Berkshire Hathaway|My homework helper

Posted: March 3rd, 2023

Final Milestone

 

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Sarah E. Brennan

University of Arkansas at Grantham

MGT500 – Management

Professor Esplin

03/07/2023

 

 

Berkshire Hathaway is an American multinational corporation’s holding company. It has its main office in Omaha, Nebraska. The company holds a minority, majority, or entire stake in a number of public and private companies. Berkshire Hathaway owns GEICO, Coca-Cola, American Express, Wells Fargo, IBM, and Apple, among other companies. In 2016, Berkshire Hathaway had $621 billion in total assets, $283 billion in total equity, and $224 billion in total revenue (Chen et al., 2021). The corporation is the fourth-largest public company and the ninth-largest conglomerate by revenue in the world. The current paper discusses the culture of Berkshire Hathaway, how it deals with uncertainty in the market, and the environmental factors that impact it.

The Culture of the Company

Buffett had an interest in business and investing at an early age. He is renowned for saving $35 on his first tax return by delivering newspapers while riding his bicycle and watching television. Buffet has adopted the economic philosophy of “value investing,” which combines “behavioural finance” and “investor psychology” and aims to comprehend how institutions, organizations, investors, and consumers make decisions based on how they act and think (Hartwig, 2019). Graham, an American economist, established his investment strategies while working as a financial consultant. Buffet’s investing strategy, which has grown into the company’s guiding principles and philosophy since he acquired Berkshire Hathaway over four decades ago, is largely responsible for Berkshire Hathaway’s success. People have used his reputation for frugality in his personal life as leverage in negotiations. Even when losses have occurred, liabilities are considered sources of stress and strain in order to fulfill debtor commitments. This notion and value shape the culture of the organization. A “buy-and-hold” investment is one in which you purchase an asset and maintain it even if it loses value in the short term. This assumes that the nation’s economy will eventually revive. Fundamental Analysis: According to this method, a company’s financial statements can be used to determine the company’s financial health. A contrarian perspective delays investing in a popular trend until it has been prevalent for some time. Activist investment is when an investor uses their ownership share in a company to exert pressure on management to perform well. Diversification requires placing only some of one’s eggs in a single basket.

Berkshire Hathaway’s investment strategy is founded on its fundamental principles and beliefs. It achieves this by investing in profitable companies that have been in business for a long time and are seen as necessities by ordinary customers, such as clothes, airlines, insurance, etc. Buffet has established a small core of dependable individuals to assist the company’s success. This group consists of family members and Charlie Munger, his longtime friend and co-chair, who worked with Buffet as a teenager (Hartwig, 2019). By sharing their personal learning experiences and developing hypotheses based on behavioral economics, these individuals have become less anxious about navigating the market and accomplishing their goals.

How the Organization Deals with Uncertainty in the Market

Playing a Simple Numbers Game that Favors the Patient

Warren Buffett plays a numbers game with Berkshire Hathaway’s investment portfolio, expanding on what has been mentioned previously. This game strongly favors investors with patience. If you examine the roughly 400 stocks in Berkshire Hathaway’s investment portfolio or the 500 companies it has acquired over the past 50 years, you will notice a reoccurring theme: they almost always move in a circle (Loviscek & Xie, 2022). As the American economy develops, so do cyclical businesses. The difficulty is that economic expansions tend to last considerably longer than recessions. Buffett and his colleagues may relax and enjoy the fruits of their years of hard work and foresight now that they have diversified Berkshire’s investment portfolio with companies that may benefit from sluggish growth.

Dividend Stocks

People typically miss the fact that dividend stocks contributed to Berkshire Hathaway’s extraordinary success. Buffett’s company, Berkshire Hathaway, is projected to earn nearly $6 billion in dividend income over the next 12 months. This is owing to the fact that it owns more than 30 stocks that pay regular dividends, which will provide this revenue. Monthly dividend-paying companies are often well-established and almost always profitable; otherwise, they could not afford to do so. These companies have proven their ability to endure challenging economic conditions and emerge stronger in the end. Moreover, dividend-paying stocks typically outperform those that do not pay dividends. The average annual return for public firms that began paying dividends in 1972 and grew them between 1972 and 2012 was 9.5%. During the same time period, non-dividend-paying public corporations generated an annualized return of only 1.6% (Salzar, 2019).

Environmental Factors that Impact the Organization

Using PESTEL analysis, Berkshire Hathaway could improve its strategic decision-making by identifying the major external environmental forces that influence its competitive landscape and strategy. To develop effective strategies and accomplish its long-term growth objectives, Berkshire Hathaway must conduct a PESTEL analysis. This is because Berkshire Hathaway wishes to expand and capitalize on its core skills.

Political Factors

The political components of a PESTEL analysis have a substantial effect on Berkshire Hathaway’s long-term profitability potential. Because the company operates on a worldwide scale, it is more aware of political changes in other nations. In today’s fast-paced, global economic environment, it is essential for political success to disperse systematic risks. There are various aspects that influence the political atmosphere of a country. During the course of strategic planning, Berkshire Hathaway must examine the following political issues: A high level of political stability produces a steady, favorable business climate with predictable market growth. However, political instability deters investors, erodes people’s faith in the economy, and diminish

Create a presentation, the first few slides should briefly outline the highlights of your milestone paper.

The remainder of your presentation is meant to be a pitch of your own idea for a quality management program. Your pitch should address the following questions:

a.  Who will you include on the deployment team and why?

b.  How will you structure and manage the team to optimize their success?

c.  What quality management tool are you proposing be implemented and why?

d.  Why is this particular tool a good fit for this organization or the problem you are trying to solve?

e.  How will the new tool you are proposing impact overall quality (service quality or product quality)?

Your final milestone submission should follow APA format, be well supported with a minimum of five recent sources, and be a minimum of 20 slides long.

Be sure your PPT is well assembled, using a design template (not a plain white sheet), minimal text on the slide (bullet point lists, not paragraphs of text), and incorporates graphics where appropriate. Use the speaker notes section to indicate what you would say if you were giving the presentation. The speaker notes section is mandatory.

SOLUTION

Berkshire Hathaway’s culture revolves around values such as integrity, trust, and transparency. Buffet emphasizes the importance of honesty, both in business dealings and personal conduct. He has stated that “it takes 20 years to build a reputation and five minutes to ruin it” and that Berkshire Hathaway will always prioritize its reputation above profits. The company’s culture also values long-term thinking, with a focus on investments that have the potential to provide sustained growth and value over time.

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