Monday, June 25, 2012 at 1:36pm by Sandy Jones
Despite the challenge of an ever-changing economy, a few businesses are managing to keep afloat with strategic investments and innovative new products. However, not all companies are able to sustain growth.
Procter and Gamble
For Procter and Gamble (PG), the Euro activity and Europe crisis has exacerbated their downward slide. Since the markets slowed down and growth became stagnant overseas, PG decided to route their investments via China instead. However, as investors.com reports, they ended up lowering their sales and profit direction because the exchange rates were so unfavorable. The predicted Earnings Per Share (EPS) of 79-85 cents are only expected to reach 75-79 cents. Additionally, Organic sales growth is not projected to be 4%-5% but rather 2%-3%.
Businesswire.com continues the story noting that PG plans to prioritize its investments in the highest profit markets and largest innovations as part of their strategic approach to the coming fiscal year. The company has made it clear that they are committed to winning the fight against the odds. Part of their initiatives includes more focus, balance, and a strategic approach to wise investments. They have expressed concern over volatile variables such as commodity costs, foreign exchange, and government policies.
In contrast to Procter and Gamble, Walgreens announced just recently their largest quarterly dividend in company history; the previous 22.5 cents per share rose to 27.5 cents per share. Walgreens President and CEO Greg Wasson reportedly attributed the success to their commitments to returning cash to shareholders and staying consistent with their goals of paying out a target of 30%-35% of net earnings for long-term dividends.
This was countered by the company’s recent acquirement of nearly 50% of Alliance Boots in a strategic attempt to put a solid foot on the ground in Europe. What impact did this have on consumers you might ask? Due to uncertainty, the Wall Street Journal notes that investors bailed on Walgreen’s shares out of fears that the European gamble won’t follow through and based on the expensive price tag of $6.7 billion. However, Wasson feels confident the move will benefit the company in the long run. If things pan out the way he expects, it won’t be long before they purchase the entire Alliance Boots Company.
Crowned-king of coffee, Starbucks decided to take on a new flavor of business in an innovative endeavor to create a tea-only shop featuring the Tazo brand. Unlike the typical coffee shops, this store allows customers to choose from over 80 varieties of tea and pay for it by the ounce. CNN shares that the location of the store will be in Seattle’s University Village, nearby the company’s headquarters.
Tazo as a brand has been quite successful, especially since Starbucks purchased them back in 1999. Having paid $8.1 million for the tea company, Starbucks has increased the brand’s value to $1.4 billion. Depending on the success of the first shop, Starbucks may continue to build more in the future. However, the company is currently more focused on bolstering the Tazo brand at the moment.
Starbucks is stirring up excitement in Costa Rica too. Daily Finance reports about the recently opened location in San Jose that offers the complete range of beverages to the Latin American coffee consumers. Starbucks has a history with Costa Rica, but although they import beans from the country, this will be the first store located there. In addition to the coffee shop expansions, Starbucks also added a Farmers Support Center in Colombia and plans to open one in China as well in the coming year. Over the next three years, the coffee-king will team up with a joint-venture partner and open 300 new stores in Mexico and Argentina.
The New York Stock Exchange welcomes back Burger King (BK) to the public market through a complicated deal the fast food franchise struck in April (rather than a public offering, the chain sold a minority stake to Justice Holdings Ltd.). Burger King modestly offered 16% of their shares to investors and according to Business Week the shares are on the rise. 3G Capital, who controls 71% of BK’s stock, will hang onto that claim for at least the next six months. Burger King also seeks to expand their business overseas, in Russia and China specifically over the next few years.
Speaking of innovations, Burger King just announced a bacon sundae as one of the limited time offers of summer delights on their menu. The NY Daily News gives us the delicious scoop on this frozen salty-sweet treat. Made with soft serve vanilla ice cream, topped with fudge and caramel sauce, bacon crumbles, and accented with a strip of bacon, it’s not surprising the dessert clocks in at 510 calories. Between the 18 grams of fat and the 61 grams of sugar, this treat is sure to give anyone a heart-attack. Thanks to the recent additions of fruit smoothies, wraps, and new salads, at least there are plenty of alternatives for health-conscious consumers.
It seems successful businesses are strategically planting their feet globally to provide added stability and making safe investments to secure their future despite whatever economic changes come their way. Innovation also plays a key role in determining the success and survival of a business.
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