Team Six-Pack
20 April 2008
Emerson Pre-Departure Report
By Carol Alvarado, Jason Barnes,
Steve Hinkebein, Robert Ledesma,
Jenny Savage, and John Slanina
Due: April 20, 2008
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April 20, 2008
Table of Contents Abstract......................................................................................................................................................... 2 Introduction .................................................................................................................................................. 3 About Emerson Process Management ......................................................................................................... 3 Process Management Systems and Software ......................................................................................... 4 Measurement and Analytical Instrumentation....................................................................................... 4 Valves, Actuators and Regulators............................................................................................................ 4 PlantWeb® Digital Plant Architecture....................................................................................................... 5 Distribution............................................................................................................................................... 5 Brands ....................................................................................................................................................... 5 Strategy ......................................................................................................................................................... 6 Emerson in Asia‐Pacific ............................................................................................................................ 6 Asia‐Pacific Strategy ................................................................................................................................. 6 Emerson Brands in Asia‐Pacific................................................................................................................ 7 Economic Strategy in Greater China ........................................................................................................ 8 Asia‐Pacific Corporate Citizenship ........................................................................................................... 9 Domestic Strategies................................................................................................................................ 10 Culture ........................................................................................................................................................ 12 Domestic Culture.................................................................................................................................... 12 Asia‐Pacific Culture................................................................................................................................. 14 Asia‐Pacific Cultural Barriers and Risks ................................................................................................. 15 Overcoming Cultural Barriers ................................................................................................................ 16 Financial Health........................................................................................................................................... 18 Market Capitalization............................................................................................................................. 18 Capital Structure..................................................................................................................................... 19 Dividend Policy ....................................................................................................................................... 19 Conclusion................................................................................................................................................... 19 References .................................................................................................................................................. 21 1|Page
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Abstract This report introduces and provides an overview of Emerson Electric Company (EMR)
founded in 1890 in St. Louis, Missouri now a globally diversified technology company. In
addition, this report will share Emerson’s strategy, culture and financial health both domestically
and in Asia. Finally, this report will share cross-cultural operational issues in the implementation
of Emerson’s growth in the Asia region in order to meet its 20 percent year on year projected
growth in Asia.
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Introduction Emerson Electric Company (EMR) began its incorporation by serving regional needs in
the U.S., and today has morphed into a highly diversified global technology company. EMR has
remained customer focused throughout its growth by dividing its delivering into six concentrated
business segments of various service offerings. Its expansion has been spurred by acquisition
and organic growth.
Today, Emerson is designing and supplying product technology lines and
engineering services in a very diverse and wide range of industrial, commercial, and consumer
markets around the globe. Emerson is strategically organized into business segments, one of
which is Emerson Process Management; which provides measurement, control and diagnostic
capabilities for automated industrial processes which work to produce such items as food, fuels,
medicines and power. Class 30’s corporate visit will be with Emerson Process Management.
EMR’s growth in Asia has not been without challenges. This report will share ERM’s strategy;
culture and financial health on how important each are in contributing to the overall goal of
growing its sales in Asia 20 percent year on year. This report will also touch on EMR’s
challenges (culturally, financially, socially) they will face to be successful. EMR’s track record
for being results oriented, their willingness to train, hire and to grow the best talent, and to be
cognizant of the communities in which they operate give EMR a solid license to operate in Asia.
About Emerson Process Management Emerson Process Management is just one of EMR’s business segments.
Process
Management offers customers product technology as well as engineering and project
management services for precision control, monitoring and asset optimization of plants.1 These
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plants produce power, process or treat such items as oil, natural gas and petrochemicals; food
and beverages; pulp and paper; pharmaceuticals; and municipal water supplies.
Process Management Systems and Software Emerson’s Process Management systems and software control plant processes by
collecting and analyzing information from measurement devices in the plant. The information is
used to adjust valves, pumps, motors, drives and other control hardware in the plant for
maximum product quality and process efficiency.
