DATE: APRIL 11, 2017 TO: ROBERT MARINI FROM: Joe Bullinski SUBJECT: WHAT CONSUMERS SHOULD KNOW BEFORE THEY BUY ORGANIC PRODUCTS This report will help individuals understand organic products. Many individuals want to eat healthy but stick to a budget. The knowledge that will be gained from this report will help consumers know if organic products are worth paying extra money. This report will cover three main topics: (1) what is an organic product, (2) why organic products cost more, and (3) where you can buy organic products. What Is Organic? Organic is a labeling term that is used on products that have been produced through methods approved by the U.S. Department of Agriculture (USDA) and its National Organics Program (NOP) (George Mateljan Foundation). A product is considered organic if it is grown without the use of synthetic fertilizers and pesticides, sewage sludge fertilizers, genetic engineering, growth hormones, irradiation, antibiotics, artificial ingredients and synthetic additives. The USDA has identified three categories for labeling organic products, 100% Organic, Organic and Made with Organic Ingredients (Foerstel Design). 100% Organic 100% organic means that the product was produced and processed using only organic methods and organic ingredients (excluding water and salt). These products cannot contain any ingredients from the National List of Allowed and Prohibited Substances. The USDA Organic Seal is permitted on the front panel of this package. Figure 1 below shows what the USDA Organic Seal looks like. It is very difficult to make a product that is 100% organic. Most products in this category are single ingredient products (Global Organics). Figure 1 Joe Bullinski Page | 2 April 11, 2017 Source: USDA Made with between 95% to 100% Organic Ingredients Organic means that the product was produced using only organic methods and contains a minimum of 95% organic ingredients. The other 5% of ingredients must be non-GMO (nongenetically modified organisms) and included on the National List of non-organic ingredients permitted in certified organic agriculture and processing. These products may also carry the USDA Organic Seal on the front panel if they wish. Most organic items found in stores today fall within this category (Global Organics). Made with between 70% to 95% Organic Ingredients Made with organic ingredients means the products contains between 70% and 95% organic ingredients. They can use the wording “made with organic …“ and list up to three ingredients or food groups on the front panel. These products cannot include the USDA Organic Seal anywhere on the package, even though the product is certified organic. The non-organic ingredients in these products must be non-GMO and produced without irradiation or sewage sludge (Global Organics). Made with Less than 70%. Products with fewer than 70% organic ingredients or less can use the word “organic” to specify organic ingredients in the ingredient panel. These products are not permitted to have the USDA Organic Seal or make any front panel claims about organic certification (Global Organics). Why Does Organic Cost More? It’s kind of a myth that organic products cost more than nonorganic products. Some items may cost the same, almost the same or even less than their conventional counterparts. As the demand for organic products continues to grow, the cost is expected to drop (Foerstel Design). Below in Figure 2 is a comparison of organic and nonorganic food prices. As you can see from Figure 2, the difference in price between organic and nonorganic bananas is only 10 cents. Figure 2 Joe Bullinski Page | 3 April 11, 2017 Source: Make Your Body Work Why Organic Products Can Sometimes Be More Expensive If you do find certain organic products you wish to purchase to be more expensive, consider these three facts: • • • Organic farmers don’t receive federal subsidies so the price reflects the cost of growing. Organic farming is more labor and management intensive than conventional farming. Organic farms are usually smaller than conventional farms and do not benefit from the economics of scale. (Foerstel Design) Where are Organic Products Sold? Since 2002, when the USDA released its national standards for organic products, people all over the world have grown extremely interested in eating organic foods and using organic products. Figure 3 below shows the increase in sales, farms, acres and QAI (Quality Assurance International) Certifications from 2001 to 2011. One of the most recent trends in today’s culture is shopping at a local health food store. A health food store is a grocery store that primarily sells health foods, organic foods, local produce, and often nutritional supplements (Intuitive Minds). Figure 3 Joe Bullinski Page | 4 April 11, 2017 Source: One Designs Chain Grocery Stores Numerous chain grocery stores offer all three categories of organic products for a reasonable price. Below is a list of different