The Embry Investment Group: Recommendations to Acquire - Research Proposal Example

? CAE Inc: Recommendations to Acquire The paper deals with CAE Inc considering the Company as a potential object for investments for the Embry Investment Group (EIG). The report consists of an abstract, an executive summary, background information about the company, an assessment of the company’s future performance, a description of the analysis methodology, supporting details and data, and references. CAE is positioned as a perspective object for investments. The Company has ensured its safety, efficiency, world’s recognition and intentions to go global in the fields of aircraft industry, healthcare industry and mining. Therefore, the EIG has a triple perspective of making reliable investments and receiving essential bonuses. Key words: aviation, aircraft industry, simulation, modeling, investments. Executive summary Global economic growth can be reached in the world by a proper direction of potential investments. Air traffic and aircraft industry are two key factors influencing economic growth. A rapidly changing global economy depends much on aircraft industry. The productivity of different economies depends much on high quality of aircraft industry services and enhancement of global links internationally. Therefore, Embry Investment Group (EIG) chose CAE Inc as a potential object for investments. The Company can be identified internationally due to essential contribution to aircraft industry services and products targeted on markets of both developed and developing countries. An evident progress of the CAE in aircraft industry, especially development of simulation and modeling, enabled the Company to go forward by expanding its products and services in the fields of healthcare and mining. Thus, the CAE is a global player, which is worth being invested. In the result of a fruitful cooperation of potential investors and the CAE, a global bridge of mutual understanding, economic growth and development can be erected. Background information CAE is one of the most well-known companies in the world, which provides simulation and modeling technologies and different training services in the field of the civil aviation industry, but it also provides much military aviation industry with its products and services. The company has thousands of employees around the world and training locations in more than 30 countries. So, this Company goes global. It evokes a vivid interest among the potential investors. It should be noted that in the fiscal 2012 year the Company had annual revenue of more than $1.8 billion (Financial Report, 2012). The international activities of the company are increasing at a full pace. Thus, for the international investors the fact that Company goes global plays a crucial role. There is no doubt that different industries try something new to gain benefits. So, the CAE is not an exception. Especially, in the modern global context it is evident that civil and military industries are very popular industries. The most famous products of the Company, which are full-flight simulators (FFSs) are popular around the world, because they enable aircraft performance under various environmental conditions. Moreover, the Company is very much interested in the development of healthcare and mining industries. It means that the Company is marked by the dynamic development and a variety of contexts for the potential investments are available. In accordance with the vision of the Company, it is open for providing the customers with different opportunities, because the contemporaries are operating in mission-critical environments and provide the most innovative products and service solutions improving safety and efficiency of operations. The Company goes global in the following directions: It provides the services for the civil market: e.g. national and international airlines, commercial airlines, helicopter operators etc. The Company is focused on the military market and its products in this field are interesting for the international governments, defense forces around the world, military equipment manufacturers. In the field of healthcare the Company provides healthcare centers with simulation equipment, provides necessary services required for the medical and nursing schools, paramedic organizations etc (Annual Report, 2012). Moreover, a current interest of the company in mining can be explained by the world’s interest in the field of mining, exploration companies etc. Basically, CAE has a firm position in the international market. This Company is not afraid of innovations and experiments. It is open for different alternatives and it is evident that the potential investors would gain huge benefits in the process of cooperation with the company. Long-term gains of CAE: assessment of the Company’s future A future performance of the Company can be prognosticated on the basis of current changes in it. Thus: “For the first six months of calendar 2012, passenger traffic increased by 6.5% compared to the first six months of calendar 2011, while freight-tonne-kilometres decreased by 2.1% over the same period” (Financial Report, 2012). Air travel has gained popularity recently and the world’s aviation is being developed at a full pace. Concerning management issues of the Company, it can be said that there is a large growing number of the companies, supporting air travel in the developing markets, such as