berkshire hataway

Running Head: CASE STUDY OF CSR BERKSHIRE HATHAWAY

Abstract

Berkshire Hathaway was founded in Cumberland, Rhode Island United States (1839 as Valley

Falls Company) and formed in1955 as Berkshire Hathaway by Warren Buffet whom is referred

to as the Oracle of Omaha. Warren Buffet has been able to make his name into a house hold

brand with companies like Geico, Dairy Queen, Fruit of the Loom, Helzberg Diamonds, and

Flight Safety International. Within this essay discussion I will elaborate on how Warren Buffet

was able to turn a small investment firm into one of the countries number one Investment

companies with excellent CSR and NGO.

By: Tunisia I.E. Al-Salahuddin

Master Science -Organizational Leadership

http://en.wikipedia.org/wiki/United_States

http://en.wikipedia.org/wiki/Rhode_Island

http://en.wikipedia.org/wiki/Cumberland,_Rhode_Island

CASE STUDY OF CSR BERKSHIRE HATHAWAY 1

Introduction

Warren Buffet has made Berkshire Hathaway a household for investors it has also created a

connection with the common person with their Dairy Queen and Geico venture. Warren Buffet

the man talked about within the book, “The Snowball” which talks about is years in school and

college and the educational hardships he faced, and how he overcame each one. He also

elaborates on healthy financial investments that he made and the genius way he educated others

to invest into penny stocks and other mutual funds to gain the maximum from their stock market

dollar. Mr. Buffet has been able to grow Berkshire Hathaway into an A list Wall Street company

meaning he holds a chair on Wall Street something all major companies hope to gain and achieve

within their business endeavors. Even though Berkshire Hathaway hit a few bumps in the road

by being fined by the Federal Trade Commissioner in 2014 they have still been able to move

investment mountains and make ground. Berkshire Hathaway is and was a successful NGO that

also has a CSR that governs them as well. Within this essay report I will discuss their

contributions and how they work with the government as a NGO that has done extremely well.

Thesis Statement

Berkshire Hathaway annual report stated, “Viewed as a single entity, the companies in this

group are an excellent business. They employed an average of $25 billion of net tangible assets

during 2013 and, with large quantities of excess cash and little leverage, earned 16.7% after-tax

on that capital” (BH, 2013). Due to Berkshire Hathaway’s allowing investors to have a say

within the business makes them more desirable. Berkshire Hathaway’s CSR allows the voice of

their stakeholders and investors to be heard and also seen. The companies’ social responsibility

is remarkable.


Fortune 500 Ranking

Key Financials $ Millions % changeRevenues 182150 12.1%Profits 19476 31.4%Assets 484931

(Fortune Global, 2014)

Type of Industry

Berkshire Hathaway is a company that has helped many investors all over the global with

becoming successful with when it comes to super investing. Many of their clients have been

able to invest in penny stocks and been able to make a difference financially. “Berkshire

Hathaway Inc. is a conglomerate holding company owning subsidiaries engaged in a number of

business activities, including property and casualty insurance and reinsurance, utilities and

energy, finance, manufacturing, service and retailing” (Fortune, 2014). The majority of investors

are those whom invest into diverse stocks, bonds, and mutual funds.

Global Standard Industrial Classification (GSIC)

This is a report from the Berkshire Hathway company themselves. This company is

considered a holding company, investment, stocks, bonds, and mutual funds company on Wall

Street. Information and addresses are correct along with SEC File Numbers.

REPORTING-OWNER:

OWNER DATA:COMPANY CONFORMED NAME: BUFFETT WARREN ECENTRAL INDEX KEY: 0000315090

FILING VALUES:FORM TYPE: 4SEC ACT: 1934 ActSEC FILE NUMBER: 001-14037FILM NUMBER: 101085474

BUSINESS ADDRESS:


STREET 1: 1440 KIEWIT PLZ 3555 FARNAM STSTREET 2: STE 1440CITY: OMAHASTATE: NEZIP: 68131

MAIL ADDRESS:STREET 1: 1400 KIEWIT PLZ 3555 FARNAM STSTREET 2: STE 1440CITY: OMAHASTATE: NEZIP: 68131

REPORTING-OWNER:

OWNER DATA:COMPANY CONFORMED NAME: BERKSHIRE

HATHAWAY INCCENTRAL INDEX KEY: 0001067983STANDARD INDUSTRIAL CLASSIFICATION: FIRE, MARINE &

CASUALTY INSURANCE [6331]STATE OF INCORPORATION: DEFISCAL YEAR END: 1231

FILING VALUES:FORM TYPE: 4SEC ACT: 1934 ActSEC FILE NUMBER: 001-14037FILM NUMBER: 101085475

BUSINESS ADDRESS:STREET 1: 1440 KIEWIT PLZCITY: OMAHASTATE: NEZIP: 68131BUSINESS PHONE: 4023461400

MAIL ADDRESS:STREET 1: 1440 KIEWIT PLAZACITY: OMAHASTATE: NEZIP: 68131

FORMER NAME:FORMER CONFORMED NAME: NBH INCDATE OF NAME CHANGE: 19980810)