chain grocery stores. • • • • • • • Trader Joe’s Aldi Walmart Costco Pick N Save Meijer Target (Intuitive Minds) Health Food Stores Health food stores offer all three categories of organic products at a more expensive price than chain grocery stores because most products are 100% organic or purchased from local merchants. Below is a list of different health food stores. • • • • Whole Foods Market Natural Food Shop Outpost Natural Foods Good Harvest Market (Intuitive Minds) Joe Bullinski Page | 5 April 11, 2017 Types of Organic Products Most people are familiar with organic foods but almost everything comes in an organic form now. Below is a list of organic products found at both chain grocery stores and health food stores. • • • • • • • • • • • • • • • Fruit & Vegetables Flour and Grains Legumes Nuts & Seeds Meats & Dairy Herbs & Spices Juices & Energy Drinks Frozen Foods Canned Goods Coffee Baby Food Pet Food Chips, Crackers, Cookies & Chocolate Health & Beauty Products Clothing (George Mateljan Foundation) Conclusion/Recommendations The consumer and environmental benefits of organic products make them worth spending the extra money. If the consumer does choose organic, many different products can be found in either chain grocery or natural food stores. When choosing organic products, you should • • • Carefully read labels. As the USDA has three different categories of labeling organic products, 100% Organic, Organic and Made with Organic Ingredients. Choose 100% organic products. If the consumer can afford to spend more on products, it’s recommended they buy 100% organic. Choose chain grocery store. If the consumer wants to buy organic products but doesn’t have the budget for expensive health food store prices choose a chain grocery store. Works Cited Joe Bullinski Page | 6 April 11, 2017 Foerstel Design. "Organic FAQ." Organic.org - Organic FAQ. N.p., 2017. Web. 03 Apr. 2017. . George Mateljan Foundation, The. "Everything You Need to Know About Organic Foods." Whfoods. N.p., 2017. Web. 03 Apr. 2017. . Global Organics. "4 Categories of Organic Product Labels." Global Organics News & Views. N.p., n.d. Web. 03 Apr. 2017. . Intuitive Minds. "Milwaukee, WISCONSIN Organic Food Stores Locator - Find Your Local Organic Food Stores and Suppliers." Milwaukee, WISCONSIN Organic Food Stores Locator - Find Your Local Organic Food Stores and Suppliers. N.p., n.d. Web. 03 Apr. 2017. . Make Your Body Work. "Why Eat Organic Food?" Make Your Body Work. N.p., 05 Oct. 2015. Web. 03 Apr. 2017. . Mayo Clinic. "Organic Foods: Are They Safer? More Nutritious?" Mayo Clinic. N.p., n.d. Web. 03 Apr. 2017. . One Designs. "Consumers Demand More Local Organic Food." Farming 4 Change. N.p., 25 Jan. 2015. Web. 11 Apr. 2017. . USDA. "The Organic Seal." The Organic Seal | Agricultural Marketing Service. N.p., n.d. Web. 03 Apr. 2017. . DATE: April 12, 2018 TO: Robert Marini FROM: Montgomery Burns SUBJECT: WHY GENERAL ELECTRIC’S STOCK FELL AND THE FUTURE OUTLOOK FOR INVESTORS General Electric (GE), one of the largest infrastructure and technology companies in the world, has seen a 51.61% decrease in their stock from February 25, 2017 to February 25, 2018. From this report, shareholders will be able to decide whether they want to keep their positions in General Electric. The report will cover two main topics: (1) why General Electric’s stock has declined significantly and (2) will the stock price ever rebound back. Why General Electric’s Stock Has Declined Significantly Below in Figure 1 is a chart of General Electric’s stock price from February 25, 2017 to February 25, 2018. As one can see from Figure 1, the stock price has realized little to no upward movement in the period shown. It has fallen from a high of $30.20 all the way down to its current price of $13.68. There have been four main reasons behind the significant drop in General Electric’s stock price: lower demands, insurance portfolio debt, insurance portfolio investigations, and revenue recognition problems. Figure 1 (Yahoo! Finance) Montgomery Burns 2|Page April 12, 2018 Lower Demands Power markets such as gas and coal have been interrupted because of lower volumes and services globally. These lower volumes are primarily due to the lower demand for electricity and the growth of renewable energy sources such as wind and solar. General Electric’s European and Asian manufacturing markets have already been reduced substantially due to this falling demand (Proctor, Darrell). From the average estimates gathered by Bloomberg, profit expectations have already been cut from earnings of $1.07 per share to $0.97 per share (Clough, Rick). Insurance Portfolio Debt In 2004, Genworth Financial Inc (NYSE: GNW) was created out of numerous insurance businesses of General Electric (Murphy, Tara). General Electric formed this insurance business because they did not want an insurance business interfering with their profits. Plus, they had the extensive capital