expenditure

Steelcast 30.09.17 H$m P&L

2017 % Rev

Revenue 5556

Cost of sales 2415 43.5

Gross Profit 3141 56.5

Other Operating Exp 2075 37

Operating profit 1066 19

Finance cost 138 2.4

Profit before tax 928 16.7

Income Tax 260 4.6

Net profit 668 12


8. Corporate Governance

• Steelcast operate with 4 executive directors and 4 Non executive directors. Thefollowing board committees can be identified.

1.Remuneration Committee ( Maria , Walter)

- Approve the remuneration of the directors

- Ensure non of the directors are involved in determining own remuneration

- Review the effectiveness of the policy and determine the elements

2. Nomination Committee ( Victor , Lukas , Walter)

-Succession planning – vacancy’s at the board

-Review the size and structure of the board

-Identify potential nominees ( Lukas , Walter)

3. Audit Committee ( Lukas , Walter)

-Manage internal control & audit

-Liaise with External audit

- Ensure quality of the financial statements


Issues

Background of NED – Committee members

Victor Kijec ( NE Chairman) – Career in businessMaria Bell – Independent NED – Industry ExpereinceLucas Marten – Independent NED – Accounting experience – PartnerWalter Dane – Independent NED – Lawyer & political background

Combined code specifications

1.Nominations committee– Majority of members should be NED- Focus more on diversity in appointments- Review the time of the appointments and contracts for both ED & NED

2. Remuneration Committee-Comprise of NED-Clear limit with the connection with the organisation-Ensure no conflict of interest


3. Audit committee

– At least one member should be a financial expert ( specialist)

- Comprise of majority NED – Independent

- Responsible for appointment of external auditors

- Responsible for maintaining internal control & audit

Future Strategy

• The committee members and appointments are inline with thecombined code principles

• Its advisable to include more NED to ensure independence andprofessional conduct

• Walter Dane is involved with all 3 committees

• Its important that each committee operate with clear terms andconditions.


9. Promotion & Sponsorship

• General promotions are carried out in upmarket magazines

• Steelcast operates with own Polo team

• Sponsors the annual ocean yacht competition.

• Prince Sebastian is the current captain of the Steelcast polo teamwhich one the local Polo competition

• There is a criticism on the character of prince Sebastian and theimage

• This can create a negative publicity for the company if the princecontinue to operate with an unacceptable social behavior.

• The company operates with very limited promotional campaigns andadvertising options

• The current practice only focus on maintaining the brands and do notelaborate on strategically building a brand or aggressively positioninga model in the market.

• The lack of effective promotion can create a competitivedisadvantage.


Issues & Future Strategy

• Steelcast should identify the exact target market for the 7 models.

• The company should develop a differentiated strategy based on eachnew market and country conditions.

• The emerging countries with higher economic wealth should beapproached with a unique promotional strategy.

• The company should consider employing a famous person as a brandambassador to reach a larger target market.

• The company should consider brand extension with relatedassociations facilitating luxury and prestige

• Associations and strategic alliance can be developed with luxury carmanufacturers , luxury yacht manufacturers , exclusive resorts ,private jet manufacturers to reach a larger audience and create astrategic competitive advantage.

• The promotions should facilitate the core values of Steelcast andensure a clear differentiation among other luxury watch brands.


10 Retailing

• The sales are through independent retailers.

• There is no direct sales to the consumers

• Retailers are selected based on the ability to sell luxury watches andmaintain the prestige and brand appearance

• The retailers are mainly high class jewelers located in up market city centersand in duty free and high street.

• Each staff member has to compete an online course designed by steel craftprior to dealing with the products

• Every staff member should be able know the technical specification of eachwatch and communicate effective with customers

• A retailer should operate with a properly equipped workshop with skilledwatchmakers to undertake adjustments at the time of purchase and assessthe maintenance requirements and repairs throughout he life of he watch.

• A retailers is the first point of contact with the customer. Steel cast shouldensure a positive relationship with retailers to generate higher sales andmaintain the competitive advantage over other brands.

• A retailer sells many type of luxury wrist watches .38Gajendra Liyanaarachchi - CIMA SCS Nov 2017

Issues

• A customer can receive the service from any retailer irrespective ofthe actual purchase location or country

• A Steel craft watch must be serviced once in every 2 years to ensureaccuracy and performance

• The services are done at steel cast factory.

