Evaluarea întreprinderii - studiu de caz Unibet

1. UNIBET – BUSINESS AND INDUSTRY OVERVIEW

1.1 Unibet– Brief Overview

The company was founded in 1997 by Anders Ström. The company is one of the largest on-line gambling operators in the Nordic market with over 275 000 customers worldwide. Unibet is focused on the Nordic region which accounts for 75% of the customer base. The rest 25% of the customers are diversified into more than 100 different countries. Unibet offers a comprehensive range of online gambling products such as sport betting, live betting and casino gambling through their website. 1998 the company was granted a license for betting operations in UK. The same year Unibet established an office in London and started its betting operations taking bets over the telephone. In 1999 a Swedish and an English website was launched. In 2000 the company was granted a license for betting operations in Malta. In 2001 the second version of Unibet’s website was launched that was translated into 12 languages. Moreover, in 2003 the company had a turnover of GBP 144 million and a profit after tax of GBP 2.9 million. In June 8, 2004 Unibet was noted on the Stockholm Stock Exchange. They were the first publicity traded online betting company on the Swedish market (Unibet, 2005).

Figure 1:1 Organizational structure Unibet (Unibet, 2005)

The business concept of Unibet is to “provide reliable on-line gambling and to build value by delivering entertaining gambling products and excellent service”. The strategy is to maintain its position in the Nordic region as well as expanding its operation within and outside the rest of Europe. Unibet Group plc is divided into different business units: Unibet Ltd (UK), Firstclear Ltd (UK), Unibet Holding Ltd (Malta) and Unibet Software (Sweden). Unibet Holding Ltd also has one sub branch Unibet International Ltd (Malta) (Unibet, 2005).

Unibet’s sport betting offers a comprehensive range of odds on a variety of international and local sport events, 24 hours a day, seven days a week. The customer will find odds on around 500 different events and around 25 different sports. The most popular sports are football, ice hockey and tennis, which together compromise around 80 per cent of Unibet’s sport books. The live element is very important for Unibet. This means that the customer can place a bet on a particular game or event and then watch the game live on the television. The company chose and prioritizes events that have a large exposure in the media. The most attractive are events broadcasted live on the terrestrial 1channels. The firm’s casino consists of 17 different products. This includes online table games like Roulette, Black Jack, Caribbean Stud, Baccarat and Texas Hold’em but also online slot machines. Casino games are not subject to seasonality variation as sport betting is. The activity on online casino games is relative stable over the year (Unibet, 2005).

1.2 Background

The importance of understanding cultures and traditions increases when markets are getting more and more international. This is also true when it come to corporate goals. In different countries there exist different philosophies when it comes to corporate and investor relationships. It is hard to find one universal rule that is not influenced by cultural determined norms. One example of this is the tradition of shareholder and corporate wealth maximization.

The Anglo-American markets are characterized by the philosophy that the firms’ main focus is on maximizing the shareholders wealth; the shareholders wealth maximization (SWM) model. The shareholders wealth is measured by the sum of capital gains3 and dividends. The firm should also try to minimize the risk faced by the shareholder for a given rate of return. This perspective is essential when it comes to attracting international capital from outside investors. During the 1990s economic expansion and bull market for a flaw in the SWM model was exposed. Instead of focusing on long-term value maximization several corporations focused on short-term value maximization. This development had been driven by the excessive use of stock options to motivate top managers. Shareholders can motivate managers to accept the prescriptions of the SWM model which is described in the study of Agency theory.

Continental European and Japanese markets on the other hand are characterized by the philosophy that the firms’ main objective is to maximize the corporate wealth, the corporate wealth maximization (CWM) model. In this model the shareholders have the same priority as other corporate interest groups like the management, suppliers, creditors and local community. The goal for the company is to earn as much as possible in the long run and to increases the corporate wealth for the benefits of all interest groups. The definition of corporate wealth is much broader than the definition of financial wealth. Corporate wealth also includes the market position of the firm and the knowledge and skills of the employees when it comes to production, technology, marketing and administration of the corporation. The CWM model avoids the shortcoming of the SWM model when it comes to short-term value maximization. However it has it owns flaw. Managers are focused on pleasing a number of different corporate interest groups. The problem is that it does not exist a clear structure of the tradeoffs when it comes to pleasing on different interest groups and how it affect the long term value of the company. This has influenced us to write a thesis that covers a more broaden perspective on corporate valuation.