Measurement and Analytical Instrumentation Measurement instrumentation measures the physical properties of liquids or gases in a
process stream, such as pressure, temperature, level, or rate and amount of flow, and
communicates this information to the control system. Measurement technologies provided by
Emerson include Coriolis direct mass flow, magnetic flow, vortex flow, ultrasonic flow,
differential pressure, ultralow-flow fluid measurement, temperature sensors and radar based tank
gauging. Emerson measurement products also are used in custody transfer applications, such as
the transfer of gasoline from a storage tank to a tanker truck, where precise metering of the
amount of fluid transferred helps ensure accurate asset management.
Valves, Actuators and Regulators Control valves respond to commands from the control system by continuously and
precisely modulating the flow of process fluids to provide maximum process efficiency and
product quality. Emerson provides sliding stem valves, rotary valves, butterfly valves and related
valve actuators and controllers. Emerson also provides a line of industrial and residential
regulators, whose function is to reduce the pressure of fluids such as natural gas and liquid
petroleum gas for transfer from high-pressure supply lines to lower pressure systems.1
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PlantWeb® Digital Plant Architecture Emerson’s PlantWeb digital plant architecture combines the technologies described
above with the advantages of “intelligent” plant devices (valves and measurement instruments
that have advanced diagnostic capabilities), open communication standards (non-proprietary
digital protocols allowing the plant devices and the control system to “talk” with one another)
and integrated modular software, not only to control the process better but also to collect and
analyze valuable information about plant assets and processes. This capability gives customers
the ability to detect or predict changes in equipment and process performance and the impact
they can have on plant operations. The PlantWeb architecture provides the insight to improve
plant availability and safety. PlantWeb also furnishes a platform to continually improve asset
management and standards compliance, and to reduce startup, operations and maintenance costs.
Distribution The principal worldwide distribution channel for the Process Management segment is a
direct sales force, although a network of independent sales representatives, and to a lesser extent,
independent distributors purchasing these products for resale are also utilized. The majority of
sales in the United States are made through a direct sales force with the remainder primarily
through independent sales representatives. In Asia, sales are almost exclusively made through a
direct sales force with the remainder split evenly between independent sales representatives and
distributors.
Brands Brands, service/trademarks and trade names within the Process Management segment
include Emerson Process Management, AMS Suite, Asset Optimization, Baumann, Bettis,
Bristol, Brooks Instrument, CSI, Damcos, Daniel, DeltaV, El-O-Matic, Fisher, Micro Motion, 1
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Mobrey, Ovation, PlantWeb, ROC, Rosemount, Rosemount Tank Radar, Smart Process and
Tescom.1
Strategy Emerson in Asia­Pacific Emerson's Asia-Pacific operations employ more than 52,000 people and have 40
manufacturing locations in this fast-growing region. Asia-Pacific customers accounted for $3.7
billion in Emerson sales, or 16 percent, in fiscal 20072. Emerson serves Asia-based customers
from regional corporate headquarters in Hong Kong and from satellite offices in China, India,
Japan, Korea, Indonesia, Malaysia, Taiwan, and Singapore. Emerson Process Management,
Emerson Network Power, and Emerson Climate Technologies have significant R&D,
manufacturing, and marketing activities in China, India, Thailand, and the Philippines.
Asia­Pacific Strategy Emerson plans to further increase Asia market presence by continuing to establish more
divisions throughout Asia Pacific to better capitalize the region's economic growth, as well as
foster their domestic organic company growth. International sales were $11,642 million in 2007,
$9,545 million in 2006 and $8,179 million in 2005. U.S. Exports were $1,277 million, $1,127
million and $998 million in 2007, 2006 and 2005, respectively3. Emerson manages businesses
with manufacturing facilities worldwide, a majority of which are located outside the United
States. Serving a global customer base requires that they place more production in emerging
markets to capitalize on market opportunities and maintain best-cost position. International sales
increases, year over year, primarily reflect growth in Asia (20 percent) and Europe (7 percent) 1.
The Company estimates that the underlying sales growth of more than 12 percent primarily
reflects a nearly 9 percent gain from volume, an approximate 3 percent impact from penetration
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gains and a less than 1 percent impact from higher sales prices1. International destination sales
including U.S. exports increased approximately 17 percent, to $9.5 billion in 2006, representing
47 percent of the Company’s total sales. U.S. exports of $1,127 million were up 13 percent
compared with 2005. International subsidiary sales, including shipments to the United States,
were $8.7 billion in 2006, up 17 percent over 2005. Excluding the net 1 percent unfavorable
impact from acquisitions, divestitures and foreign currency translation, international subsidiary
sales increased 18 percent compared with 2005. Underlying destination sales grew 20 percent in
Asia during 2007, driven mainly by 19 percent growth in China, and 21 percent in Latin America
and the Middle East, while sales grew 7 percent in Europe3.