and resources to accomplish it. To make the Genworth Financial Inc IPO an appealing investment, General Electric put some risker long-term care insurance policies on their balance sheet. Unfortunately, generating money on long-term care insurance is unachievable due to low interest rates and higher life expectancies (Levitt, Aaron). In 2018, General Electric exposed a $6.2 billion after-tax charge from the insurance portfolio (Clough, Rick). The company explained that the total insurance charge would cost them $15 billion over the time span of 7 years (Henning, Peter). To save cash for the future insurance charges, General Electric had to take large precautions. They cut their dividend, removed 12,000 power jobs, and put their railroad and light bulb divisions up for sale (Egan, Matt). Insurance Portfolio Investigations The $6.2 billion up-front charge and $15 billion total cost on their insurance portfolio accumulated over the course of ten years. Not only is this a massive underestimation in costs, but it shows that General Electric may have been trying to hide their losses (Henning, Peter). There have been multiple lawsuits by shareholders on whether the company handled its insurance commitments honestly (Levitt, Aaron). Currently, the SEC is determining if their failure to recognize the losses earlier was for keeping the company’s earnings positive. The SEC is also investigating why these losses are only being revealed now (Henning, Peter). Revenue Recognition Problems. On top of their insurance portfolio, General Electric is also being investigated by the SEC for revenue recognition issues. They are being questioned for recording revenue early without completing the services they promised to their clients in future accounting periods (Egan, Matt). Due to the company struggling, they most likely adjusted their numbers to make their present earnings better and hope their future earnings recover. General Electric dealt with a comparable situation in 2009 when the SEC charged them $50 million for civil fraud and accounting charges. Montgomery Burns 3|Page April 12, 2018 This means that the SEC will probably be harsher in their penalties towards General Electric with past issues in the same charges (Henning, Peter). Will the Stock Price Ever Rebound Back? The recent operations of General Electric have threatened its established time of staying on the Dow Jones Industrial Average since 1896. Their cash position has dropped by approximately $47 billion in the last three years, which lead to three consecutive negative cash flows. All in all, building the company back to where it was from a financial standpoint will not be easy and will take time (Healy, Will). To determine if General Electric’s stock will ever bounce back, this report will analyze both technical and fundamental indicators. Technical Analysis Figure Two shows the candlestick chart of General Electric’s stock price within the last year. The purple line hovering above the candlesticks is the simple moving average (SMA) of the stock. As one can see by the simple moving average, there is no hint at any trend moving up soon for General Electric. Figure Two (StockConsultant) Fundamental Analysis When General Electric altered their numbers to make their financial reports appear better, they risked losing the trust of their investors. In turn, this damages the reputation of the company in worse ways than they could have imagined (Henning, Peter). Now the effects of changing their numbers in the past has affected their most recent financial reports. Below are some key figures that represent how the company is performing financially: Montgomery Burns • • • • • • • • • • 4|Page April 12, 2018 Total Revenue (FY): $122.093 Billion Gross Profit (FY): $27.014 Billion EBITDA (TTM): $3.793 Billion Net Income (FY): -$5.787 Billion Earnings Per Share (FY): -$0.30 Market Capitalization (February 25, 2018): $118.756 Billion Enterprise Value (MRQ): $210.008 Billion Cash Ratio (FY): 0.5104 Debt to Equity (MRQ): 2.0943 Return on Assets (TTM): -0.0065% (TradingView) General Electric is unquestionably hurting as a company and struggling to keep afloat financially. However, there still are some positive aspects to the company that need to be evaluated. Listed below are significant fundamental indicators that might make General Electric a promising investment to investors: • • • • Industrials Recovering. Confidence in the tax reform, increasing prices in oil, and a strengthening worldwide economy build towards helping General Electric’s business. Undervalued Assets. General Electric’s power business is doing poorly, but the business model supporting it still has unique and competitive aspects to it that no other business would be able to replicate. Insider Trading. Wise investors including the CEO of Loews Corporation, the CEO of Cognizant Technology Solutions Corp, and the CEO of QUALCOMM bought about $56 million worth of General Electric