• A retailer has to pack the watch securely and forward them throughcourier for the service

• The serviced watch is returned through courier to the retailer.

• The customer has to pay a fee for this service

• The retailer is provided with a sales target that need to be achievedto continue as a steel cast retailer.

• Steel craft depend on the information provided by retailers on sales ,customer preference and the nature of demand

• Retailers have the authority to grant substantial discount which isborne by Steelcast to military officers.


Future Strategy

• There should be clear guideline and a limit in offering a discount tothe military personal.

• The nature and the level of discounts should be agreed by theretailer at the beginning of a financial year with Steecast to ensurecontrol and goal congruence.

• Steelcast should operate with a clear plan in managing retailers. Thisshould include a periodic monitoring system

• The company should provide facilities to service a watch at the retailpremises by the trained Technician at the workshop. This will reducethe coat to the customer and the time taken to return the watchafter the repair or service. The service done at Steelcast factory andthe courier service creates a higher risk and inconvenience for theconsumer. A watch can be damaged or lost in he process of courier.

• The company should provide incentives for the retailers to create anadvantage over other similar luxury wrist watch brands. This caninclude additional benefits based on incremental sales andrecognition.


11. Mergers & Acquisitions

• Steelcast operates with the same strategy and the business modelfrom 1910 and the mission from 1930.

• Its very difficult to achieve growth through the current platformwhich focus on internal process and competence.

• To ensure growth integration with external parties will be practical

• The company should not ignore the threat created by Quartz andsmart watches which can be the trend for the future.

• Steecast can consider acquiring a company with the followingcharacteristics

- Successful luxury Quartz watch manufacturer

- Successful Smart watch manufacture

- Successful aesthetic mechanical watch manufacturer focusingon a different target market ( young fashion market)

- Successful retail chain with outlets in strategic locations

• However the company must ensure that the acquisition to be treatedas a separate company with a unique brand proposition and valuesystem.


Possible Merger

Information is available on Laine – Similar company

Laine 30.09.17 H$m P&L

2016 % Rev 2017 % Rev Growth

Revenue 6573 7223 10

Cost of sales 3133 48 3333 46 6

Gross Profit 3440 52 3890 54 13

Other Operating Exp 2673 41 2956 41 10

Operating profit 767 12 934 13 22

Finance cost 87 1 87 1

Profit before tax 680 10 847 12 24

Income Tax 190 3 237 3

Net profit 490 7 610 8 24


Laine Balanced Sheet2016 2017 Growth %

Non Current AssetsGoodwill 430 430Other Intangible Assets 317 348 .PPE 3538 3745 6

Current AssetsInventories 362 385 6Debtors 1011 1111 10Cash 897 732 (18)

Current LabilitiesCreditors 369 391 6Tax 194 230Net current assets 1707 1607Total Assets 5992 6130

EquityShare capital & Premium 2400 2400Retained earnings 2626 2758 5

LiabilitiesLoans 900 900Tax 66 72Total Liabilities 5992 6130


Laine 2016 2017

Profitability

GP 52% 54%

OP 12% 13%

NP 7% 8%

Gearing

IC 9 11

D / TA 15% 15%

Liquidity

CR 4 3.5

QR 3.4 3

Cash / TO 14% 10%

Efficiency

STD 42 42

DD 56 56

CD 43 43

Market

ROSE 10% 12.%

ROCE 13% 15.%

ATO 1.1 1.2 44Gajendra Liyanaarachchi - CIMA SCS Nov 2017

Analysis

• Laine is 1.3 times larger in revenue compared with Steelcast and 1.21times greater in net profit.

• Laine indicate an aggressive strategy based on investment where thePPE has increased by 6% in 2017 compared with 2016. Steelcast PPEincrease only by 1% in the same period.

• Laine indicates a very strong gearing ratio of 15% ( debt / totalassets) with an interest cover of 11 times in 2017. Steel cast recodeda gearing of 25% with an interest cover of 6 times in the sameperiod.

• There is a possibility for a merger between the companies which willresult in synergetic benefits. Both companies will be in a betterposition to counter attack the threat caused by Smart and Quartzwatches successfully.

• Laine can even create a bid to acquire Steelcast in order to capitaliseon the reputation of the company and access larger market basedon luxury sports , adventure and achievement.