CEO and Executive Board

Executive LeadershipWarren E. BuffettAge: 842014 Salary: $100.00 KChairman of the Board and Chief Executive Officer

Marc D. HamburgAge: 632014 Salary: $1.23 MSenior Vice President and Chief Financial Officer

Daniel J. JaksichAge:Salary: n/aPrincipal Accounting Officer, Controller and Vice...

Howard G. Buffett

Age: 60Salary: n/aDirector

Ms. Meryl B. WitmerAge: 53Salary: n/aIndependent Director

Number of Employees

Berkshire has 302,000 employees and 12 of them work at the corporate office. Berkshire

Hathaway is still currently hiring employees.

Headquarters

Berkshire Hathaway’s headquarters office is located in Omaha Nebraska where it was formed

once the name changed from Valley Falls.

Number of Offices Globally

Recently Berkshire Hathaway has increased their company human resource assets by hiring

over 302,000 worldwide. “Berkshire’s insurance and reinsurance business activities are

conducted through numerous domestic and foreign-based insurance entities. Berkshire’s

insurance businesses provide insurance and reinsurance of property and casualty risks worldwide

and also reinsure life, accident and health risks worldwide” (BH, 2015). Due to the company

investing in other subsidiaries it has allowed for the company to do substantial hiring along with

investment opportunities.


Reported Sales

Since 2013 Warren Buffet the CEO and founder of Berkshire Hathaway has made excellent

ground through joint ventures and alliances. By investing in one of his favorite restaurants Dairy

Queen and Geico he has been able to gain more investment stakeholders and investment ground

than ever before. Berkshire’s gain in net worth during 2013 was $34.2 billion. That gain was

after our deducting $1.8 billion of charges – meaningless economically, as I will explain later –

that arose from our purchase of the minority interests in Marmon and Iscar. After those charges,

the per-share book value of both our Class A and Class B stock increased by 18.2%. Over the

last 49 years (that is, since present management took over), book value has grown from $19 to

$134,973, a rate of 19.7% compounded annually” The efficiency of the Berkshire Hathaway

company is remarkable and the numbers show through revenue, employees, stakeholders, and

investors.

EFFICIENCY

Company industry sector

Revenue/Employee (TTM) 616,054 105,397,081 45,703,303

Net Income/Employee (TTM) 63,829 4,890,360 18,754,456

Receivable Turnover (TTM) 18.93 0.62 6.55

Inventory Turnover (TTM) 14.88 0.48 0.88

Asset Turnover (TTM) 0.39 0.26 0.02

(Reuters, 2015)


Company Performance

Below is a computation of the NASDAQ and earnings for March 19, 2015 showing the

company performance for the month of March 2015.

BRKa on New York Consolidated

218,300.05U

SD19 Mar 2015 Change (% chg)

$-1,398.95(-0.64%)Prev Close $219,699.00

Open $219,698.00

Day's High $219,698.00

Day's Low $217,705.00Volume 173

Avg. Vol 310

52-wk High $229,374.00

52-wk Low $181,785.00

What the numbers are showing are that Berkshire Hathaway has had more highs than lows

with for a 52-wk High. Berkshire Hathaway annual report stated, “Viewed as a single entity, the

companies in this group are an excellent business. They employed an average of $25 billion of

net tangible assets during 2013 and, with large quantities of excess cash and little leverage,

earned 16.7% after-tax on that capital” (BH, 2013). Due to Berkshire Hathaway’s allowing

investors to have a say within the business makes them more desirable. Berkshire Hathaway’s

CSR allows the voice of their stakeholders and investors to be heard and also seen. The

companies’ social responsibility is remarkable

CSR Compliance or Violations

Violations

In August 2014 Berkshire Hathaway was fined 896,000 to failure to comply with premerger

notifications. Premerger notifications are a way of allowing stakeholders the rightful notice

about present or future alliance and mergers that may be taking place. By notifying investors it

help to alleviate from possible fraudulent inside trading by keeping the company honest.

Note: Often time where there is a broker that knows that a company is merging he or she may

sale under the noise of outside investors or stakeholders before the announcement or they may


just merge without informing the investors all together. This is often reported within the Trade

Commissioner as fraudulent trading practices and is frown upon.

