Fraser and Neave, Lmited (F&N)

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AY2006/2007 SEMESTER 2
AA201- ACCOUNTING MEASUREMENT & DISCLOSURE
TERM PROJECT
COMPANY: FRASER AND NEAVE, LMITED (F&N)

CONTENT PAGE

COVER LETTER3
VISION & MISSION4
COMPETITIVE STRATEGIES OF F&N4
VALUE CHAIN ANALYSIS5
INDUSTRY PROSPECTS 6
FINANCIAL ANALYSIS8
NON-FINANCIAL ANALYSIS9
RECOMMENDATIONS10
APPENDIX A
APPENDIX B

To: Ms Tan
Chief Executive Officer
Lion Investment Company

Re: Investment in the Shares of Fraser & Neave Limited
Fraser and Neave Limited (F&N) diversified from its printing business to pioneer the aerated water business in Southeast Asia in 1883. From a soft drinks base, F&N ventured into the business of brewing in 1931, dairies in 1959 and glass bottle manufacturing in 1972, property development and management in 1990 and publishing & printing in 2000. In order to determine the desirability of the investment, the below are some of the aspects that haven been discussed to arrive at the recommendations.

Company’s Strategy
The company’s main core strategy is to stimulate group’s growth through practicing of operational efficiency, capturing new markets and venturing into new industries.

Value Chain Analysis
The value chains of F&N had been mapped out according to its industry which is identified as property and F&B. In this part of the report, the strengths and weaknesses of the of F&N’s value chains are evaluated.

Industry Prospects
The prospects of the different industries have been evaluated under this section. It is identified that the property and beer industries are growing with potential, while the other industries regarded as cash cow units.

Financial Analysis
An analysis on the financial performance of F&N has been done in the report. According to the analysis, the firm had not been performing well. However, in the report, the reasons for poor performance will be discussed further.

Non-Financial Analysis
The concept of Balance Scorecard is used here to evaluate the non-financial performance of F&N.

Recommendation

The recommendation with respect to the analysis is to make a long-term or medium-term investment in F&N but not a short-term investment. This will be further discussed in the report.

Enclosed is a detailed report of the analyses that led to my recommendations.

Sincerely,
Investment Officer

VISION & MISSION
Fraser and Neave (F&N) envisions itself to become a world-class multinational corporation based in Asia, providing great returns by concentrating its corporate efforts on the Food & Beverage (F&B), Properties and Publishing & Printing businesses. F&N not only aspires to reward its shareholders with high investment returns, but also aims to create value for its customers and offer superior career opportunities to its employees . COMPETITIVE STRATEGIES OF F & N

F&N operates via its three core businesses units as mentioned above, but in our opinion, the Properties division is the one in which it is undertaking rapid expansion and development. As will be shown in our financial analysis, this division is reaping in huge profits for F&N, and it is likely this trend will persist. Thus, F&N should devise competitive strategies that focus on its Properties business. However, at the same time, it should maintain its leading position in the local F&B industry, and strive for higher profits in the Publishing & Printing business. Not wanting to be constrained by the small size of Singapore’s market, F&N has undertaken vigorous efforts to stimulate the Group’s growth through practising operational efficiency, capturing of new markets and venturing into new industries. As such, F&N has developed four main competitive strategies . Firstly, it seeks to earn higher returns via the redistribution of its existing assets to concentrate on asset-light, fee-based businesses. This also entails the plan to better manage its capital base so as to create higher value for shareholders. Thirdly, F&N will attempt to build on...
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