• Laine paid a dividend of H$ 478m compared with Steelcast H$228m.45


12. Share Price

• 31.12.2012 share price was H$7.8

• The share price was highest at H$ 11.4 around end of 2013

• The share price was stable around H$ 11 throughout 2014

• However since 2015 the share price declined at a steady rate

• The share price dropped from H$10 to H$ 6 from 2015 to 2016

• The share price reached the lowest level of H$ 4.2 on 31.01.2017

• However from the lowest point in 31.01.2017 there has been asteady rise and has reached H$7.8 as at 31.10.2017.

• This can be largely due the increase in financial performance in 2017.

• The revenue increased by 17.6% and the net profit increased by 16%compared with 2016.

• Retained earnings increased by 16% in 2017 from 2016 creating acapital gain and increase in shareholder wealth.


Future Strategy

• Book value of the company is H$4105m

• To identify the market value the number of shares in issue is required

• The company has paid a dividend of H$ 228m in 2017

• Dividend paid = ( Retained earnings 2016 + net profit 2017 –Retained earrings 2017)

= 1830 + 503 – 2105 = 228m

• This could have contributed towards the increase in the share price

• The market value of the company need to be identified in the case of a merger or an acquisition

• The company was incorporated in 1910 therefore asset based valuation may not provide a practical value

• Earnings based valuation based on the Price earnings ratio ( P/E) will be most suited to determine a realistic value.

• The number of shares in issue is required for any meaningful valuation.


Earnings Based Valuation

• This method of valuing a business is based on the P/E ratio - price Earnings ratio. This identifies the Share price based on the Maximum potential of the business as a going concern.

• P/E ratio ( Share price / EPS)

• This ratio demonstrates the number of times a particular earnings can be repeated based on the potential of the organisation in the future. This is a futuristic measure available based on an efficient market

• Share price = P/E x EPS

• MV = P/E x Earnings (Total)

• MV = Shane price x No of shares Issued


13. HRM

The company operate with 4 directors

1. Alain Trubb – CEO

- Marketing background , Highly experienced in Luxury goods

- Interested in motor racing

2. Sandra Daull – Finance Director

- Accountant. Diversified experience in different industries

3. Arthur Lim – Marketing Director

- Experienced in managing prestigious brands

4. Alexa Syme – Production Director – joined in 2014

- Academic background in computer assisted manufacturing

• 1000 staff in the factory

• Peaceful working conditions with individual work stations ( bench)

• Retention of Skilled staff are crucial for the success of the company49Gajendra Liyanaarachchi - CIMA SCS Nov 2017

Issues

• Management do not directly communicate with staff. The communication iswith the staff representatives. This can create a gap and ack of goalcongruence.

• The following additional positions will be required- Director – Human Resource Management- Director – R & D- Director Purchasing / Supply Chain

• Director R & D will be very important considering the future direction of thecompany. The present Director Production joined the company in 2014. Dr.Alexa Syme is primarily from the academic background speciated inComputer assisted manufacturing and do not posses any productionknowledge considering wrist watches.

• The Director R & D should demonstrate a sound knowledge and experiencein luxury writ watches to ensure effective management of 100o staff andguide the skilled technicians.

• This is a highly specialised industry . Therefore at least few people in the topmanagement should demonstrate a sound competence based on theindustry and systems.


Future Strategy

• A clear system of managing staff based on specific units orspecialised areas should be established

• The staff can be managed based on the 7 models to ensure effectivecontrol

• Team building will be a key area that will be required in the future.The areas such as motivation and factor of developing successfulteams will be important.

• There should a leader to manage the skilled technicians. This can bea person from the proposed positions of Director HRM or DirectorR&D

• There should be a clear system to evaluate performance of staffconsidering key guidelines covering a variety of financial and nonfinancial measures

• Balanced score card can be used as a strategy to evaluateperformance of staff to ensure goal congruence and overall control.

• Specific objectives should be developed based on future plan. Thisshould include KPI to ensure control and results.


14. Change Management

• Steel cast operate with a mission developed in 1930. ( 87 years ago)

• The concepts and values perceived from the mission were notupgraded based on the general developments in the world.

• The company operates with the wrist watch models designed in1970. These models are almost 50 years old and do not indicate orrepresent the modern thinking or the interest of the futuregeneration.

