The Morgan Stanley Company's Investment Decisions - Thesis Example

Business Research Methods Table of Contents Introduction…………………………………………………………………………………….2 Industry/ Company overview…………………………………………………………………...2 An Assessment Of Past (Actual) and Future (Projected) Performance………………………....3 Identify Some Of The Underlying Business/ Industry Drivers………………………………....4 Valuation Levels (Current Vs Historic and Projected)…………………………………………5 Environmental Considerations……………………………………………………………….....6 Ethical Considerations………………………………………………………………………......7 Management Team Analysis………………………………………………………………..…...7 Profit and Loss Performance………………………………………………………………..…...8 Introduction The Morgan Stanley Company has investments in over forty two countries across the globe. The Company is a worldwide financial institution that is headquartered in Midtown Manhattan, New York. The thesis is written on behalf of the company’s management for the purpose that they make the right investment decisions as most economies across the globe are experiencing slow growth after the recent monetary recession. Industry/ Company Overview The Morgan Stanley investments company offers facilities in the management of worldwide wealth, offering of securities internationally along with management services for global investments by other companies (Venzin, 9). This therefore raises the question whether the investments company should expand its activities globally to include issues such as risk management, at a time that the global economy is recovering from the recent fiscal recession and experiencing slow growths? It was formed in the year 1935 as a response to the Glass-Steagall law, which required that commercial along with trade in investment banking is spilt. It dwells in serving varied conglomerates, governments, economic institutions along with affluent individuals (Venzin, 15). The company operates in around forty two countries across the world and has over a thousand and three hundred offices around the globe. In their recent reports, the company was estimated to be managing or supervising assets owned by other companies that were worth over 287 American dollars. During their first year of operation, the company operated using an initial market share that was estimated at 24% of public offerings along with private placements. The company has not had a smooth transition throughout the years since it suffered a crisis in its management, which resulted in the company losing many of their staff members and the sacking of their senior chief officers about three months after (Venzin, 19). An Assessment Of Past (Actual) and Future (Projected) Performance Due to the introduction of the Glass-Steagall legislation in the year 1935, the Morgan Stanley Corporation was barred from investing in both the commercial along with the investment banking industries. The Corporation opted to indulge in the commercial sector thereby making some of its prominent members to leave the J.P Morgan Company in order to form the Morgan Stanley Corporation (Venzin, 39). The Corporation in turn began its operations in the month of September achieving a market share worth 24%, which was estimated at over a billion dollars of the total market in its public offerings. They involved themselves in distributing over a hundred million dollars in the form of debentures to several companies within the steel industry. The organization underwent several reforms to facilitate the performance of more operations in their business of providing securities. It additionally won several major contracts such as the financing of the American railway system in the year 1941 and the provision of steel to the majority of the American industries (Venzin, 41). During the 1950 to 1990 period, the Corporation issued several debts to companies such as AT&T that were worth over 250 million American dollars. It also offered stocks on behalf of IBM that were worth over 230 American dollars in addition to debts that were worth over 300 million dollars to the General Motors organization (Venzin, 65). It is during this period that the Corporation started expanding its operations into the European markets while acquiring ownership of companies such as the Brooks, Harvey & Co. firms. They were also actively establishing their presence in the real estate trade. During the 1970’s, the company finally expanded their market into the Asian region by opening up branches in Tokyo, Japan. As the corporation expanded, it also increased its departments and scope of activities with their managements handling issues that ranged from merging along with acquisitions and the management of private assets (Venzin, 107). By the year 1990, the Corporation had expanded its activities to cover countries along with cities such as Sydney, Frankfurt and Hong Kong. Currently, the corporation has increased its pace in acquiring assets across the globe with companies such as the van kampen’s American capital being acquired in the year 1996 (Venzin, 118). In the following years, the Corporation also made mergers with other organizations such as the Dean Witter Reynolds’s Company, which was eventually swallowed up by the corporation. They are currently investing greatly in technologies within the investment-banking sector and serves as a leading underwriter for companies such as Cisco, Salesforce, Google and Groupon. However, the Corporation has received additional money worth 5 billion American dollars from China’s investment corporations (Venzin, 126). This was in exchange for securities so that they could handle the crisis they are experiencing in their mortgages. The Morgan Stanley Corporation has experienced a drop in the prices of the shares by 42%. In the year 2008, the Corporation became a traditional company involved in banking activities that fell under the regulations of their country’s federal reserve (Venzin, 133). Identify Some Of The Underlying Business/ Industry Drivers Its success has largely come due to the high demand for the capital they offer and their monetary advisory services in the fields of real estates, corporate lending, mergers, and acquisitions along with the restructurings required to be carried out within several companies. The corporation has also increased its profitability by providing their services in monetary and asset planning to rich individual’s across the globe (Venzin, 166). They have reportedly had a 12% increase in their annual pre-tax incomes. They also have diversified their activities in their