Strategic Marketing Tesla Motors Inc. Research Paper - 4125 Words

Strategic Marketing: Tesla Motors Inc. (Research Paper Sample) Content: Strategic Marketing: Tesla Motors Inc.By Studentà ¢Ã¢â€š ¬s NameCourseInstructorInstitutionDateStrategic MarketingUGB335Tesla Motors Inc. Strategic Marketing Analysis and Marketing StrategyPart A1.0 Purpose of the reportThe auto manufacturing market is very competitive, especially for alternative fuel vehicles that has become more popular with the rise of environmental concerns. This report will elaborate the electric vehicle manufacturing company Tesla Motors, and how it can manage the extreme competition from large and premium manufactures.An auto manufacturing industry is a challenging and competitive market mainly for those who are involved with alternative fuel vehicles which have become a trend especially with the increasing environmental factors and concerns. This report is designed to assist Tesla Motors in developing an effective marketing strategy to enhance its success. A market analysis is used to focus on key issues affecting the industry and theoretical tools and frame work which are related to the module with detailed quotes, stats, graphs, and tables included.2.0 Brief IntroductionTesla Motors Inc. is one out of a few known companies that creates, manufactures and sells electric cars and vehicle powertrain machineries. The name Tesla comes from an inventor, futurist, electrical engineer and mechanical engineer who was mostly known for his contributions to design of a modern altering current (AC) electricity supply system Nikola Tesla (Laplante, 1999).The company first got global attention and recognition when they produced the Tesla Roadster which therefore was the first known electric sport car. The company later than produced other vehicle such as the model S which was a complete electric luxury sedan and the Models 3 and X similarly. (Teslamotors, 2014).Tesla Motors is not only known to manufacture vehicle, they also markets electric powertrain components such as lithium-ion battery packs to automakers such as Toyota and Daim ler (Alttransport, 2010).CEO, Elon Musk who is one of the founders of the company has mentioned that he sees Tesla as an independent automaker (Howell, 2014), which therefore plans on offering their electric vehicles for a price that would be affordable to an average customer (Young, 2014).3.0 A market analysis addressing key contextual, environmental issues and trends affecting industry currently and in the future (predictions)The idea behind a market analysis is to find out the attraction of a market and to understand the trends and threats as this leads to the strengths and weakness of a company (Gurun, 2014).According to David A. Aaker he outlined some of the following aspects of a market analysis hence will be presented as stated: * Market share (currently and in the future) * Market trends * Distribution channels3.1 The market size and its future potentialMarket size is the measurement of the total volume of a particular market therefore a market size can be assessed by presen t sales and future sales if the use of the product were stretched (Gurun, 2014). For Tesla they are the only company that sells electric luxury battery vehicles therefore as the market of Tesla expands it will take share out of the market. Moreover to spend more than $60,000 on a car, globally they are only so many people who could do that. This is a sub-segment of the amount of population globally that will prioritize the electric cars and the companyà ¢Ã¢â€š ¬s brand equity to decide to purchase a tesla (Lowry, 2014).Globally, around 37 million vehicles are likely to be sold in 2014. Mainly in the U.S. (TSLA's primary market), approximately 15.3 million units were predicted to be sold in 2014. General Motors (NYSE:GM) have about 18% market share in the U.S. (2.7mm units), followed by Ford (NYSE:F) at 15%, Chrysler (FIATY) at 12.8%, Honda (NYSE:HMC) at 10.1%.Source: Wall Street published research reports.As stated by the company's Q413 earnings release on February 19, 2014, Tesl a expected to deliver 35,000 units in 2014, which could then represent approximately 0.2% of the U.S. market share (Fu, 2014). Lastly, the company Tesla is not easy to peg by basing its sales on lesser grouping (Lowry, 2014).3.2 Market trendsWhen a market changes it is a crucial period because ità ¢Ã¢â€š ¬s often the lead to a new opportunity or threat to a company (Gurun, 2014). Related trends are industry dependent such examples are when there is a change in price sensitivity and the level of emphasis on a service and so forth.3.2.1 Price sensitivityAccording to Tesla, during the first of August they slowly increased their price for many of the options for the Model S by selling their product separately through the features that were packaged together. Including other changes were à ¢Ã¢â€š ¬Ã‹Å"à ¢Ã¢â€š ¬Tech Packageà ¢Ã¢â€š ¬Ãƒ ¢Ã¢â€š ¬ which used to be $3,750 that was then lowered to $3,500. Therefore Tesla vehicle Obeche Wood Gloss Decore that was before included has turne d out to be a $650 option, as a result to the changes it has increased the overall price of the model S.Tesla may have increased the prices of the features because its aim is to firm the cost of parts and labor installation on their factory (Teslamotors, 2014).3.2.2 Level of emphasis on a service * Tesla Service Centers is like any auto shop à ¢Ã¢â€š ¬ they make sure that the surroundings are clean * Tesla Services are more than a once-a-year check-up. * Tesla uses cutting-edge software to control Model S vehicle functionality. * In North America, a one-year (or 12,500-mile) service plan would costs $600. This price covers the customerà ¢Ã¢â€š ¬s annual inspection and all wear and tear parts, excluding tires. This plan is paid for at the time of your annual (or 12,500-mile) inspection.Finally their goal is look after the customerà ¢Ã¢â€š ¬s car in such a way that is different and unique from other businesses therefore the Model S being the first vehicle to get improved and better the longer the customers have it (de Vries, 2014).3.3 Distribution ChannelsTesla manufacturer is located in the United States however Tesla has a different approach in the way they run their distribution channels. The fact that tesla is a recent new carmaker, they donà ¢Ã¢â€š ¬t have the chance to actually inform potential customer of their vehicles such as the Model S by positioning in a typical auto dealer locations.For this reason Tesla positioned their stores and gallery locations in high foot traffic and high visibility venue retails such as malls and other areas where people would regularly visit and shop (Teslamotors, 2014)Tesla has 31 worl-wide locations, in which are mostly located in the U.S differing from conventional dealerships. In some aspects they seem to be modeling their business going for a look such as the popular Apples stores therefore to obey the local laws which prohibits manufacturers to selling directly to customers. That being said Tesla showrooms are not accepting any orders for cars. However, employees from those showrooms are directing potential buyers to the companyà ¢Ã¢â€š ¬s website where the purchaser could order the vehicle they desire directly from the company, where in this case it is not prohibited by the state laws.Lastly Tesla predicts that all of its retail showrooms wonà ¢Ã¢â€š ¬t be found being dealerships under the applicable laws. (Anon, 2014)4.0 A situational analysis assessing Teslaà ¢Ã¢â€š ¬s competitiveness in its market4.1 SWOT AnalysisThe SWOT analysis is a type of situational analysis that points out Teslaà ¢Ã¢â€š ¬s key competitiveness in its market from the external environment and strategic abilities of a company that has an impact on strategy development (Johnson et al., 2008).Moreover, it will be useful in creating strategic options and future courses of action (Thompson and Martin, 2005).4.2 Strengths * Tesla Motors has various strengths hence has led it to be ahead of other organization in the sam e automotive industry. Outsourcing the secondary components will help to maintain and keep low cost and put effort mainly on technological advancement (Welsh, 2009). This will also put a firm research on development department, which will create a great productivity battery system and electric powertrain (Tesla Motors, 2010). * The company functions by a system known as lean management system hence all employers are tied up to work together in a fairly small and efficient environment such as well-organized offices (welch,2009). Furthermore it will allow the company to take an effective approach to their decision making process. * Lastly Tesla has gained a large amount of investors from top well-known companies such as Google, and through the successful strategic partnership it built with companies such as Toyota Motors, Panasonic and Daimler (Tesla Motors, 2014) which in both parties brings mutual benefits therefore allowing them to share their expertise in technologies and producti on processing advancement.4.3 Weakness * The company is weak in some aspects such as when the company only sells electric vehicles leading to some people who are sceptical to electric cars hence to solve the issue Tesla needs to build stores globally where people can visit and understand why tesla is a start to a bigger and greater future. * Another aspect is that tesla has a restricted size, amount, or to an extent manufacturing capacity just having their factory in Fremont, California which may result in failing to meet its rising customer demands in the future, mainly when they are trying to develop and expand their plans to places such as Asia and Europe. * Lastly Tesla faces a limited operating history where the company is just ten years old which results in the lack of brand recognition