Brushing up HBR fundamentals will provide a strong base for investigative reading. Often readers scan through the business case study without having a clear map in mind. This leads to unstructured learning process resulting in missed details and at worse wrong conclusions. Reading up the HBR fundamentals helps in sketching out business case study analysis and solution roadmap even before you start reading the case study.
Because, the Pecom management team has huge experience of the international market. So the company would be able to benefit from that expertise, and expand in the international market.
Furthermore, it can be determined that Petrobras is controlled by the government. But, because the current government is business oriented, and has allowed Petrobras to work independently in the market.
On the other hand, there are some complications that company might face. Since, general elections are held within next few months.
So, the potential candidate for the presidential election is supposed to increase the complications for the company. It is because he would not allow company to work independently, and might drive the decision making power from the managers, and might leave on the some selected board of directors.
A public limited company is listed on the stock exchange, and is partially owned by the shareholders who regulate the company by electing the board of directors.
This shows that company is more independent in making decisions, and that it would have much more opportunity to expand in the market. On the other hand, listing in the international stock exchange market would have enabled company to acquire fund from the shareholders, expand in market and build trust among the existing shareholders.
Weighted average cost of capital WACC is minimum required rate of return that investors require from the company. However, there are many factors that are considered while calculating the cost of capital. Such as the cost of debt, cost of equity, and the tax rate.
But in the given scenario sovereign risk is added factor in the calculations. Furthermore, the company that is being acquired is in the Argentina, and has sovereign risk of bps means around 7.
Therefore, by adjusting the sovereign risk in the calculations of the cost of capital for the company is If the company would increase the share valuation of the government, then cost of capital would be decreased from the given WACC. Because the profit is not motive of the government, Since the government does not require profit, but it emphasize over the going concern of the company to ensure the public interest by any means.
Consequently the rate of return required by the common shareholders than the government would be relatively high. On the other hand, the company would be more confident in its decisions, since government would be supporting it by all means.
Furthermore, the sustained growth rate was calculated by multiplying the retention ratio and return on the equity. Consequently, through this method we approached the terminal value of the company and the growth rate as well.The Brazilian oil company Petrobras is evaluating the acquisition of an Argentine oil company Perez Companc Group (Pecom).
The acquisition would increase Petrobras’ oil reserves and expand their interests outside of Brazil, an important step for the largest company in Brazil. Drilling South: Petrobras Evaluates Pecom Case Solution, The Brazilian oil company Petrobras is evaluating the acquisition of an Argentine oil company Perez Companc Group (Pecom).
The acquisition would increase P. Drilling South Petrobras Evaluates Pecom Case Study Help Analysis With Solution Online. Looking for help in writing case, then obviously you are at the right place.
CASE QUESTION 4 ANSWERS: • Cost of capital is a relevant factor in measuring the competitiveness of Petrobras • Such high cost of capital is not competitive compared to other competitors within the industry.
Drilling South: Petrobras Evaluates Pecom Case Solution, Drilling South: Petrobras Evaluates Pecom Case Solution Key Issues in Emerging Markets: If Petrobras is going to acquire Pecom, then the company would have. Drilling South: Petrobras Evaluates Pecom, Chinese Version is a Harvard Business (HBR) Case Study on Finance & Accounting, Fern Fort University provides HBR case study assignment help for just $ Our case solution is based on Case Study Method expertise & our global insights.