stock when it dropped beneath $20. General Electric Has Already Bottomed Out. With the massive amount of assets and resources that General Electric contains, many believe that the company cannot decrease in value anymore. (Lango, Luke) Conclusions/Recommendations General Electric’s stock is a bad buy if the investor is looking at a short-term investment. No one knows how long the stock will take to hit its final bottom and the company’s stock is still extremely unpredictable. However, the stock could be a strong buy if the investor is seeking a long-term investment. General Electric is still a unique and competitive business model within their industry and has a large amount of potential to succeed in a few years. Once they rebuild their company’s structure, they will most likely rebuild bigger and better than before. Montgomery Burns 5|Page April 12, 2018 Works Cited Clough, Rick. “GE Says Finance Woes Pushing Company Toward Low End of Forecast.” Bloomberg. 21 Feb. 2018. Retrieved from www.bloomberg.com/news/articles/2018-02-21/ge-says-finance-woes-pushing-companytoward-low-end-of-forecast. Egan, Matt. “GE warns restated results will shrink 2016 and 2017 profits.” KYMA, 25 Feb. 2018. Retrieved from http://www.kyma.com/news/ge-warns-restated-results-will-shrink2016-and-2017-profits/707443043. Healy, Will. “General Electric Company (GE) Stock May Be a Buy Eventually.” InvestorPlace. 29 Mar. 2018. Retrieved from investorplace.com/2018/03/general-electric-company-ge-stock-may-be-buy/. Henning, Peter. “Accounting Investigation Adds to Challenges Facing G.E.” The New York Times. 2 Feb. 2018. Retrieved from www.nytimes.com/2018/02/02/business/dealbook/general-electric-accountinginvestigation.html. Investing.com. “GE (GE) Financial Ratios.” Investing.com. 30 Mar. 2018. Retrieved from www.investing.com/equities/general-electric-ratios. Lango, Luke. “Stick with General Electric Company Stock for the Long Term.” InvestorPlace, 10 Jan. 2018. Retrieved from investorplace.com/2018/01/ge-stock-long-term/. Levitt, Aaron. “GE Capital Is Still Plaguing General Electric Company.” InvestorPlace, 21 Feb. 2018. Retrieved from investorplace.com/2018/02/ge-capital-still-plaguing-generalelectric-ge/. Murphy, Tara. “General Electric Completes Spinoff Of Genworth Financial.” Forbes Magazine. 6 June 2013. Retrieved from www.forbes.com/2004/05/25/cx_tm_0525video1.html#1b3dad646aa9. Proctor, Darrell. “GE Cutting 12,000 Jobs in Power Division.” POWER Magazine. 7 Dec. 2017. Retrieved from www.powermag.com/ge-cutting-12000-jobs-in-power-division/. StockConsultant. “StockConsultant Technical Analysis and Trading Charts for GE, $GE, General Electric Co.” StockConsultant. 30 Mar. 2018. Retrieved from www.stockconsultant.com/consultnow/basicplus.cgi?symbol=GE. TradingView. “GE Stock Price and Chart.” TradingView. 30 Mar. 2018. Retrieved from www.tradingview.com/symbols/NYSE-GE/. Yahoo! Finance. “GE : Summary for General Electric Company.” Yahoo! Finance. 30 Mar. 2018. Retrieved from finance.yahoo.com/quote/GE?p=GE. Some Textbook Selections Relevant for the Informal Report (6th ed) Chapter 12 • • Graphics (Charts and other visuals); incorporating graphics into reports (338-341) Documenting data and MLA style (C-1 through C-3) Chapter 13 • • • • • • Preparing a three point introduction (363) Organizing data (312-315) Preparing Report Conclusions and Recommendations (350-360 & 358-360) Headings and Heading Levels (435-436) Using transitional words (363-364) Sample Informal report (379-381) English 205: Business Writing REPORT 3-5 pages (not counting visuals and works-cited page, report format, New times Roman 12point font, single spacing Overview This assignment requires you to effectively report analytical information while employing the principles of business writing. Business reports typically have two purposes: they answer questions or solve problems. You will construct a report either offering a problem-solving recommendation to an audience or answering a question you believe is relevant to them. You will be selecting a real problem or question from your life, work, or school—preferably something that is important to you and/or is important in your discipline—and writing a report to a person with the power to solve that problem or who is need of an answer to a question they have. The topic should be sufficiently complex to merit analysis, though not so complex that a sufficient analysis would exceed the requirements for this assignment. So you need to keep the topic narrow. In addition, your report writing situation must • • • POTENTIAL TOPICS Not be a personal complaint. Part of the point of this assignment is to explore how writing can effect real social change, and while writing a report about a personal complaint (e.g., “My fries were cold”) has the potential to generate change for you (e.g., free fries, next visit), it’s more useful, I think, to attempt to create real change or answer a question