• The share price has declined continually in the last 3 years beforeindicating sings of growth early this year.

• The company operate with limited models. ( 7 )

• There is no clear strategy on competitor analysis

• The company has ignored the developments in the market sociallythe technological revolutions such as the Quartz watch and the smartwatch.

• The decisions are highly internal focused with little or no analysis ofthe market conditions , consumption pattern or developments.


Issues

• The company has indicated a very high resistance to change in the past anin the present context

• The staff join as apprentice at a very young age as the first job in life andcontinue to be employed as life time employment. This indicates lack ofmarket knowledge or experience which can negatively influence innovationand ability o be proactive .

• The company tend to focus on the past success and indicate lack offuturistic vision or ambition for growth.

• The skilled staff operate though a pre determined process with indicatework benches . This indicate lack of integration , team work and a desire toimprove towards a higher standards of performance.

• The is no interaction between the company and the end consumer. Theinformation regarding the market is derived through third party retailers.This can create a competitive disadvantage because this information isavailable to every competitor as a retailer sells many brands.

• The company requires cultural shift based on a clear focus on the market.


Future Strategy

• A new Director for HRM should be appointed to drive the companyforward.

• The Director HRM should operate as a change agent in shifting themind set of staff from internal focus to facilitate a performancedriven culture based on a growth perspective

• Suitable strategy to manage change ( overcome resistance )

Force filed analysis – Kurt Lewin ( Process of change / Stage model)

1. Unfreeze – Change the mid set of people to accept change

2. Change process – Develop strategy to overcome resistance

- Identify the force of change

- Identify the force of resistance

3. Refreeze – Ensure successful change management and operate withcontinuous improvement to ensure permanent results .


15. Internal Control & Audit

• The company operate with 1000 staff in one factory

• The wrist watches involve the use of precious metal such as gold andprecious stones.

• There are only 4 Independent non executive directors to function 3committees ( Nomination , Remuneration & Audit)

• The resources allocated for Internal audit is limited

• The parts and work in progress is moved around the factory by staffusing trolleys. This indicates lack of control and possibility of loss ofarticles and parts.

• The manual process can lead to defective parts or delay in the workin progress

• The watch makers work according to personal schedule and timeplan without a standard system.

• The work performed by a skilled watch maker is not supervised byanother personal. This indicate lack of transparency and control.


Issues

• There is a higher possibility of loss of inventory considering precious stonesand valuable metal such as solid gold.

• The wastage and the normal loss of using these precious material canindicate a significant value

• The inventory management system should be very efficient andstandardised ensure effective control and minimise stock loss situations.

• The watchmakers enjoy absolute power and discretion considering decisionmaking. This can create lack of transparency and the possibility of fraud.

• The nature of resources required for each model should be clearlydocumented an considered as a performance standard to ensure effectiveresource utilisation and control.

• The production should be carried out based on a clear budget whichindicate the number of units and a clear mechanism for overheadallocation.

• Very limited integration between the staff and watchmakers . This indicatelack of information and limited feedback on the behaviour of staff.


Future Strategy

• The Internal audit department should develop a clear audit plan coveringthe following areas

- Material usage for each watch – Brand / Model- The value of material used- Time required to complete each watch- Nature of labour hours per watch and the cost- Stages involved in developing each watch- Guidelines for issuing watch parts and material- Supply chain management- Examine the quality of the material used. ( standard usage)- Nature of wastage and documentation- Nature of defects , coat and timing for rework

• There should be random audits based on the entire process

• There should be a clear systems audit including the audit of the softwareand the computer numerical control

• The inventory should be audited regularly against the production• A standard should be established for repairs and services based on the

watches received through retailers .


16. Branding

• 1920 the watches of the company was certified as Chronometers dueto the accuracy. This was the beginning of the brand and a uniquecompetence for differentiation.

• Pioneered the concepts in avian and introduced the features throughthe watches.

• A clear leadership in luxury watches in sports and adventure segment

• 1924 introduced the Chronograph watch. ( still the main product )

• Considered as the main brand for military personal

• Considered as a collectors item over a period of time

• Retailers play a major role in creating sales

• Mission in 1930 focus on leaders as customers

• Many speed records and achievements in sport and adventure wereset by wearing Steelcast watches.

