BUFFETT TAKES CHARGE

8/7/2019 BUFFETT TAKES CHARGE

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BUFFETT TAKESCHARGE


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It is a conglomerate holding company headquarteredin Omaha, Nebraska, United States, that oversees and

manages a number of subsidiary companies.

The company averaged an annual growth in bookvalue of 20.3% to its shareholders for the last 44

years, while employing large amounts of capital, andminimal debt.

Berkshire Hathaway stock produced a total return of76% from 2000-2010 versus a negative 11.3% returnfor the S&P 500.

Warren Buffett is the company's chairman and CEO.


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Buffett has used the "float" provided by

Berkshire Hathaway's insurance operations to

finance his investments

Berkshire now owns a diverse range of

businesses including

railroads, candy production, retail, homefurnishings, encyclopedias, vacuum cleaners,

jewelry sales

newspaper publishing

manufacture and distribution of uniforms

several regional electric and gas utilities.


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Warren Edward Buffett is an American investor, industrialist, and philanthropist. Often called the "legendary investor Warren Buffett", he is the

primary shareholder, chairman and CEO of Berkshire Hathaway.

ranked among the world's wealthiest people,

third wealthiest person in the world as of 2010. Buffett is called the "Oracle of Omaha or the "Sage of Omaha

and is noted for his adherence to the value investing philosophy

In October 2008, Buffett invested in new energy automobile

business by paying $230 million for 10% of BYD Company. In less than one year, the investment has reaped him over 500%

return of profit

(ref :http://en.wikipedia.org/wiki/Warren_Buffett)


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Charles Thomas Munger

born January 1, 1924 in Omaha, Nebraska is aninvestment manager and philanthropist.

He is Vice-Chairman of Berkshire Hathaway

Corporation. Munger is also the chairman of Wesco Financial

Corporation, based in Pasadena, California.

Munger donated 500 shares of BerkshireHathaway, worth $43.5 million, to StanfordUniversity to build a housing complex forStanford Law School.


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BYD : Build Your Dreams

Established in 1995, BYD is a high tech

enterprise list exchange .

Founded by Mr. Wang Chuan Fu in China itspecializes in IT, automobile, and largest

market share for nickel batteries, cell-phone

chargers etc.

Most innovative independent national auto

brand with growth rate of over 100%


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BYD moved to the new industrial park in

September of 2000, which locates in ShenZhen,China.

It covers an area of 374,000 square meters, andover 15 thousand employees work there.

Leads the field of electric vehicles with uniquetechnologies.

Green products like Electric vehicles, energystorage stations, solar power stations.

It will continue to lead the new energy revolutionin the world.


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Wang Chuan Fu Wang was born in China to a family of poor farmers. While in high school he was cared for by his elder brother and

sister because both of his parents had died.

After high school he studied chemistry atthe Central SouthIndustrial University of Technology, and went on to earn a

master's degree in 1990 from the Beijing Non-FerrousResearch Institute.

in 1995 he entered the private sector and founded his owncompany, BYD.

Founded when he was just 29 years old, BYD Company is

currently the world's biggest mobile phone batteriesmanufacturer.[

In early 2009, he was reportedly worth US$1.3 billion , In late2009, his worth grew to $5.1 billion and was crowned China'srichest man on the Hurun Rich List.


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BYD Corporate culture

committed to constructing a strong corporateculture and sharing its prosperity with all of itsemployees.

devoted to carrying out its core corporate cultureof equality, factuality, passion and innovation,adhering to a technology based and innovationoriented development concept.

striving to realize a high retention rate through itsvast opportunities in career advancement,excellent working environment, and itsemployees love for the company.


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Wang Chuan Fus moves :

GOAL : to edge in on the Japanese

dominated battery business.

Studied Sony and Sanyo patents andstudied their batteries.

BREAKTHROUGH : substituted migrant

workers for machines.

Cut costs by hiring thousands of

people.


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Quality control : breaking down jobs intobasic tasks and implying stricttesting

protocols. Hence among top 4 manufacturers

worldwide, largest Chinese manufacturer.

Made apt use of human resource

available. BYD manufactures all cars itself engine,

body, seat covers etc.

Distributed 15% shares among workersand retained 28% ( $1 billion) himself.

Gave severe attention to costs.


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100% recyclable batteries nontoxic

electrolyte fluid.

Exports gasoline powered cars to

Africa, South America, and the Middle

East

Competing on price not quality.

First hybrid plug-in Dual mode car

(F3dm) and 2 electric cars E3 and E6


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Strengths:

Human resource advantage.

First mover advantage. Buffetts support for advancement in America.

Technological advantage.

Weakness

Low costs of for implementing new technology still inprogress.

Oppurtunity

Europe as a export market for electric cars.

Battery suppliers for global automakers.

Threats

Better quality vehicles by competitors( for non costconcerned consumers)


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Key drivers for new era of alternative

energy technology

New era of

alternativeenergy

technology

Unsustainablepetroleum based

consumption

Increasingenvironmental

pressures

Alternative

energytechnology

reachingthreshold


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1) Unsustainable petroleum-based

consumption

Global daily oil consumption is still increasing

steadily, of which transportation takes a large part


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2)Increasing environmental pressure

Our climate is going unsustainable with a gradual globalwarming trend

Due to temperature change living environmentIsworsening

1990-2008 Global warming is a continuous trend Average temperature will increase by between 1.4 and 5.8

degrees Celsius by 2100

Rising temperature is likely to cause catastrophic results Melting ice caps in North and South Poles

Sea level has risen 4 to 8 inches More frequent natural disasters, i.e. floods, droughts, etc.

(Source: World Bank; Booz & Company analysis)


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3) Alternative energy technology reaching

threshold

Cost is still the major barrier in EV, but recent

progress has pushed the technology to the

minimum threshold of consumer acceptance

example :

Toyota Prius is one ofthe most popular (excluding

scale effect) hybrid models in the world and use

Ni-Li 10 battery that generates energy at a rate of12 KwH


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Key Success Factors for BYD

Integrating battery manufacturing with the role of atraditional VM Integrated battery and Environmental vehicle R&D, while

other companies do it separately

Capitalize on the current battery and auto manufacturingresources and facilities

Prioritize the role that local government (or utility)plays Approach local government as the first customer base to

create the market Work closely with these partners to develop the market in

order to increase production size and drive down cost


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Challenge!

Consumer acceptance of new energy vehiclesis major challenge

consumers must also be convinced thatthe price

and performance ofthe new energy vehicle can infact meettheir expectations.

Chinese consumers have less experience withgasoline-powered cars, and are already

accustomed to short distance, low-speedcommuting conditions very favourable forelectric cars.


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Innovations in both technology as well as

business model will be required to succeed in

the EV sector


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Thank YOU!

Group 4

Jesseco

Wesley

Liza

JudeShiba

BUFFETT TAKES CHARGE

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