henc... Strategic Marketing Tesla Motors Inc. Research Paper - 4125 Words Strategic Marketing: Tesla Motors Inc. (Research Paper Sample) Content: Strategic Marketing: Tesla Motors Inc.By Studentà ¢Ã¢â€š ¬s NameCourseInstructorInstitutionDateStrategic MarketingUGB335Tesla Motors Inc. Strategic Marketing Analysis and Marketing StrategyPart A1.0 Purpose of the reportThe auto manufacturing market is very competitive, especially for alternative fuel vehicles that has become more popular with the rise of environmental concerns. This report will elaborate the electric vehicle manufacturing company Tesla Motors, and how it can manage the extreme competition from large and premium manufactures.An auto manufacturing industry is a challenging and competitive market mainly for those who are involved with alternative fuel vehicles which have become a trend especially with the increasing environmental factors and concerns. This report is designed to assist Tesla Motors in developing an effective marketing strategy to enhance its success. A market analysis is used to focus on key issues affecting the industry and theoretical tools and frame work which are related to the module with detailed quotes, stats, graphs, and tables included.2.0 Brief IntroductionTesla Motors Inc. is one out of a few known companies that creates, manufactures and sells electric cars and vehicle powertrain machineries. The name Tesla comes from an inventor, futurist, electrical engineer and mechanical engineer who was mostly known for his contributions to design of a modern altering current (AC) electricity supply system Nikola Tesla (Laplante, 1999).The company first got global attention and recognition when they produced the Tesla Roadster which therefore was the first known electric sport car. The company later than produced other vehicle such as the model S which was a complete electric luxury sedan and the Models 3 and X similarly. (Teslamotors, 2014).Tesla Motors is not only known to manufacture vehicle, they also markets electric powertrain components such as lithium-ion battery packs to automakers such as Toyota and Daim ler (Alttransport, 2010).CEO, Elon Musk who is one of the founders of the company has mentioned that he sees Tesla as an independent automaker (Howell, 2014), which therefore plans on offering their electric vehicles for a price that would be affordable to an average customer (Young, 2014).3.0 A market analysis addressing key contextual, environmental issues and trends affecting industry currently and in the future (predictions)The idea behind a market analysis is to find out the attraction of a market and to understand the trends and threats as this leads to the strengths and weakness of a company (Gurun, 2014).According to David A. Aaker he outlined some of the following aspects of a market analysis hence will be presented as stated: * Market share (currently and in the future) * Market trends * Distribution channels3.1 The market size and its future potentialMarket size is the measurement of the total volume of a particular market therefore a market size can be assessed by presen t sales and future sales if the use of the product were stretched (Gurun, 2014). For Tesla they are the only company that sells electric luxury battery vehicles therefore as the market of Tesla expands it will take share out of the market. Moreover to spend more than $60,000 on a car, globally they are only so many people who could do that. This is a sub-segment of the amount of population globally that will prioritize the electric cars and the companyà ¢Ã¢â€š ¬s brand equity to decide to purchase a tesla (Lowry, 2014).Globally, around 37 million vehicles are likely to be sold in 2014. Mainly in the U.S. (TSLA's primary market), approximately 15.3 million units were predicted to be sold in 2014. General Motors (NYSE:GM) have about 18% market share in the U.S. (2.7mm units), followed by Ford (NYSE:F) at 15%, Chrysler (FIATY) at 12.8%, Honda (NYSE:HMC) at 10.1%.Source: Wall Street published research reports.As stated by the company's Q413 earnings release on February 19, 2014, Tesl a expected to deliver 35,000 units in 2014, which could then represent approximately 0.2% of the U.S. market share (Fu, 2014). Lastly, the company Tesla is not easy to peg by basing its sales on lesser grouping (Lowry, 2014).3.2 Market trendsWhen a market changes it is a crucial period because ità ¢Ã¢â€š ¬s often the lead to a new opportunity or threat to a company (Gurun, 2014). Related trends are industry dependent such examples are when there is a change in price sensitivity and the level of emphasis on a service and so forth.3.2.1 Price sensitivityAccording to Tesla, during the first of August they slowly increased their price for many of the options for the Model S by selling their product separately through the features that were packaged together. Including other changes were à ¢Ã¢â€š ¬Ã‹Å"à ¢Ã¢â€š ¬Tech Packageà ¢Ã¢â€š ¬Ãƒ ¢Ã¢â€š ¬ which used to be $3,750 that was then lowered to $3,500. Therefore Tesla vehicle Obeche Wood Gloss Decore that was before included has turne d out to be a $650 option, as a result to the changes it has increased the overall price of the model S.Tesla may have increased the prices of the features because its aim is to firm the cost of parts and labor installation on their factory (Teslamotors, 2014).3.2.2 Level of emphasis on a service * Tesla Service Centers is like any auto shop à ¢Ã¢â€š ¬ they make sure that the surroundings are clean * Tesla Services are more than a once-a-year check-up. * Tesla uses cutting-edge software to control Model S vehicle functionality. * In North America, a one-year (or 12,500-mile) service plan would costs $600. This price covers the customerà ¢Ã¢â€š ¬s annual inspection and all wear and tear parts, excluding tires. This plan is paid for at the time of your annual (or 12,500-mile) inspection.Finally their goal is look after the customerà ¢Ã¢â€š ¬s car in such a way that is different and unique from other businesses therefore the Model S being the first vehicle to get improved and better the longer the customers have it (de Vries, 2014).3.3 Distribution ChannelsTesla manufacturer is located in the United States however Tesla has a different approach in the way they run their distribution channels. The fact that tesla is a recent new carmaker, they donà ¢Ã¢â€š ¬t have the chance to actually inform potential customer of their vehicles such as the Model S by positioning in a typical auto dealer locations.For this reason Tesla positioned their stores and gallery locations in high foot traffic and high visibility venue retails such as malls and other areas where people would regularly visit and shop (Teslamotors, 2014)Tesla has 31 worl-wide locations, in which are mostly located in the U.S differing from conventional dealerships. In some aspects they seem to be modeling their business going for a look such as the popular Apples stores therefore to obey the local laws which prohibits manufacturers to selling directly to customers. That being said Tesla showrooms are not accepting any orders for cars. However, employees from those showrooms are directing potential buyers to the companyà ¢Ã¢â€š ¬s website where the purchaser could order the vehicle they desire directly from the company, where in this case it is not prohibited by the state laws.Lastly Tesla predicts that all of its retail showrooms wonà ¢Ã¢â€š ¬t be found being dealerships under the applicable laws. (Anon, 2014)4.0 A situational analysis assessing Teslaà ¢Ã¢â€š ¬s competitiveness in its market4.1 SWOT AnalysisThe SWOT analysis is a type of situational analysis that points out Teslaà ¢Ã¢â€š ¬s key competitiveness in its market from the external environment and strategic abilities of a company that has an impact on strategy development (Johnson et al., 2008).Moreover, it will be useful in creating strategic options and future courses of action (Thompson and Martin, 2005).4.2 Strengths * Tesla Motors has various strengths hence has led it to be ahead of other organization in the sam e automotive industry. Outsourcing the secondary components will help to maintain and keep low cost and put effort mainly on technological advancement (Welsh, 2009). This will also put a firm research on development department, which will create a great productivity battery system and electric powertrain (Tesla Motors, 2010). * The company functions by a system known as lean management system hence all employers are tied up to work together in a fairly small and efficient environment such as well-organized offices (welch,2009). Furthermore it will allow the company to take an effective approach to their decision making process. * Lastly Tesla has gained a large amount of investors from top well-known companies such as Google, and through the successful strategic partnership it built with companies such as Toyota Motors, Panasonic and Daimler (Tesla Motors, 2014) which in both parties brings mutual benefits therefore allowing them to share their expertise in technologies and producti on processing advancement.4.3 Weakness * The company is weak in some aspects such as when the company only sells electric vehicles leading to some people who are sceptical to electric cars hence to solve the issue Tesla needs to build stores globally where people can visit and understand why tesla is a start to a bigger and greater future. * Another aspect is that tesla has a restricted size, amount, or to an extent manufacturing capacity just having their factory in Fremont, California which may result in failing to meet its rising customer demands in the future, mainly when they are trying to develop and expand their plans to places such as Asia and Europe. * Lastly Tesla faces a limited operating history where the company is just ten years old which results in the lack of brand recognition henc...