Emerson Brands in Asia­Pacific All of Emerson's Brands are able to contribute to some of Asia's most rapidly growing
sectors. For example, an increasing demand for base materials has spawned growth in the
process industries handled by Emerson Industrial Automation and Emerson Process
Management.
Emerson Industrial Automation designs the technologically sophisticated,
automated plant facilities.
Emerson Process Management ensures optimal, efficient
manufacturing process for the financial benefit of their customers. The exponential growth of
network-dependent Asian businesses benefits from the "high nines" reliable power solutions of
Emerson Network Power. Uninterrupted power is crucial for telecommunications, Internet and
other networked businesses. Emerson Network Power delivers integrated power solutions that
include the components, design and implementation. As new manufacturing and commercial
properties are built, and existing facilities are upgraded, Emerson Climate Technologies provide
a broad range of cost-effective climate systems. These new refrigeration and comfort solutions
benefit from Emerson's cutting edge integrated products and designs.
Emerson Motor
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Technologies delivers product quality to new manufacturers, so they enter the global
marketplace with products that contain advanced, proven motor technology.
Economic Strategy in Greater China Greater China is one of the fastest-growing regions in the world for Emerson.
Combining the technological sophistication of Taiwan, the logistical and communications
capabilities and global market awareness of Hong Kong, and the strength of China as a
manufacturing base for global and regional sales, Greater China presents Emerson with
tremendous opportunities. Emerson first licensed technology to China through its Rosemount
division in 1979. In 1992, the company opened its first factory, a manufacturing plant for
Therm-O-Disc products, in Shenzhen.
Since that time, Emerson has expanded rapidly,
leveraging the opportunities offered by China's steady modernization to establish 30 wholly
owned and joint venture facilities. Emerson has 30 engineering research programs underway
with six of China's leading technological research universities.
Emerson's involvement in
Greater China is characterized not only by its rapidly increasing breadth of commitment - more
than 60 percent of all Emerson divisions already have some presence - but also by its depth1.
Emerson is building the services and structures required to support its customers and sustain its
presence in Greater China through active recruitment and training of talented local staff and
creation of effective distribution, logistical and service infrastructures.
At the same time,
market-focused research and development are crucial in integrating Emerson more thoroughly
into the region's economy and its research institutions.
Emerson also provides MBA
scholarships and sponsors doctoral research programs at Beijing’s Tsinghua University,
Shanghai’s China Europe International Business School and Jiaotong University, the Hong Kong
University of Science and Technology, and other universities in China.
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With the high speed of China economic development in recent years, there is a
imbalanced phenomenon on human education that more people focus on business knowledge and
few people enjoy engineering knowledge, which bring on the people who master the core
engineering technology with international horizon have become the important resource for
country construction. The requirement for these talents spurred by high-speed development of
large scale engineering project, infrastructure construction and manufacturing industry has been
dramatically increased. With the background of the occupation request, Emerson is confident to
make the Department of Automatization become the platform of international innovation and
R&D in collaboration with East China University of Science and Technology. As the national
top-ranking base of training automatization talents, it will enhance the academia communication
of researchers, reinforce the intercommunication and integration of subjects and accelerate the
scientific research results to become product, so that the professional level of automatization
talents in China will be improved and the development of the industry field will be promoted
with high speed5.
Asia­Pacific Corporate Citizenship Emerson continues giving back to society in China and participating in community
construction projects.
While developing its business in China, Emerson is committed to
fulfilling its corporate social responsibility and making contributions to the development of a
harmonious society. At the beginning of 2008, China experienced the heaviest snow storm in the
past sixty years. The most severely affected areas included the provinces of Hunan, Guizhou,
Jiangxi, Anhui, Hubei, Guangxi and Sichuan.