CSR Ranking

Berkshire Hathaway ranked number 11 on the fortune 500 transparently and non-

transparently list. Berkshire Hathaway was and is the 9th ranking company out of the 203

companies analyzed. “According to Dow Jones, “Corporate Sustainability…creates long-term

shareholder value by embracing opportunities and managing risks deriving from economic,

environmental, and social developments. Corporate sustainability leaders achieve long-term

shareholder value by gearing their strategies and management to harness the market's potential

for sustainability products and services while at the same time successfully reducing and

avoiding sustainability costs and risks” (CSR Resource, 2009). Even though Berkshire

Hathaway never discloses all of their value assets they do give many stakeholders and investors

insight into current economic state of the company. Below is a chart disclosing the ratings of

Berkshire Hathaway.

Appendix I Berkshire Hathaway Inc. Rating

Berkshire Hathaway Inc.

Subscribe to see all available data

Ratings CSR News CSR Jobs

Provides insurance and reinsurance of property and casualty risks also reinsure life, accident and health risks world-wide.

Ticker: BRKA ISIN: US0846701086Address: 3555 Farnam Street, USA, Omaha, NE,

68131Website: Berkshire Hathaway Inc.

Phone #: 1-402-3461400 CSR Web Area: SUBSCRIPTION INFO

Basic Corporate Social Responsibility (CSR) Ratings

Overall Community Employees Environment Governance

Berkshire Hathaway Inc. 40 38 38 43 38


Conglomerates SUBSCRIPTION INFO

All company average 55 56 57 58 52

USA SUBSCRIPTION INFO

Non Profit Contribution

Berkshire Hathaway has played a significant role when it comes to charitable donations and

within nonprofit realm of the corporate world. The Berkshire Hathaway Foundation has been a

major contributor to many foundations such as: Children of the Night, Los Angeles Senior High

School, Friends & Family Senior Connection, San Diego Humane Society, Project Wildlife,

Human Development Foundation-Cultivating Brilliance One Child at a Time, The San Diego

Foundation, Realtorsa® Building Homes for Heroes, Canine Companions for Independence, San

Juan Capistrano Historical Society. Many of these foundation and 501c organizations are located

within the San Diego and Los Angeles area. In 2014 Warren Buffet the founder of Berkshire

Hathaway donated $2.8 billion to the Bill and Melinda Gates Foundation as part of a plan to give

away part of his fortune he has accumulated over the years. Huffington Post associate online

press stated,

“In accordance with Buffett's giving plan, the Bill and MelindaGates Foundation received the biggest gift worth more than $2.1 billion. That was his largest single charitable contribution to date, according to Bloomberg. Buffett also gave nearly 1.7

million Class B Berkshire shares to his own foundation and 1.16 million shares to each of his three children's foundations. Buffett also made smaller gifts to several unnamed charities. Buffett has been giving away Berkshire stock since 2006, but he still controls roughly 34 percent of the voting power because his 321,000 Class A shares carry more voting rights ” (HP, 2014).


Considering the substantial amount of money given it is evident that Warrant Buffet has many

more organizational contributions that he is willing to give to society and humanity through

philanthropathy work with other billionaires and foundational leaders.

NGO

Non Governmental Organizations mean big business on Wall Street. These organizations

tend to make up their own rules and regulations that govern them. Billions of dollars pass

through the hands of big business executives each year which still help alleviate the economy in

some considerable way. Every company that Berkshire Hathaway has is a NGO company that

also contracts with the government on a regular basis. The question that many Americans ask is

it a good decision to Contract and work with NGO companies. Many might say yes it is fine to

to do business with a NGO based on the argument that NGO contribute services and

merchandise that many governmental organizations and businesses cannot deliver.

According to Counterpunch online news, “On Nov 3, 2009, Berkshire Hathaway, the investment vehicle of Warren Buffett, announced its plan to purchase the 77.4 percent of Burlington Northern Santa Fe (BNSF) that it did not already own for $26 billion in cash and stock – the largest deal in Berkshire history. The deal, which included Berkshire’s prior investment and the assumption of $10 billion in Burlington Northern debt, brought the total value to $44 billion. Buffett remarked it was a big bet on the United States” (CP, 2013).

NGO companies make up more than half of the United States economy to date and help build

by adding to the economy from the creation of small businesses and major corporations. Even

Barak Obama has taken interest within the NGO investment game. Warren Buffet is President

Barak Obama’s financier and gives him exceptional advice on current investment opportunities.

http://web.archive.org/web/20091104123533/http:/www.marketwatch.com/story/berkshire-buys-burlington-northern-2009-11-03


Strengths

Berkshire Hathaway’s strength is the Oracle of Omaha along with 12 others that participate in

the daily business of the company. When talking to Mr. Buffet the he only speaks about what he

knows and that is numbers and investment opportunities. By allowing others the opportunity to

have the chance to invest from evens the bottom of the pyramid with penny stocks. According to

Stephen Simpson the writer for Investopedia stated, “Instead of buying giant boring companies

and holding for decades, Buffett has thrown his lot in with the penny stocks. After all, those

efficient market hypothesizers that proved that it's impossible to beat the market have based their

case largely on information - the idea being that all that can be known about a big company is

already known, but that it might be possible for lesser-known companies to have some

outperformance potential” (Investopedia, 2011).