Adverbio o Adjetivo Which Should You Use

Like in English, Spanish relies on the use of adjectives (adjetivos) and adverbs (adverbios) to describe nouns, verbs and other adjectives and adverbs, but knowing which one to use can be tricky. Fortunately, these parts of speech are the same in both English and Spanish, so whether youre learning Spanish as an Alternative Language (SAL) or learning your first language, following common rules will help you achieve grammatical accuracy. Adjectives are always used to describe nouns and adverbs are always used to describe verbs, adjectives or other adverbs — but sentence structure and placement in Spanish can be a bit tricky. Check out the examples in the sections below for a better understanding of proper Spanish grammar. Adjectives Describe Nouns In Spanish, adjetivos can be used to describe a person place or thing, and are most often found immediately before the noun. For example, the sentence Tom is an excellent singer / Tom es un excelente cantante, the adjective excellent/excelente describes the noun singer/cantante. Adjectives are also used in simple sentences with the verb to be, and in this case, the adjective describes the subject of the sentence. Such is the case in the following examples: Jack is happy / Jack es feliz — happy/feliz describe Jack.Peter was very tired / Peter estaba muy cansado — tired/cansado  describe Peter.Mary will be excited / Mary   estarà ¡ emocionada — excited/emocionada  describe Mary. Its important to note in the above examples that the modifier describing tired and excited — very — are in fact adverbs.   Adverbs Modify Verbs, Adjectives and Other Adverbs In English, adverbs are easily recognized as they end in -ly — with a few exceptions — and oftentimes appear next to the verbs, adjectives, or other adverbs they are  describing. These words often appear as adjectives when they drop the -ly —  such is the case with the adverb carefully and the adjective careful or the adverb quickly and the adjective quick; however, in Spanish adverbs typically end with the letters -mente such as Cuidadosamente and rà ¡pidamente for carefully and quickly. Additionally, adverbs are usually used at the end of a sentence to modify the verb: Jack drove carelessly / Jack condujo descuidadamente.Tom played the match intelligently / Tom jugà ³ el partido con inteligencia.Paul talks incessantly / Paul habla incesantemente. Oftentimes, youll naturally use the right part of speech when forming Spanish sentences, but be careful not to use adjectives that share root words of adverbs interchangeably.

Watergate - 722 Words

The story of Watergate is both historically and politically interesting. It began to occur from the Pentagon Papers, in which Daniel Ellsberg handed over to the press. The Pentagon Papers contained secret documents outlining the history of U.S. involvement in Vietnam (p.848).These secret documents would bring to light the deception of the the morning of June 17, 1972, at 2:30 a.m. 5 burglars were arrested inside the office of the Democratic National Committee, located inside of the Watergate building in Washington, D.C.. Being connected to President Richard Nixon’s reelection campaign, and they had been caught while attempting to wiretap phones and steal secret documents. It was not immediately clear that the burglars were connected to the†¦show more content†¦In May 1972, as evidence would later show, members of Nixon’s Committee to Re-Elect the President (known derisively as CREEP) broke into the Democratic National Committee’s Watergate headquarters, stole copies of top-secret documents and bugged the office’s phones. It later came to light that Nixon was not being truthful. A few days after the break-in, for instance, he arranged to provide hundreds of thousands of dollars in â€Å"hush money† to the burglars. Then, he and his aides hatched a plan to instruct the Central Intelligence Agency (CIA) to impede the FBI’s investigation of the crime. This was a more serious crime than the break-in: It was an abuse of presidential power and a deliberate obstruction of justice. Meanwhile, seven conspirators were indicted on charges related to the Watergate affair. At the urging of Nixon’s aides, five pleaded guilty and avoided trial; the other two were convicted in January 1973. Early in 1974, the cover-up began to fall apart. On March 1, a grand jury appointed by a new special prosecutor indicted seven of Nixon’s former aides on various charges related to the Watergate affair. The jury, unsure if they could indict a sitting president, called Nixon an â€Å"unindicted co-conspirator.† In July, the Supreme Court ordered Nixon to turn over the tapes. While the president dragged his feet, the House of Representatives voted to impeach him for obstruction of justice, abuse of power, criminal cover-upShow MoreRelatedWatergate Of The Watergate Scandal1135 Words   |  5 PagesWatergate Scandal The Watergate Scandal happened almost 43 years ago; the event will never be forgotten. The Watergate scandal defined, perhaps for the first time, that a president of the United States could be portrayed as untrustworthy. 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Financial Analysis for ERM Electricity Limited- myassignmenthelp