Shortly before the Chinese New Year, the
Ministry of Commerce contacted Emerson inquiring about possible aid to affected areas in south
China. The company assembled a team of executives and began making arrangements for
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disaster relief. As a good corporate citizen, Emerson contributed to disaster relief efforts to help
needy people and communities. The power facilities supplied by Emerson Network Power,
performed throughout the disaster and succeeded in meeting the challenge of the snowstorm and
winning customer recognition.
The company’s power facilities played important roles in
withstanding the storm and ensuring power supply in numerous locations. In addition, Emerson
has participated in China activities including the fight against the SARS epidemic and supported
the Lifeline Express Foundation. The company also made donations to the earthquake areas of
Jiangxi province and Project Hope in China4.
Domestic Strategies Today’s tight economy offers customers who demand more from suppliers, Emerson
knows that simply having a line of leading products and technologies is not enough to compete.
Many customers are looking to reduce their number of suppliers and increase efficiency with
someone who has experience in merging together and applying superior technologies with
industry and customer specific applications. Simply put, part of Emerson’s strategy is to become
a single face to their customers. "Just as our customer's plants, platforms, mills and pipelines are
becoming more integrated, we as an organization need to become more tightly connected.
Customers are streamlining their entire supply chains, and they need to link information
everywhere and use it to improve business processes. They do not want to buy and then try to
link disparate islands of technology. They want to acquire connected solutions. But when they
look to suppliers, they see fragmented specializations. Until now, no one has offered superior
technology and process management solutions. Emerson Process Management is the first to
bring it all together"6.
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While striving to become a total solution for the their customers, Emerson has also
decided to slim down and rid themselves of area’s that were not seen as part of the future. A few
years ago a major change on the software front for Emerson was its decision to sell its Intellution
unit to G.E. Fanuc Automation. At the time of the sale, Emerson Process Management President
John Berra said that “Intellution's expertise in stand-alone human machine interface systems and
related applications was not a good fit with Emerson, which had increased its focus on
integration projects via PlantWeb”. However, not to let a good thing get a way (for too long),
Emerson made sure to bring back Bob Yeager (an Emerson executive who became president of
Intellution in 2001) in 2003 as president of Emerson Process Systems, which is part of Emerson
Process Management7.
“Customer support is primary in Emerson Process Management's business focus. The
company continues to center its business on the experience and expertise of its local
representative and direct-sales channels. In keeping with its expanded capabilities, industry and
services experts have been added to help deliver tailored process management solutions. An
initiative is under way to centralize all transactional activity for the expanded company through a
common business system. Customers will further benefit by providing one point of access for
commerce activities into the company”6.
Emerson’s acquisition strategy has been aggressive in building up its global business with
many subsidiaries. The company has gathered its 60-plus business units and divisions under
eight Emerson Brands with the U.S. accounting for about half of the over 22 billion made in
sales last year. As old Ralph Waldo once said, "Make yourself necessary to somebody," a
practice that Emerson firmly believes8.
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Emerson’s long term strategy will continue to encourage more of its divisions to invest in
Asia and actively seek strong local partners with complementary skills in its key investment
sectors. These include forging strong relationships with local sub-contractors, maintaining a
strong emphasis on hiring and developing local staff, and locating research and development
facilities in more than one nation in the Asia-Pacific region to facilitate market-by-market
customization.
Culture Domestic Culture Emerson’s domestic culture was built on mid-west values with long roots going back to
its inception in 1890. Emerson’s culture is one of commitment to its employees and customers.
Whether it’s in the United States or globally, excellence and a disciplined management process
are part of its mission. Emerson prides itself on cutting edge technology, investing globally and
delivering its best for its customers. Emerson is committed to being a well-managed, resultsoriented, engineering-driven organization whose people have a passion for progress9. A trait that
separates Emerson from others in its field, is their drive to be more in tune with their customers,
being more proactive and more customer-focused than their competitors. Its management style
has allowed them to focus on creating shareholder value while anticipating changing economic
and industry environments.
This management process emphasizes current and long-term
planning, disciplined control, and clear priorities9.
The company relies heavily on the skills, integrity, commitment, and dedication of its
employees. They offer challenging, fair, and rewarding employment for its employees and set
high expectations for performance9.