global asset management facilities by providing their services in equity, alternative investments and private equities to various institutions like AT & T. The Corporation additionally providers its services in the management of assets to investment investors globally, organizations that are not profit making, government agencies along with several insurance companies (Venzin, 168). The market operations of the corporation have been adversely affected by the fluctuations being currently experienced within the financial markets and many other economic factors such as slow economic growths in many countries across the globe (Venzin, 177). Due to its sound financial performance, the company has been able to pay several claims that have been brought against them thereby implying that they have avoided going bankrupt. For instance, the Corporation has been able to pay up a total of 125 million dollars that was owed for the assistance they provided to research that was intentionally misleading (Venzin, 186). They have faced many lawsuits over the years but have still been able to continue operating profitably. This can mainly be attributed to their ability to employ very many qualified personnel around their branches across the globe (Venzin, 196). Their staffs experience and knowledge have enabled the Corporation to come up with policies that will help in improving their profitability along with sustainability within their market. In addition, the demand for their products and services has continuously increased with their supplies being availed readily through their compliance to the Federal Reserve’s regulations (Venzin, 201). Valuation Levels (Current Vs Historic and Projected) The Corporation initially controlled just over a billion dollars in private holdings during its first year since it was created. However, the Corporations profitability has increased over the years with the Corporation reporting an increase in their revenues for the year 2011 to over six billion during the first quarter of the year (Venzin, 231). They have additionally witnessed a drop in the value of their earnings for every share they got by -$0.15 with their revenues decreasing by -42.29% in the same year. In addition their operating incomes decreased by -8.00% along with their net margins decline by -4.38% (Venzin, 233). This is about four years after the recession took place and the Corporation is still experiencing a drop in its performance while the value of revenue collected from their assets around their globe has dropped by 0.51% in 2011. These figures imply that the Corporation should invest carefully in the future to avoid incurring losses which could hamper their overall performances in the various sectors they deal in (Venzin, 241). The Corporation’s consolidated net incomes have decreased in the past from over seven billion dollars to about one billion dollars. In addition, their earnings for every of their shares have dropped from 6.96 in the previous decade to below 1.8 in the year 2011. The Corporation should use efficient planning methods to ensure that their investments efforts in the near future will be productive (Venzin, 256). The impacts of the financial along with market downturn have extended to the credit, investment, securities along with loans departments. These effects have brought about a monetary crisis within the organization (Venzin, 265). Environmental Considerations The Corporation should consider various environmental conditions that may necessitate or hamper their investment efforts. This could include issues like natural disasters that could range from flooding, earthquakes, hurricanes and other serious forms of disasters such as disease outbreaks within the regions they are operating in. The Morgan Stanley Corporation has entered into various agreements with organizations like the AT & T, Microsoft and other leading providers of advanced technologies to equip them with the latest technology (Venzin, 271). The technologies adopted have greatly assisted the company in the evacuation of their staff members from disastrous areas (Venzin, 289). The Corporation also has to consider the impacts of their investment activities to the environment. They have been sued in the past for financing researches that were misleading and this could greatly affect their reputation and eventually their profitability and expansion ability (Venzin, 299). Ethical Considerations In their investment activities the Morgan Stanley Corporation has previously been overlooking ethics in their investment activities. This has resulted in their managements being sued in several lawsuits across the years due to the harm their activities have brought to the consumers along with neighbors to their properties across the globe (Venzin, 303). The Corporation has incurred big losses due to the settlements they have had to pay as settlement to the complainants. In future, the Corporation should ensure that their activities do not bring harm to the users of their commodities along with services within the society. This move will in turn play a vital role in ensuring that they do not incur large expenses in settling debts owed to complainant matters (Venzin, 307). Management Team Analysis The Corporations has previously faced a crisis with many employees leaving their work due to their inadequate financial satisfaction. The Corporations Chief Officer, Mr. Phillip Purcell, in the month of March 2005, was fired after several of their staff members around the globe quit their jobs (Venzin, 9). The management team within the Corporation has since undergone a major overhaul which is focused on producing positive results on the institutions investments (Venzin, 325). Profit and Loss Performance Morgan Stanley has remained profitable in the past several decades though their net incomes have continuously declined in the recent years. Their profitability levels have had a 5.67% drop within the past decade. They have additionally experienced drops in their net margins, operational incomes and net profits (Venzin, 111). Conclusion This therefore implies that the Morgan Stanley Corporation should invest their capital in productive activities since the fluctuations being experienced in the financial markets could adversely affect their operations and profitability levels (Venzin, 329). Work Cited Venzin, Markus. Building an International Financial Services Firm: How to Design and Execute Cross Border Strategies, 2009. Oxford: Oxford University Press. Read More