that will benefit others. Must not be too subjective. A report trying to answer the question who is the greatest rock and roll drummer of all time will almost certainly end up just being an opinion paper that can’t be backed up with objective proof. Have a real chance of creating change. There’s little point in writing a report to make a recommendation or answer a question you know won’t be accepted (e.g. “I think you should stop selling fries and start selling sushi”); your writing situation needs to address a problem to which you can offer a realistic solution that will be taken seriously by the recipient. Here are some topics students have chosen in the past, just to help you start thinking about your topic. • • • Adding more volleyball posts on Bradford Beach Changing scheduling policies for restaurant staff Altering the curriculum of a major (e.g., eliminating or adding a requirement, or adding a course) RECOMMENDATION REPORT —2 • • • • Arguing for a rule change at a dog park Showing readers what to look for when purchasing sports memorabilia. Making students safe when commuting to campus Showing how to protect yourself from identity theft In other words, this can address just about any situation you’d like changed, whether in your community, your school, your program, or whatever. The point is that even situations like these are complex, assuming you actually want your change to occur. Consider the example of adding volleyball posts to Bradford Beach. Many people who wanted to accomplish this might call the city or write a general letter (or email) that said, basically, “add more poles!” The student who took on the project, though, knew that he had to persuade the city on its own terms, by trying to first understand why they had the number of poles they did – surely the reason wasn’t just that the people putting them in got tired. Someone made a decision, for a reason. So he did the research. He called the city to find out why they decided as they did; it had to do with the ease of maintaining the beach with their mechanical sand sweepers – more poles = more headache. So then he contacted the city of Chicago, and learned that they were able to keep more poles on their beach using a different technique. Knowing this allowed him to write a _much_ smarter proposal that anticipated the city’s argument and addressed it in a concrete fashion. PROCESS Your process for these reports will be as follows: 1. Find a situation/topic and an audience. Once you’ve developed your idea, tell me about your topic and get your topic approved before you go on to the other steps of the process. 2. Analyze the situation. Analyze your particular situation, concentrating on the particular problem and solution you’re suggesting; remember that a crucial element of the assignment is convincing your audience that the problem exists, that it’s important that they try to solve it, and that your solution is the best. 3. Conduct research. Figure out why the current situation exists and gain an understanding of the complexity of the situation. Remember how important it is that you understand the reasons that policies exist before you can expect that they will be changed. 4. Draft your report. Taking into account your rhetorical analysis, write a draft of your report. 5. Revise. Using the feed-back you received from your instructor, you will revise your report. REPORT PARTS Your finished report must include: • At least two visuals/exhibits RECOMMENDATION REPORT —3 • • A minimum of three sources (also cited in the report) The text of the report (3-5 pages) All of these elements are explained in the text and class material. You may also choose to include end matter and/or a table of contents. The final version of your report should reflect professional standards. All of the components of the document in a single Word document. SOME EVALUATIO N CRITERIA A successful report, for the purposes of this class, will: • Effectively construct the problem for the reader, so that the importance of the problem to the reader is thoroughly established • Argue effectively for the recommendation that is being offered, persuading the reader that your solution is the best (in a problem solving report) • Provide information that will answer all the readers anticipated questions (for an informational report) • Include visual elements to elaborate key points • Follow a logical pattern of organization; 3-point-introduction and transitions from one idea to the next that guide the reader through the material; unified paragraphs • Have high visual accessibility using headings, subheadings, bulleted lists and anything else that might make the document more scannable. • Use proper documentation (MLA or APA style had shown in appendix C of the textbook) • Use language and tone adapted to the subject, purpose, and audience • Be free from mechanical errors (grammar, spelling, etc.)
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