Emerson strives to create an environment where its
employees can make a difference. The culture is based on achievements and delivering results is
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valued far above personalities or internal politics10.
Emerson also provides various career
development paths for its employees.
Emerson is known for setting a high priority on business ethics.
Often we see
corporations emphasize ethics at the beginning of employment but Emerson reinforces it through
ongoing training programs that reach all of their employees around the world. From senior
management to line production workers, practices demonstrate uncompromising ethical
standards in all dealings with customers, suppliers, governments, the public and each other9.
Another area that sets Emerson apart from its competitors is its open communication at
all levels. Whether it’s in the public or private sector, lack of communication is many times the
root of an organization’s weakness. One level of the organization does not know what the others
do, or employees are not aware of the company’s goals, financial status, new products, or
acquisitions. All Emerson divisions have quarterly employee communication sessions where
division performance is openly communicated, along with strategic goals and how that division
is doing relative to the goals. All managers and supervisors know the full P&L, down to
individual product lines10. Communication is priority from the top on down. CEO David Farr
and John Berra are very accessible and are known for returning emails with hours. Rules of
hierarchy are not always the practice when it comes to decisions that benefit the customer;
employees are empowered to make those decisions.
One way to judge a company’s stability is to look at its employee turnover. No such
thing as a revolving door at Emerson. The company is well known and sought after as a training
and development ground, resulting in a constant inflow of excellent new management. Emerson
seems to attract some of the best people in the industry and keeps developing the next wave of
leaders10. One of Emerson’s recruiting efforts is its Corporate Sponsorship Program for MBAs,
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where it recruits high potential graduate students from top-rated university MBA programs.
More than 70% of MBAs hired in the last 10 years have remained at Emerson and have been
promoted to leadership roles. In fact, CEO David Farr began his career in the sponsorship
program10.
One way to get the truth about a company is to talk its employees. In Jim Pinto’s blog on
Emerson, we get a clear picture of its culture. There were two employees who left Emerson to
work for companies like Rockwell or Invensys and later returned to Emerson. Both individuals
talked about Emerson’s commitment to its customers. One new employee said he hope to be at
Emerson for 10 to 15 years and then retire. This speaks volumes to its retention and employee
satisfaction11.
Their culture has enabled them to successfully expand globally. Emerson will serve as a
role model for corporations here and abroad.
Asia­Pacific Culture Emerson’s culture of excellence, commitment of customer satisfaction, strong business
ethics, employee leadership development, ability to attract the best employees and open
communication within its organization, set it apart from its peers, making it an employee
destination. Their culture has enabled them to successfully expand globally. Emerson will serve
as a role model for corporations here and abroad. Having entered China in the late seventies,
Emerson has since utilized more than fifteen technologies in the form of direct sales, local
manufacturing and joint ventures. In general, manufacturing businesses often face political
uncertainty, inadequate protection for technology, primitive infrastructure, and restriction on
hiring assembly workers (permitted only in surrounding areas). Joint ventures allow Emerson to
establish working partner relationships throughout the regions where they conduct their business.
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While looking for partners, Emerson suggests that it is important to examine what they can bring
to the business in three areas: employee relationships, government relationships and customer
relationships12. In some difficult areas such as attaining government approvals, local partners
often find it easier to maneuver through government bureaucracy. Emerson uses a balanced
approach that best meet the needs of the individual project.
Emerson's involvement in Greater China is characterized not only by its rapidly
increasing breadth of commitment - more than 60 percent of all Emerson divisions already have
some presence - but also by its depth. Emerson is building the services and structures required to
support its customers and sustain its presence in Greater China through active recruitment and
training of talented local staff and creation of effective distribution, logistical and service
infrastructures13. In fact, Emerson established an incubation centre ($ 1.5 million, 20-year lease,
200,000 sq.ft area and CAD facility) for divisional managers to develop their ideas into full-scale
business ventures14.
Asia­Pacific Cultural Barriers and Risks There are risks attendant to Emerson’s foreign operations especially in China, such as
possible nationalization of facilities, currency fluctuations and restrictions on the movement of
funds. Operations depend on production facilities throughout the world, a majority of which are
located outside the United States and subject to increased risks of disrupted production causing
delays in shipments and loss of customers and revenue. The international production facilities
and operations risk disruption by a natural disaster, labor strike, political unrest, terrorist activity
or public health concerns, particularly in emerging countries, such as China and Singapore that
are not well-equipped to handle such occurrences.