Question: Discuss about theFinancial Analysis for ERM Electricity Limited. Answer: Cash conversion cycle (CCC) is the time taken to convert the investment tied up in inventory into cash. The cash conversion cycle for both the companies is as below: 2015 2016 EPW -7.8 days -5.02 days MCY -10.2 days -5.43 days (Morningstar, ERM Power Limited) We see that EPW has a negative cash conversion cycle for the years 2015 and 2016. This shows working capital efficiency as a negative cycle is desirable. The company has more days of payables outstanding than the combined days of inventory and receivables outstanding. This means ERM is taking more time to pay its suppliers and it is giving a credit of lesser period and also its inventory is fast converting into sales. However, the cycle has increased from 2015 to 2016. This has been majorly on accounting of an increase in the receivables as the days outstanding receivables increased from 33 days to 43 days. The receivables have increased due to an increase in loan in both Australia and US. Mercury NZ Limiteds CCC is also negative for both the years because the days payables outstanding are more than the days inventory and receivables outstanding. However, the CCC has reduced in 2016 due to a higher increased inventory and receivables costs as compared to payables cost. There was an increase in inventory of Consumables stores to $31 million (2015:$22 million) and Meter stock to $14 million (2015: $22 million). The receivables were high due to a decrease in cash flow from sale of electricity and metering services by $20 million as compared to 2015. Capital Structure is the mix of debt and equity in the companys invested capital. The ratios used to measure the same are debt to equity ratio and debt ratio. 2015 2016 2015 2016 EPW MCY Debt to Equity ratio 76% 47% 35% 36% Debt ratio 65% 62% 46% 46% (Morningstar, Mercury NZ Limited) ERM has more of debt as compared to equity in 2015 and more equity than debt in 2016. The equity has increased in 2016 as a result of the cash flow hedge reserve recognised as part of equity. The company uses cash flow hedges to hedge price exposures in electricity industry in Australia (Limited E. P., 2016) Also there has been a reduction in debt by 8% as the company has repaid part of its long term debt. The debt ratio has remained more or less stable in both the years. A debt ratio of 65% means that the company has more liabilities than assets and hence can be considered as risky. The ratio is high as compared to industry average of 45% which means the company has more liabilities than assets. Mercury has a lower debt ratio and equity to debt ratio. With regards to the equity to debt ratio, the company has higher equity than debt and the ratio has remained more or less the same in both the years. The debt ratio has also remained stable at 45% in both years and is as per the industry average. The company has more assets as compared to liabilities and the assets have further increased in 2016 by $27 million due to revaluation of the generation assets a capital expenditure of $72 million. This shows the company is less risky as compared to ERM. DuPont analysis is an analysis of the profitability of a company focusing on the return available to shareholders. The ratio for both companies is as follow: 2015 2016 EPW 29% 11% MCY 4% 5% ERM has a high return on equity in both the years but the return has decreased in 2016. This is as a result of the fall in profit margins. The net income has decreased by 54% due to fall in the revenue, increased operating costs in the form of depreciation and finance costs resulting from the operations in the US. Also there was a reduction in the interest income. The total asset turnover increased marginally as the increase in revenue was higher than the increase in total assets. For every dollar invested in assets, the company is able to generate $2 revenue. The company is well leveraged with capital structure comprising more debt than equity. Mercury has lower return on equity; however, the return has increased by 1% in 2016. This is because of an increase in the profit margin. The profit margin is higher than ERM. The companys profits increased as a result of very high geothermal generation at 2830 Wh. And benefit of replacement of Turbine at Nga Awa Purua. Also there were high impairment costs in 2015 resulting in lower profits. The total assets turnover is below 1 for both years and the financial leverage has also remained at a constant level of 1.85 for both the years. Even though the electricity sales have increased, the assets have also increased in the same proportion. As far as return on equity is concerned, ERM