• Depend on 7 models with limited new products and models

• A watch demonstrate a rugged feeling indicating strength andendurance


Issues

• Brawn a flagship model was launched in 1970. However there is nosignificant development after this launch.

• Lack of new products and ideas are a clear thereat for the marketleadership o he company

• There is no clear strategy to dominate the market and indicate anover reliance on previous brands based on known conditions.

• The main market is luxury sports and adventure. This is a nichemarket and the lower frequency of purchase indicate a clear threatfor the future of the company.

• Very limited brands with 7 models

• Very high threat caused by Quartz and smart watch brands withdirect association considering youth and the modern world order

• Higher threat on future brand recognition due to lack of innovation

• Brand association and presence is created by retailers. This indicateslack of identity since a retailer will exhibit many brands


Future Strategy

• The company should re create the brand image to suit the modern businessenvironment

• In a niche market identifying the customer as a leader may be effective.However the brand should indicate a higher scope to include performanceand achievement to demonstrate practical application.

• A new brand should be created to reflect a lower price watches around H$2500 to protect the image of the models which sell for H$ 26,500

• The company has to originate a new concept beyond sports since sport hasbecome a common element in luxury watches.

• New bands should be developed with a different design with Quartz andsmart watch technology.

• Develop brand extension with a partnership with similar luxury productmanufacturer or association. ( Car racing team , prestigious resort etc.)

• Ensure each model associated different value system

• Ensure new brands are created for emerging markets to capitalize ondemand for higher volume

• The brand has to reach a larger audience than racing , yachting and aviation


17. Threat of Substitutes

1. Quartz watches

• Introduced in 1970

• Battery powered and rely on an electronic circuit

• Time displayed through a screen or based on hands operatedthrough a motor

• Majority of the watches in the market are quartz due to theaffordability and simplicity in the manufacturing process

• Very accurate due to the electronic mechanism

• Some luxury watch makers offer range of quartz watches

• There was a higher initial impact in the early years however failed tocapture the traditional aesthetic mechanical watch market

• Quartz watches are purchased by lower income category whichcomprise of general consumers. The higher end consumers with ahigher income continued with traditional watches with clock workmovement which included precious material.


2. Smart watches

• Technological advancement based on modern life

• Ability to integrate with other devices such as mobile phones andcomputers

• Provides value additions based on data collection and information on health, time spend on exercise and general habits.

• Initial Smart watches were produced using basic material. However thelatest Smart watches focus more on the aesthetics and include valuablematerial to ensure durability.

• Smart watches creates a higher threat than the Quartz watches. The quartzwatch only provided time with accuracy and was affordable reaching adifferent market than the mechanical watches.

• The smart watch is not a product , it’s a way of life in modem society andfulfil the needs of social life and integration.

• The information generated from the Smart watch creates a new dimensionto life and has become a very important element in life and business.

• This can deviate future consumers from traditional clockwork watches andcreate a very high threat on sales for the future generation.


Future Strategy

• Try to develop a Smart watch based on the existing platform of theaesthetic clock work mechanism.

• Identify the possibility of introducing a luxury smart watch focusingon the sports and adventure segment including a modern design

• Acquire a company which produce smart watches to minimise therisk and exposure on future sales revenue

• Invest in manufacturing a Quartz watch and introduce in an emergingmarket with higher deposable income

• Conduct market research on the usability of the smart watch and thecharacteristics of the consumers including income , age andoccupation.

• Develop a joint venture of a strategic alliance with a company whichmanufacture Smart watches and develop a co- branding strategy bysharing the competence.

• Introduce innovative new models different from the current 7models to deviate the attraction of the consumers from the Smartwatch and create excitement for a new luxury sports watch.


18. Supply Chain

• A watch is produced using many parts and material

• A single watch include more than 350 parts

• The base plate which provide the base for integrating watch parts ismade from brass and requires 53 holes to be drilled very precisely

• Final assembly required regulating the time accurately by combiningall the parts by a skilled watchmaker.

• The production process operates with Computer numerical control

• The parts and work in progress is transferred throughout the factoryby staff through trolleys. Manual handling.

• Material used include Stainless Steel , solid gold , leather andprecious stones.

• Inventory management and use of material for production has to beregulated based on the number of products and capacity

• The system for servicing and repairing of watches and the nature ofmaterial used has to be documented and transparent.