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The manufacturing facilities abroad are also more susceptible to changes in laws and
policies in Asian countries and economic and political upheaval than their domestic facilities.
Substantial sales abroad subject Emerson’s Asian growth strategy to economic risk as operations
are affected by changes in local government regulations and policies. International sales and
operations are tied to local government, including those related to tariffs and trade barriers,
investments, taxation, exchange controls, and repatriation of earnings. Changes in the relative
values of currencies occur from time to time and affect regional operating results.
Even with the inherent risks and barriers, Emerson is encouraging more of its divisions to
invest in Asia and actively seeking strong local partners with complementary skills in its key
investment sectors.
These include forging strong relationships with local sub-contractors,
maintaining a strong emphasis on hiring and developing local staff, and locating research and
development facilities in more than one nation in the Asia-Pacific region to facilitate market-bymarket customization.
In order for EMR to meet its targets, it must hire the talent to help deliver. To do this
they are challenged with hiring, on average, 12 new hires per day to meet their aggressive
targets. Human capital is a big challenge that will be on ongoing challenge for the region and
not just EMR.
Overcoming Cultural Barriers In China, Emerson’s Nanjing Facility is slowly overcoming many cross-cultural barriers
by upholding a philosophy that states, “serve Asia from Asia.” This statement alone has helped
Emerson overcome cross-cultural barriers in the United States, China and Singapore.
In China and Singapore Emerson’s Asian business culture relies on taking time with
business decisions, negotiations and concessions. “Chinese business tends to be completed
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through contacts rather than contracts. Establishing relationships based on mutual respect is a
fundamental aspect of both the Chinese culture and business place. Professional relationships
tend to be built through face-to-face social interaction, such as over lunch or dinner - the simple
act of shaking hands can be extremely significant”15.
Emerson has built its business by
interacting locally and has become a trusted employer within the region. The company has
overcome many bureaucratic hurdles by ensuring compliance within their organization and
following local regulations.
Emerson’s philosophy is, “Anything in China is Possible; Everything in China is
Difficult.” Mike Train, President Asia/Pacific, for Emerson states, “The people coming to work
for us and our customers in China are young—but very sharp. They speak pretty decent English.
They are willing to adopt new ways of doing things and are thirsty to learn. They are also hard
workers,” Train says. “Turnover is a small challenge, and you have to constantly look for new
people, as well as provide for growth opportunities for those who work for you now”16. In
China, Emerson integrates into the culture by providing MBA scholarships and sponsors doctoral
research programs furthering Emerson’s market-focused research and development and retaining
employees.
On November 14, 1999, China joined the World Trade Organization. This deal was a
major success for opening China up to major markets. Since 1999, China’s unemployment has
risen as its inefficient state industries faced increased competition17. Today; Emerson’s Nanjing
Facility is a manufacturing and distribution hub and only ships regionally within Asia. Similar
facilities are located in the U.S., Canada and Mexico to service each region.
Manufacturing in China has had a major lack of financial solutions for securing
reasonable credit terms due to risk. Emerson does not seem to have any financial barriers.
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During an interview with one of Emerson’s executives, our team discovered several
“keys to success” for working with cross-cultural barriers. They are:
•
China is not a proxy for Asia Pacific nor is it 1.2B people of homogeneousness
•
China is change on steroids
•
China is not black and white; expect grey
•
Assume your counterpart is smarter than you (don’t confuse language with intelligence)
•
Put yourself on the other side of the table at all times and work hard to understand the
cultural differences
Despite the language barrier, many executive within Emerson survive with skilled
translators. Each executive within Emerson is encouraged to work with local people to hire key
positions: General Manager, Finance, HR and Government Relations).
Finally, Emerson’s
executives are encouraged to utilize Emerson’s process and not to “reinvent the wheel.”
Financial Health Market Capitalization Emerson’s (EMR) market cap based on stock of 52.89 per share and 785 million shares
outstanding is currently at 41.57 billion. EMR average daily trading of shares was four million.
