The recession of 2008/09 was the worst decline of global markets since the
Great Depression in the 1930's. Some international markets lost 30 - 50% of its
value in the period July to October 2008. The main reason for this dramatic drop
in investor demand was the sub prime crisis in the USA where growth was
fuelled by providing loans to house owners who could not afford the mortgage
payments.
Platinum, which is the biggest mining sector in South Africa both in terms of
revenue and employment, was not spared this sudden decrease in demand.
Platinum market price lost more than 50% of its value, free-falling from a level of
over $2000/oz to below $1 000/oz in three months.
A recession poses a massive challenge to the management teams of companies.
Their main task of ensuring shareholder value growth comes under enormous
pressure from macro-economic factors outside of their control. Strategic
objectives based on high growth and demand scenarios have to be adapted to a
low demand and negative growth environment. This study embarks on a journey
to determine what strategies the different management teams of the five top
South African platinum mining companies implemented and how successful they
were in optimising shareholder value during the recession period.
The impact of risk and return on investor demand were discussed on a
theoretical level and tested on a practical level by evaluating the performances of
individual companies and finding correlations between company performance
and shareholder value optimisation. Companies who performed well by
maintaining good profit margins, maintaining dividend payouts, managing risks
well and continuing to build a good platform for future profit growth performed the
best in optimising shareholder value during the recession period. Recommendations are made based on theoretical and practical best practices for
how to optimise shareholder value during future recessionary times.
Opportunities for companies in the platinum mining industry for the next 3 - 5
years are also evaluated and summarized. / Thesis (MBA)--North-West University, Potchefstroom Campus, 2011
| Identifer | oai:union.ndltd.org:NWUBOLOKA1/oai:dspace.nwu.ac.za:10394/8299 |
| Date | January 2010 |
| Creators | Raats, Jasper-Johan |
| Publisher | North-West University |
| Source Sets | North-West University |
| Language | English |
| Detected Language | English |
| Type | Thesis |
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