Issues

• Information available is very limited regarding the nature of suppliers

• A general assurance is provided in the CSR report indicating thematerials are obtained from ethical sources within a legal framework

• However the suppliers should be listed and evaluated based on theaccepted ethical guidelines to ensure consistency in delivery and thesourcing of material.

• There should be guideline for the disposal of waste. A watch isdeveloped by integrating more than 350 parts and as a result manycomponents and wastage from parts will be eliminated. The disposalof these waste should be carried out effectively to ensure sustainablebusiness practice.

• The use of animal skin for leather should be examined by assessingthe resources of each supplier with the technology to ensure practiceof the accepted standard for treatment of animals.

• Mot of the watches use precious material such as gold. Thesustainability of such resources and the process of obtaining naturalresources should be examined with the working conditions of staff.


Future Strategy

• The company should certify the suppliers based on a clear guidelineand a code of conduct.

• There should be regular visits to the production facilities of suppliersto assess the working conditions of staff and the quality of thetechnology used in sourcing and processing.

• The company needs to verify the procedure followed in obtainingscare resources such as gold and the legal requirement in sourcingsuch material

• The suppliers should be analysed based on the countries in which thematerial is sourced and the living conditions of the workers in ensuregoal congruence and practice of social responsibility.

• A clear code of conduct should be used in selecting new suppliers. Anew supplier should adhere to the guidelines to ensure quality ,sustainably an ethical practice.

• Its important to build a ling term relationship with key suppliers tofacilitate the business as a going concern.


19. Future Strategy

• Share price indicates a positive trend with better financialperformance in 2017

• Opportunities for brand extension through strategic alliance ,partnerships and core branding

• The CEO Alian Trubb is an avid motor racing fan. This can indicate apossible integration with the industry. Sponsoring a motor racingteam or a championship. Developing a core brand with a luxurysports car brand. ( already competitor Balarra which produce brighteye catching models has a link with the maker of the worlds fastestsuper car )

• Its important to build a ling term relationship with key suppliers tofacilitate the business as a going concern.

• A clear plan is required to develop a Quartz watch and a Smart watchto reduce the risk of over dependence and capitalise on the marketopportunity.

• Consider new opportunities in retailing or developing newdistribution channels in emerging economies in the world withhigher disposable income.


Strategic OptionsAnsoff Matrix

Penetration - Focus on Military personal – sales , Discounts to retailers , Develop sports competitions , new sponsorships

Product Development – New model of Brawn , New models

Market Development – Enter new countries ( emerging economies) , Develop an online strategy – sales , Identify new distribution channels ( Agents)

Diversification – Introduce a Quartz watch – Different brand

- Invest in a Smart Watch – Acquire a company

Existing New

MARKET

New

Exis

tin

gPR

OD

UC

T Product DiversificationDevelopment

Penetration Market Development


BCG Matrix

Cash Cow – Brawn Model

Star - New adventure od sports model

Problem Child - A Model with poor results ( existing 7)

Dog - A model with limited future and less antique value

R & D - Quartz watch , Smart Watch

Relative Market Share

10X 8X 5X 2X X .8X .5X .2X .1X

MarketGrowth

STAR Problem Child?

Cash Cow Dog


Product Life Cycle

• It important to identify the economic potential of the existing 7 models in order to effectively manage the future revenue and cashflow. This will provide the basis for investments in new models and determining promotional expenditure .

Development Introduction Growth Maturity Decline


Value Chain

• The value chain will change considerably in the case of producing a Quartz watch or a Smart Watch. The operations will be simplified with a higher focus on technology than skilled watchmakers.


20. Industry Analysis

• The usual business practice to provide an expensive gift to secure abusiness deal or obtain a favourable political decision included a practice ofpresenting a solid gold watch or a similar gift of value.

• However with the economic downturn this practice has changed from avery expensive gist to a moderate present in the form of a silk tie.

• This has directly influenced the demand for Steelcast watches in the market

• The donations given by companies are scrutinised for transparency as amodern global practice. This can directly influence the current CSRprograms of Steelcast.

• There is an increasing trend to buy luxury smart watches inline with otherluxury consumer products such as mobile phones , laptops and high-techdevises which are an integral part of social life.

• Many luxury watch makers have developed associations with other luxurybrands based on strategic partnerships and alliance through brandextension. Steelcast have to learn from these developments and try to buildsimilar partnerships to reach a larger consumer base and increase themarket share.