The EMR board is a body made of officers from EMR along with individuals with extensive
backgrounds in most industries (government, Oil and Gas, Public, Private, Consumer Products,
Food and Beverage Industry and Telecommunications Industries). Emerson achieved record
sales, earnings and earnings per share in the fiscal year ended September 30, 2007. For fiscal
2007, net sales were $22.6 billion, an increase of 12 percent; net earnings were $2.1 billion, an
increase of 16 percent; and earnings per share were $2.66, an increase of 19 percent, over fiscal
2006. The EMR Price to Earnings ratio compare favorably with industry, sector and S&P 50018
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averages. Emerson’s beta places them in a higher risk business relative to their competition;
however, this has resulted in growth for Emerson and higher than market returns.
Capital Structure Emerson continues to rationalize its assets and manage its growth with balance of debt
and equity.
Emerson’s global strategy was to rationalize its business portfolio and build up its
growth assets. Four of the five companies in our review share Emerson’s aggressive approach
towards growth through acquisitions and decommissions. Emerson’s debt/equity ratio of (1.4) is
comparable to four of the five companies in this analysis.
Emerson’s EPS of ($2.81) is
comparative to three of the four growth driven companies in this study.
Dividend Policy Dividends were $837 million ($1.05 per share, up 18 percent) in 2007, compared with
$730 million ($0.89 per share) in 2006, and $694 million ($0.83 per share) in 2005.
In
November 2007, the board of directors voted to increase the quarterly cash dividend 14 percent
to an annualized rate of $1.20 per share. In November 2006, the company’s board of directors
declared a two-for-one split of the company’s common stock. EMR had increased its dividend
51 consecutive years.18
Conclusion EMR has earned its license to operate in Asia and continues to become a premier
organization in the global technology business.
Its commitment to its shareholders, its
employees and to the communities it operates allow EMR to serve its customers with premier
technology and solid customer service. Its growth strategy and expectations to deliver year on
year serve as a reminder to all stakeholders that the EMR journey is an ever evolving and fluid
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state. EMR will continue to place more production in emerging markets to capitalize on market
opportunities and maintain best-cost position.
In conclusion, EMR will continue to evolve its
stake globally, its brands and its commitment to deliver to its customer premier technology
solutions whilst being a good corporate citizen.
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References 1.
"Emerson 10 K." United States Securities and Exchange Commission (2007).
2.
"Emerson in Asia-Pacific." Emerson 13 Apr 2008 <http://www.emerson.com/enus/about_emerson/company_overview/pages/emerson_in_asia-pacific.aspx>.
3.
Farr, David. Emerson. 05 Feb 2008. Emerson. 15 Apr 2008 <http://library.corporateir.net/library/10/107/107575/items/278905/01_Strategic_Overview_plus_Reconcilaition.
pdf>.
4.
"Emerson Donation Helps Support Snowstorm-stricken Areas in China." Emerson News
Press Room 22 Feb 2008 12 April 2008 <http://www.emersonap.com/site/eng/news/PR2008/EMR_Donations_Snowstorm_Eng.html>.
5.
"East China University of Science and Technology-Emerson Process Management
Plantweb Digital Plant Joint Laboratory Center Formally Established." Emerson News
Press Room 18 Mar 2008 12 April 2008 <http://www.emersonap.com/site/eng/news/PR2008/East_Chi_U_Science_Eng.html>.
6.
"Fisher-Rosemount becoming Emerson Process Management." Emerson 23 Apr 2001 10
Apr 2008 <http://www.emersonprocess.com/home/news/pr/104_processname.html>.
7.
"Growth in recognition of needs." Manufacturing Business Technology 01 Jul 2003 14
Apr 2008 <http://www.mbtmag.com/article/CA310382.html>.
8.
"Emerson." Answers.com 12 Apr 2008 2007 <http://www.answers.com/topic/emersonelectric-co?cat=biz-fin>.
9. "Company Overview." Emerson.com. Emerson. 15 Apr 2008
<http://www.emerson.com/enUS/about_emerson/company_overview/Pages/Home.aspx>.
10. "The Emerson difference." Jim Pinto. 12 Apr 2008
<http://www.jimpinto.com/commentary/emersonculture.html>.
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