has a better profitability with higher returns for equity shareholders. The returns on equity are high for ERM because they have low equity and more debt in their balance sheet and also they are efficiently utilizing their assets in generating sales. ERM has very low profit margin as compared to Mercury and hence would require working on its profitability to further improve its profitability. The company can do so by increasing their sales and also working on reducing their operating costs. On the other hand, Mercury has an impressive profit margin but they have a very poor total assets turnover. The company has large amount of assets at its disposal but it is not using it efficiently to generate sales. Thus, Mercury should work towards better asset utilisation. The price earnings ratio and market to book ratios are measures of the investment performance of a company. The ratios for both the companies are as below: 2015 2016 2015 2016 EPW MCY Price earnings ratio 0.06 0.04 0.27 0.25 Market to book ratio 1.76 0.44 1.18 1.28 The price earnings ratio for ERM is very low in both the years because the share price is low as compared to the companys earnings. The ratio has decreased in 2016 as a result of a decrease in the share price resulting from decreased EPS. The fall in share price is more than the fall in EPS. The market to book ratio has decreased in 2016. This is because the market value has decreased and book value has decreased. The companys market value has decreased as the price of share has decreased. The share price has fallen due to falling earnings on account of Oakey power station and lower margins as competition increases (Newman, 2016). The company has good future prospects as the price earnings ratio is very low. A decrease in market to book value means that investors do not view the company as profitable The price earnings ratio of Mercury has remained almost stable for the two years at 0.26 as both the EPS and the share price have increased but EPS has increased at a higher rate. The market to book ratio has increased marginally in 2016 due to an increase in the market value. The market value has increased as a result of an increase in the share price. The book value has also increased but at a lower rate. Even Mercury has a low price earnings ratio which means the future prospects are good. Also an increase in market to book value means the investors view the company with good profitability. Based on the analysis of the capital structure ratios and the profitability ratios, it is recommended that a potential investor should invest in shares of Mercury NZ Limited and should refrain from buying or sell the shares of ERM Electricity Limited. This is because Mercury has a debt ratio of 45% which is as per industry standards and also shows the stability of the company, whereas ERM has debt ratio of more than 50% which shows high amount of leverage and this may pose threat to the stability of the company. Mercury uses its strong cash balance to fund its capital expenditures whereas ERM relies heavily on debt. Though the return on equity is higher for ERM as per DuPont analysis but that is because of the high amount of leverage. The profitability of ERM is very low at average 3% whereas the profitability of Mercury is good at approx.10%. Mercury is currently performing poorly as far as the utilisation of its assets for revenue generation is concerned, however the company is in the process of selling off non -core land to improve profitability and the capital investments being made by the company currently are to improve operational efficiency and increase the reliability of the key stations under its technological advancement program (Limited M. N., 2016)Moreover the electricity market of New Zealand is relatively healthy with increasing demands whereas the Australian electricity market has is highly competitive leading to lower margins. The future prospects of Mercury look better than ERM and hence it is recommended to invest in Mercury. Bibliography Limited, E. P. (2016). ERM Power Limited, Annual Financial Report for the Year Ended 30 June 2016. Australia: ERM Power Limited. Limited, M. N. (2016). 2016 Annual Report, Mercury. New Zealand: Mercury NZ Limited. Morningstar. (n.d.). ERM Power Limited. Retrieved September 28, 2017, from Morningstar DatAnalysis Premium: https://datanalysis.morningstar.com.au.ezproxy.uws.edu.au/ftl/company/profitloss?ASXCode=EPWrt=Asy=2007-01-01ey=2017-12-31xtm-licensee=datpremium Morningstar. (n.d.). Mercury NZ Limited. Retrieved September 28, 2017, from Morningstar DatAnalysis Premium: https://datanalysis.morningstar.com.au.ezproxy.uws.edu.au/af/company/corpdetails?ASXCode=MCY-NZxtm-licensee=datpremium Newman, R. (2016, June 20). CRASH! Heres why the ERM Power Ltd share price crashed 22% today. Retrieved September 27, 2017, from The Motley Fool: https://www.fool.com.au/2016/06/20/crash-heres-why-the-erm-power-ltd-share-price-crashed-22-today/