The last decades has meant a distinctive shift in the world of business. ABB Group has
followed the ongoing trend of globalisation. It has become a truly Multinational Enterprise
(MNE); showing in its structure and way of managing operations that it has adopted to the
new conditions of global markets and competition.
"ABB is in the business of creating value – for our customers, shareholders,
employees and the communities in which we operate."1
Could such a mission be pursued successfully? Does the international diversification of the
company help to achieve its goals? All value creation is essentially financial. This term
paper is dedicated to analysis the financials of the ABB Group. My purpose is to see
whether the financial position matches the expressed value creating goals. I chose the time
period from 1998-2001 for my analysis. Unfortunately the Annual Report 2001 was
published merely days before the dead line of this term paper. But nevertheless I tried to
include the latest figures in my analysis.
1 ABB Annual Report (2000), p.22
Table of Contents
- Introduction
- ABB - Business Operations
- Overview
- Facts and Figures
- Corporate Governance
- Owners and Share-structure
- Governance system
- Further Implications
- Financial Goals
- Targets
- Figures and Financial ratios
- Capital Structure
- Dividend Policy
- Self-Sustainable Goal System
- Final Comments
- References
Objectives and Key Themes
This term paper analyzes the financial performance of ABB Group from 1998-2001, examining whether its financial position aligns with its stated value-creation goals. The analysis explores ABB's evolution as a multinational enterprise (MNE) and the implications of its global operations and diversified ownership structure.
- ABB's financial performance and its alignment with stated goals.
- The impact of ABB's global diversification on its financial position.
- The implications of ABB's dispersed ownership structure and corporate governance.
- Analysis of ABB's financial ratios and capital structure.
- Evaluation of ABB's strategies for value creation.
Chapter Summaries
Introduction: This introductory chapter sets the stage for the analysis of ABB's financial performance. It highlights the significant shift in the business world towards globalization and positions ABB as a prime example of a multinational enterprise (MNE) that has adapted to the changing dynamics of global markets and competition. The author states the paper's objective: to analyze ABB's financials to determine if its financial position matches its stated value-creation goals, using data from 1998-2001. The limitations of using a recently published 2001 annual report are also acknowledged.
ABB - Business Operations: This section provides an overview of ABB's business operations, describing it as a provider of technologically advanced products and systems for industrial and commercial customers. It details ABB's structure, comprising five industrial businesses and a financial services segment, its global presence spanning over 100 countries, and its significant employee count. The chapter then delves into facts and figures, presenting data on revenue distribution across geographical regions and business segments. These figures illustrate ABB's diversification across markets and industries, highlighting Europe as its primary market and Automation and Building Technologies as its largest divisions. The customer-centric approach driving ABB's organizational structure is also mentioned.
Corporate Governance: This chapter explores ABB's corporate governance structure, starting with its ownership and share structure. It notes the large number of shareholders and the dispersed ownership, with no single shareholder controlling more than 5% of the voting rights. The cross-listing of ABB's shares on multiple stock exchanges is discussed as a strategy to access more liquid markets and potentially reduce the cost of capital. The chapter also examines ABB's governance system, noting its Swiss headquarters and the implied transition towards an Anglo-Saxon model. This transition is supported by the shift to a single-class share structure and the adoption of higher accounting standards for increased transparency. The discussion further touches upon the implications of dispersed ownership, including increased agency costs and the collective action problem. Mitigating these problems involves increased monitoring, improved accounting, cross-listing, and incentivizing managers through stock options.
Keywords
ABB, financial analysis, multinational enterprise (MNE), corporate governance, global diversification, dispersed ownership, agency costs, financial ratios, value creation, capital structure, shareholder value.
ABB Group Financial Performance Analysis: Frequently Asked Questions (FAQ)
What is the main focus of this term paper?
This term paper analyzes the financial performance of the ABB Group from 1998-2001, examining whether its financial position aligns with its stated value-creation goals. It explores ABB's evolution as a multinational enterprise (MNE) and the implications of its global operations and diversified ownership structure.
What are the key themes explored in the paper?
Key themes include ABB's financial performance and its alignment with stated goals; the impact of ABB's global diversification on its financial position; the implications of ABB's dispersed ownership structure and corporate governance; analysis of ABB's financial ratios and capital structure; and evaluation of ABB's strategies for value creation.
What is covered in the "ABB - Business Operations" chapter?
This chapter provides an overview of ABB's business operations, describing its structure, global presence, employee count, and revenue distribution across geographical regions and business segments. It highlights ABB's diversification across markets and industries, showing Europe as its primary market and Automation and Building Technologies as its largest divisions.
What does the "Corporate Governance" chapter discuss?
This chapter explores ABB's corporate governance structure, including its ownership and share structure, the dispersed ownership, cross-listing of shares on multiple stock exchanges, and its governance system. It discusses the implications of dispersed ownership, such as agency costs and the collective action problem, and measures to mitigate these issues.
What time period does the financial analysis cover?
The financial analysis in this paper uses data from 1998 to 2001.
What are the limitations of the study acknowledged in the text?
The author acknowledges the limitations of using a recently published 2001 annual report for the analysis.
What is the structure of the document provided?
The document includes a table of contents, objectives and key themes, chapter summaries, and keywords. It provides a comprehensive preview of the full term paper.
What are some of the key financial aspects analyzed?
Key financial aspects analyzed include financial ratios, capital structure, and dividend policy. The analysis aims to assess ABB's financial health and its alignment with its stated goals.
What is the significance of ABB's global diversification?
The paper examines how ABB's global diversification impacts its financial position, considering the benefits and challenges associated with operating in multiple international markets.
What is the role of corporate governance in ABB's financial performance?
The paper investigates the relationship between ABB's corporate governance structure (including its dispersed ownership) and its financial performance, examining the impact of agency costs and related issues.
- Citation du texte
- Stephan Wolter (Auteur), 2002, ABB - a financial analysis, Munich, GRIN Verlag, https://www.grin.com/document/16036