China, Eastern Europe, the Indian sub-continent, the Middle East, South America and Southeast Asia (Annual Report, 2012). These emerging markets are interested in high air traffic and other different services. Therefore, CAE is surrounded by hundreds of companies, which are in a great need for their services. Two-thirds of the Company’s benefits depend on fleet training. CAE is mainly focused on efficient and technologically advanced aircraft platforms. It means that these conditions would enable the Company to drive the demand for different new types of simulators and training programs. Moreover, the modern airlines are in a great need for efficient aircraft services and products. Fuel costs are incredibly high for every company and CAE is on the way of development of some strategies or products reducing these costs. The latest technologies are being implemented by CAE to enhance performance of aircraft models to facilitate business travel and make it more comfortable. Moreover, the Company is able to provide with required production different customers from different countries. For example, the markets of developed and developing countries differ much, but CAE is able to satisfy their demands. Moreover, CAE ensures that its services and products are demanded around the world, because different pilots and technicians are required around the world. CAE provides pilots with a perfect opportunity to obtain simulation-based pilot certification training. Pilots around the world need the Multi-crew Pilot License (MPL) and simulation-based training is a perfect option to advance the process of pilot’s training (Annual Report, 2012). Therefore, the civil market of aviation requires services of CAE. For the potential investors it means that the Company will be able to grow and develop. Military market is interested in the services and products provided by CAE too. The Company underlines that it has “a unique, global position that provides balance and diversity across the world’s defense markets; a strong, experienced position on aircraft platforms that are expected to have long program lives; and simulation-based training provides considerable value as defense forces operate in a constrained budget environment yet still need to train and maintain a high state of readiness” (Annual Report 2012, p. 25). Therefore, for the potential investors there are different options and potential directions in the military sector of the company. Defense markets of both developed and developing countries are interested in products and services required for the safety of their markets. A special attention is paid for simulation-based training, which means that pilots around the world can find help in the services provided by CAE. The Middle East is a territory of a special interest for CAE. Navy plans in the countries are great and, as America says, it plans to essentially increase the percentage of simulation-based training for its pilots by 2020 (Financial Report, 2012). Global future of CAE The Company is looking forward to changing fiscal policies of different governments in the field of aviation industry. Some emerging markets are increasing their expenditures in defense and they are mainly interested in finding perfect opportunities of investments in aviation. Germany and UK are on the way of reducing their training requirements for future pilots and in such a way it may affect future business of CAE. Defense forces of different countries are interested in approved positions on different types of military platforms. Nevertheless, in accordance with recent researches and studies, it is planned to intensify simulation-based solutions to solve budget challenges of different defense operators. Military pilot training will supposedly increase from 50% in 2011 to 80% by 2021 (Annual Report, 2012). Investors should take into account explicit factors, influencing the policy of CAE. Thus, the most serious intensifiers of international interest in the products and services of the Company are the following ones: Governments and defense forces’ intentions to increase a demand for the use of modeling and simulation; an increased cost of live assets for training, leading to an increased use of simulation; warfare current conditions, which are requiring joint forces training and mission rehearsal (Aviation Economic Benefits, 2008). Moreover, it cannot be denied that defense forces all over the world are focused on increasing opportunities for the use of modeling and simulation. CAE confirms their strong positions and their potential contribution to development and implementation of simulation and modeling around the world in the following way: “For example, the U.S. Navy is procuring at least 10 P-8A simulators to train aircrews for its planned fleet of 117 P-8A maritime patrol aircraft. The cost of fuel, detrimental environmental impacts, and significant wear and tear on weapon systems and aircraft all point to greater use of simulation and synthetic training” (Annual Report 2012, p. 26). Thus, external conditions are favorable for successful development and implementation of products and services of CAE. It cannot be denied that different aircraft allies are created and a demand for simulation and modeling is growing. Healthcare market is another perspective field for cooperation with CAE. The Company is in a close cooperation with healthcare practitioners. Safety and efficiency of simulation in aircraft industry