1. When Rolex Went Quartz: A Tale of the 1970s

How did mechanical-watch king Rolex deal with the arrival of quartz in the 1970s?

Top-quality mechanical movements would always remain expensive and exclusivedue to the large amount of highly qualified labour that is required formanufacturing the parts and assembling them. The inescapable fact that amechanical device can only tell time approximately could be easily hidden bywriting “Superlative Chronometer, Officially Certified”

Rolex totally ignored microelectronics until the early 1970s. The quartz equivalentof the men’s watch came in two versions. unfortunately, they never saw massproduction. The production was only about 4,000 pieces a year – not muchmarketing effort was made to promote the Oyster quartz

The retailers were not at all motivated to sell the Oyster quartz, as the cost wassignificantly less than the mechanical Oyster and therefore meant less profit. Thereare tales about potential customers who literally had to beg for an Oyster quartz.


• Rolex made just 4,000 Oyster quartz watches per year.

• Rolex developed several technically advanced quartz movements that never gotbeyond the prototype stage. In 1986, Rolex built 50 prototypes but there was noproduction, even though the yearly rate was just a few seconds. . This design waspatented; the patent became public domain in 2011. A test series of 400 pieces wasassembled, but there was no production; none of those prototypes ever left theRolex premises.

A Rolex FAN model with pseudo-analogue display

• they worked in August 1978. Developing the FAN had cost a cool million Swissfrancs, but Rolex was not much poorer for that.

• The Company decided that such a watch did not correspond

to the Rolex product philosophy, the FAN project

was cancelled and the development costs were written off.


2. Baume & Mercier Teams Up with Indian Motorcycle

Since it was initiated in 2015, Baume & Mercier’s partnership with the Carroll ShelbyCompany has produced several notable timepieces, the most recent being a limited-edition chronograph from the brand’s Clifton collection, co-designed by automobiledesign guru Peter Brock. Now, aficionados of classic motorcycles can also rev theirmotors in anticipation of some special watches from the Swiss brand, which just thisweek announced a new exclusive partnership with Indian Motorcycle, known as“America’s First Motorcycle Company.”


3. The Perfect Face: Dial Making at Patek Philippe

Making dials for luxury watches is a delicate and complex art. Even the smallest errorwill be plainly visible on a finished watch. That’s why Patek Philippe has its dialsproduced by Cadrans Flückiger SA.

The Cadrans Flückiger dial factory, which was established in 1860, was taken over byPatek Philippe in 2004. With this acquisition, the Geneva-based manufacture took thefinal step toward independence from external suppliers.

This provides 2000 additional square meters of areafor new departments and staff, currently about 100workers. Moreover, the new premises enable CadransFlückiger to uphold the strictest environmentalstandards.

The venue offers optimum conditions for the annualproduction of 100,000 dials, which are produced inbatches ranging from 100 to 500 pieces, as well as insmall series of one to five. Forty percent of the dialsare destined for Patek Philippe. As was the policy priorto the takeover, the remaining 60 percent aredelivered to other luxury watch manufacturers.


4. Swiss Watches Are Making a Comeback Thanks to More Expensive Models

• Swiss watch exports climbed for a fourth month in five as growth in higher-endmechanical timepieces made up for a decline in cheaper quartz models.

• Shipments rose 3.6 percent to 1.7 billion francs ($1.8 billion) in July, the Federation of theSwiss Watch Industry said in statement Tuesday. Exports of watches wholesaling for morethan 3,000 francs rose 5.9 percent, offsetting an 18 percent slump in timepieces costingless than 200 francs.

• The outperformance of the higher-end segment is is more of a boon for Richemont,which only has one lower-priced brand, than Swatch, which has several, wrote ZuzannaPusz, an analyst at Berenberg. Most of Richemont’s brands, which include Cartier andJaeger-LeCoultre, have models whose prices exceed $50,000, while Swatch’s collection ofmonikers includes its $50 namesake plastic timepieces and relatively less expensive labelssuch as Tissot.

