Massey-Ferguson Case Questions Address the following questions in a 4-5 page write-up of the Massey-Ferguson Case to explore how financing and business decisions are linked: 1) Assess the product-market strategy Massey pursued through 1976. Compare Massey’s strategy with those of its leading competitors. How successful and sensible was their product market strategy through 1976? 2) Characterize and assess Massey’s financial strategy from 1971-1976. Did it complement the product market strategy
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In contrast with its competitors‚ Massey Ferguson chose to finance its expansionary agenda primarily through debt offerings and short term credit lines. This type of structuring had very detrimental implications for Massey Ferguson. The use of so much leverage would increase the risk of the projects they were undertaking beyond the industry standard. Firms in the same industry such as Deere and International Harvester throughout the 1976-1980 period maintained debt/capital and STD/capital percentages
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sseyu [pic] Massey-Ferguson‚ 1980 Case Report Executive Summary Massey-Ferguson has been in the farm machinery business since 1847. It grew into one of the largest multinational firms in the world‚ with operations in over thirty countries throughout the world. Unfortunately‚ Massey-Ferguson financed its expansion mainly by use of debt and short term credit. Mano-Will Consulting analyzed Massey-Ferguson’s financial statements and conclued that its history of ambitiouus acquisitions
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the product market strategy and the financial strategy Massey pursued through 1976. Where possible‚ compare Massey’s strategy with those of its leading competitors. Massey Ferguson has a series of product market strategy and financial strategy problems. The initial issue was Massey’s misalignment of its production sites and its markets. The mismatch caused massey to suffer currency risk exposure. Additionally‚ some of the markets massey sold into were not the most stable‚ exposing them to political
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1. Assess the product market strategy and the financial strategy Massey pursued through 1976. Where possible‚ compare Massey’s strategy with those of its leading competitors. The company had three kinds of products‚ farm & industrial machinery as well as diesel engines. For the farm and industrial machinery‚ North American and the United Kingdom were the largest markets accounting for 81.3% of capacity. For diesel engines‚ the UK accounted for 76.7%. For having success in this kind of business
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shareholder‚ Argus Corporation‚ was a Canadian holding company. If Massey went into bankruptcy‚ the Canadian government was anxious to avoid a loss of jobs of 6700 people in Ontario. Also‚ the finance of Argus and CIBC would be affected too. Then‚ the problem of unemployment in Canada would worsen. Therefore‚ the Canadian governments agreed to provide financial assistance for Massey. 3. There were two main reasons. First‚ Massey had a high debt-to-equity ratio and those debts had some restrictions
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Massey Ferguson Case Advanced Corporate Finance The Company Massey Ferguson is a multinational producer of farm machinery‚ industrial machinery and diesel engines. The company was formed through a merger between Massey-Harris and Harry Fergusson in 1953. They combined their skills to become the West’s largest producer of farm tractors and the world’s largest supplier of diesel engines to original equipment manufacturers. Massey’s farm machinery line consists of tractors‚ several harvesters
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Case Analysis Massey Ferguson 1980: Massey Ferguson Limited an International producer of Farm machinery and diesel engine started its operations way back in 1847 and by the end of 19 th century they had operations throughout 31 countries of the world. In 1978 Company had financial loss of US. $262.2 million . Massey’s Strategies: 1) Product-Market Strategy: Massey’s product line consisted of tractors‚ combine harvesters‚ balers‚ forage harvesters‚ agriculture implements‚ farmstead equipments and
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interest rates (as an illustration‚ the federal funds rate increased from 11% in 1979 to 20% by June 1981). This affected all players as it led to a plunge of stock market prices‚ on the one hand‚ and an economic recession‚ on the other. Furthermore‚ Massey was particularly hit hard: since it mainly financed its operations with short-term debt‚ its financing cost went up dramatically. Low demand The above-mentioned contractionary monetary policy pushed the American economy into recession. Massey’s
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1. Net sales for Massey-Ferguson actually increased between 1979 and 1980. Despite this‚ net income and income from continuing operations both dropped sharply in 1980. Which item on the income statement was most responsible for this drop in income? 2. Why would the Canadian government have any interest in helping Massey-Ferguson refinance its debt? 1. Other interest expense and the exchange adjustments on the income statement were mostly responsible for the drop in income. There are high interest
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