Benchmarking Vestas against Gamesa wind turbines

Résumé du document

Interpretation: This process will provide performance information, assessment of the organization's strengths and weaknesses, performance goals that will stimulate activities for better performance, and then recommendation for improvements that will lead to effectiveness.

Scope: According to the orientation of the project, it will not be included any other situations of the companies, but the financial and a comparison of the business models and the external factors that contribute for the financial fluctuations. The benchmarking analysis is calculated on the basis of the financial data provided from the Annual report of both of the companies for 2010 and 2011. The competition will be represented only from the side of Gamesa Wind Turbines.

Theories and models: As a starting point of our benchmarking analysis we took the business models of Vestas and Gamesa and mainly comparing the way they value proposition, as they are product form competitors. Thereafter focusing on the financial situation of both of the companies, helping for identifying the performance measurements, which gives an overview for where are required changes.

Extraits

[...] Buyer power The customers are: private independent power producers, electric utility companies and state utilities . There are very high switching costs for the buyer=high bargaining power for the manufacturers.[2] Once the customer sign a contract with specific manufacturer the replacement is not possible as every player has specific design of the turbines. Recently the demand for supply of wind turbines has grown and the players are little amount, the power of buyer is weaker. Overall they have a moderate power. [...]

[...] At the same time, Vestas is having high fix costs, based on research and development. It leads to the negative result in EBIT. As general their main competitor (Gamesa) is having main focus in decreasing of the costs for themselves (Gamesa) and their customers. The focus of Gamesa is in improvement of their workforce qualification in their Gamesa University program. Gamesa is having well-structured four points plan in the financial crisis in the next 3 years. The Market value of Vestas is higher, based on their long term development and expertise. [...]

[...] It is formulated on the basis of the turnover, profit before interest (EBIT) and total assets. In this financial indicator, Vestas is having worse condition. As we can see from their profit and loss, Vestas has lower turnover and higher expenses in fix costs (research and development). It leads to the negative performance of EBIT. The most important indicator for us is return on sales. It is because; we are focusing on the profitability of the current sales level in times of crisis. [...]

[...] As we can see the number of the employees of Vestas is doubled compared with Gamesa. The indicator for Debtors turnover is higher in the case of Vestas and it leads to higher free cash in the operations. It is positive indicator .4.: Risk analysis (Appendix The most important risk measure ration for us in times of crisis is Debt/Equity ratio. It is indicating the proportion in the financing of the company. In the case of Vestas, doubled bigger part of the finance is coming from creditors. [...]

[...] The company has higher size and sales. The main challenge in front of Vestas is to protect its value and to optimize its operations Bibiliography Vestas-Annual report-2011 Gamesa Wind turbines-Annual reprt-2011 Global wind turbines.pdf Benchmark paper.doc Case 3 Vestas.ppt Literature: Management Accounting Anthony Atkinson, Robert Kaplan 4. [...]