is one of the most important concerns for CAE. At the same time, the Company offers a wide range of products for medicine, such as patient simulators, surgical simulators, ultrasound simulators, learning applications/courseware and centre management systems (Annual Report 2012). CAE Healthcare is on the way of its high-speed development and it cannot be denied that interests of different medical schools, hospitals, defense forces and other entities are very much interested in this type of services. CAE Healthcare has located its offices in different countries around the world. Potential investors can be ensured in the importance of CAE Healthcare on the basis of the following statements: Popularity of patient simulators; A growing demand of minimally-invasive surgery; Growing healthcare costs; Shortages of service providers. Mining market Another sphere of interest for potential investors is mining market sector of CAE. The company cooperates with a large number of countries, providing them with services for open pit and conducting underground operations. The customers are interested in our production because of its safety and increased productivity. It is relevant for the investors to penetrate into the secret world of mining industry and find out current trends in the industry (Foreign Direct Investments in Aviation). Actually, the main attention is paid to using less energy in the process of mining. Analysis methodology Therefore, for the Embry Investment Group (EIG) it is relevant to collect more data and make a sound analysis of different aspects of the Company’s activities. SWOT Analysis Strengths: different fields of interests; a well-known international Company providing high-quality services and developing safe and reliable products for aircraft, healthcare and mining industries. Opportunities: to cooperate with the company, which goes global; to find potential partnership with different actors in the international market; increase profits and benefits once having made investments in healthcare and mining industries of CAE, which are less developed than aircraft industry. Weaknesses: the Company can have an opportunity to lose dominance in aircraft industry, while focusing more on healthcare and mining industries. Threats: reduction of defense services and military markets around the world; increased price for fuel and energy. Investors should be aware of the fact that a certain degree of risk always exists. So, it is impossible to say whether it is safe or not to make investments in CAE for sure. It is possible only to consider some opportunities of potentially beneficial investments, focusing on SWOT analysis. External factors and a constantly changing situation in the world should be also taken into account by investors. An essential shortage of pilots in military aircraft can be compensated by a growing demand for civilian aviation. Conclusion As far as we can see, it is possible to gain much from investment in the CAE. Nevertheless, there are three different directions for investments. Firstly, it is possible to support aircraft industry of CAE. This is a well-developed field and it is appropriate to claim that both developed and developing countries are interested in services and products of the CAE. That is why potential investors go global together with the CAE. Secondly, simulation and modeling produced by the CAE is interesting not only for aircraft industry, but it is of high relevance in the field of medicine. A variety of clients from hospitals, medical schools and other entities are looking forward to buying these products. There is no doubt that a variety of contexts and options for potential investments should be considered by the modern investors. As a matter of fact, there are very many opportunities and fields for investments, but a global and high-speed development of aviation cannot be denied for sure. Dominance of the CAE in the aircraft industry and ability of the Company to exceed the limits and operate in two other industries successfully means that this Company has a great potential for the investments. Moreover, it cannot be denied that mining industry of the CAE evokes a vivid interest among the potential investors. Mining is conducted in the most remote corners of the world and technology consuming as less energy as possible is of high demand for sure. Therefore, making investments in the CAE can lead to greater economic benefits for the EIG. A long-term productivity of the Company can lead to an essential and a stable economic growth. A potential investor should be focused on long-term benefits and risk management issues in the process of making investments to any Company. Investment projects should be considered from different perspectives in the modern political and economic contexts. References Annual Report of the CAE. (2012). Retrieved from: http://www.cae.com/en/investors/Q1.FY2013.asp Aviation Economic Benefits. (2008). Retrieved from: http://www.iata.org/SiteCollectionDocuments/890700_Aviation_Economic_Benefits_Summary_Report.pdf AvInvestments. Retrieved from: http://www.avinvestments.com/ Financial Report of the CAE. (2012). Retrieved from: http://www.cae.com/en/investors/_pdf/2012/CAE_AR2012_Financial.pdf Foreign Direct Investments in Aviation. Retrieved from: http://www.ndtv.com/topic/foreign-direct-investment-in-aviation The Official Website of the IAOPA. Retrieved from: http://www.iaopa.org/about-iaopa/index.html Read More