• Among other highlights:Richemont shares up 1.2% at 10:54 a.m. in Zurich; Swatch gains0.3% July increase was 4.1% in real terms, adjusted for working days: Swiss customs officeQuartz watches dropped, while mechanical and automatic watches increased July facedeasy comparisons and the rest of the year, except for October, will be more difficult, saysBarclays analyst Julian Easthope Exports to Hong Kong, the industry’s largest market, rose17 percent for the third consecutive month of gains. FHS says watches approachingforecast for “stabilization” this year U.K. shipments drop for first time this year, down8.5%


5. ROLEX AND ASSOCIATIONS

ROLEX AND MOTOR SPORTS

Rolex's history of close ties with motor racing and speed reaches back to the 1930s.Driven by a passion for performance and precision, Rolex partners the leading motorsports series, Formula 1, iconic endurance and classic events steeped in tradition.

A GLOBAL PARTNERSHIP WITH FORMULA 1

In early 2013, Rolex became a Global Partner and Official Timepiece of Formula 1, thepinnacle of motor sports. Like Rolex, Formula 1 is present the world over, with 20 racesorganized in 20 countries across five continents…

FORMULA 1 GRAND PRIX DE MONACO

FORMULA 1 GRAND PRIX DE MONACO is considered one of the greatest races andultimate jewel in the Formula 1 crown. It requires a combination of precision drivingand technical excellence and has been a regular fixture since 1955. Winning in Monacoplaces a driver’s name on a list that includes many all-time racing greats. Among themRolex Testimonies Sir Jackie Stewart, three-time FIA Formula One Drivers’ WorldChampion and three-time winner of the 260,286-km Monte-Carlo street circuit.


COSMOGRAPH DAYTONA

The Oyster Perpetual

The Cosmograph Daytona, introduced in 1963, was designed to meet thedemands of professional racing drivers. With its highly reliable chronographand bezel with tachymetric scale, it allows drivers to perfectly measure averagespeeds up to 400 kilometres or miles per hour, as they choose. An iconeternally joined in name and function the high-performance world of motorsport.


ROLEX AND EQUESTRIANISM

The crown in equestrianism for over 50 years, Rolex is a major force at play,supporting the pinnacle of the sport. From top-level riders to iconic events,Rolex has cultivated a privileged relationship with this elite world.

ZARA TINDALL

Zara Tindall, the daughter of the United Kingdom’s Princess Anne and top-level riderCaptain Mark Phillips, is carrying forward the family’s excellence in riding. After abrilliant career in the Young Riders, she collected individual and team gold medals at the2005 European Eventing Championship in Blenheim and individual gold and team silvermedals at the 2006 World Equestrian Games in Aachen.

In 2012, her long-awaited dreamof competing at the Olympic Gameswas finally realized at theLondon Olympics: riding HighKingdom, Zara took home theteam silver medal,yet another extraordinary achievement


ROLEX AND YACHTINGYacht racing is a test of will and wit in which crucial decisions are made with split-second precision. Preparation is rigorous and team spirit is paramount. Rolex has forgeda privileged relationship with prestigious regattas as well as exciting yachtsmen andwomen, sharing the values inherent in every sailor.

ROLEX 40 WORLD CHAMPIONSHIP

The Rolex Farr® 40 Worlds represent the pinnacle of one-design yacht racing, wherevictory is purely down to the skill of the sailors. In a championship where yacht ownersmust skipper their own craft, and the rules require that the boats and total weight beequal, each crew must work together.


Rolex – Interesting Information

Rolex SA is owned by the private Hans Wilsdorf Foundation, which isregistered as a charity and does not pay corporate income taxes. Rolexdeclines to provide evidence regarding the amount of charitabledonations made by the Wilsdorf Foundation. In Geneva, where it isbased, it has gifted, among many things, two housing buildings to socialinstitutions of Geneva .

The Hans Wilsdorf Foundation funds the largest scholarship endowmentin Europe. Rolex is not owned by any individual and the trustees of thefoundation merely oversee the distribution of profits. Profit is what isleft after your cost of doing business, including payroll. No one knowshow much money Rolex gives away because the company is privatelyheld by the foundation but Rolex is known to give away vast sums ofmoney. Hans Wilsdorf, the founder of Rolex, did not have any directheirs and wanted to ensure that his legacy was one of doing good whiledoing well.


Documents

STEELCAST - aforstudy.comaforstudy.com/doc/note.pdf · Internal Control & Audit 16. Branding 17. Threat of ... Rolex first concentrated on the quality of the ... concept without affecting