The only weakness I would say about Berkshire Hathaway is the future of their sustainability

and the successor that would take Warren Buffet’s place if he were to pass away. Another

weakness that may play a factor of the company is the Omaha 12 that has been created to see

into the future endeavors of the company. Will these people be replaced with the same genius

mind set as the current Omaha 12? I would not call this a weakness, but rather a part of the

needed planning and mapping for Berkshire Hathaway.

Opportunities

Threats (Oil and Gas)

Berkshire Hathaway has many companies in which they have invested a large stake of money

into and these companies are Exxon Mobil Corporation (XOM), ConocoPhillips (COP),

National-Oilwell Varco, Inc. (NOV), Phillips 66 (PSX), Suncor Energy Inc. (SU), “ One of the

most obvious threats to Berkshire Hathaway is the damage being done to the energy sector,

http://investorplace.com/stock-quotes/SU-stock-quote/

http://investorplace.com/stock-quotes/PSX-stock-quote/

http://investorplace.com/stock-quotes/NOV-stock-quote/

http://investorplace.com/stock-quotes/COP-stock-quote/

http://investorplace.com/stock-quotes/XOM-stock-quote/


where Warren Buffett has significant interests. Indeed, the energy sector is having a nightmare

year now that benchmark prices for Brent crude are down from more than $110 a barrel in mid-

summer to less than $70 today” (Burrows, 2014). Warren Buffet also has a large sum of

portfolio of utilities and transmission companies, including MidAmerican Energy, PacifiCorp

and NV Energy (2014) and these companies that Warren Buffet and Berkshire Hathaway invest

in are not your norm but consider to be super powers and corporations on a larger scale. The

money that has been invested within these companies are not for the penny stock investor but the

mega investor with years of knowledge and know how.

SWOT Model

Berkshire Hathaway uses many factors within their SWOT model from Company Overview,

Swot Analysis, Share Data, to their financial performance. Some of Berkshire Hathaway factors

within their model are; reduce, create, raise, and eliminate. The company also uses metrics and

believes in dividends for their investors. The value chain for Berkshire Hathaway is:

Demand Fulfillment

Inbound Logistics Operations Outbound Logistics

Demand Generation

Marketing and Sales Services

Support Activities

Procurement Technology Development Human Resources Infrastructure

The company uses metrics, tables, and graphic illustration below for Appendix I. Within this

SWOT report it gives a narrative report regarding the diversity of the business, funding, strengths


and weakness, market cap, enterprise value, along with opportunities and possible company

threats. This SWOT report is a simple understandable report that gives a clear and concise report

for that given year. The SWOT report also gives a clear understanding of the financial

performance for the year.

Appendix II


A Company Plan and Social Responsibility (Simple Plan)

Creating a brilliant plan for Berkshire Hathaway could be done, but you would have to take them

out of the norm of their policies and procedures. This company has grown since they were first

formed by Warren Buffet and has taken on many new aspects within their development. For

Warren Buffet and Berkshire Hathaway it would be in the best interest for him to name a

successor for the future endeavors of his company for the near future, Develop within urban

areas and bring on a team of elite men and women from urban areas or inner city areas. I would

say invest within the African American Community and Latino community where the knowledge

is needed. Another aspect of their CSR plan would be for all of Berkshire Hathaway’s

companies to alleviate or lighten their carbon foot print. Always creating a way for investors to

earn dividends should be the standard practice for all investors and by doing this it makes the

company much more attractive. Where there is money there is money and opportunity.

Conclusion

One of the things that Berkshire Hathaway does is constantly invest into companies and never

stay stagnated within the investment arena. Even when one opportunity fails they always have 2

or 3 other investment opportunities lined up. It is evident that Berkshire Hathaway is going to be

around for the future and with that comes job creation. What I would like to see done along with

others is for Berkshire to invest more into the smaller chains or shall I say the mom and pop

stores that within communities all across the United States. Considering that Berkshire

Hathaway is such a massive company it would be somewhat of an obligation on their part for

them to be socially responsible within their business endeavor. For them to gain new ground

within investment junctions and opportunity they must invest on a constant into the youth of

tomorrow.


Appendices

Appendix I

This appendix illustrates Berkshire Hathaway’s CSR rating

Berkshire Hathaway Inc.Subscribe to see all available data

Ratings CSR News CSR Jobs

Provides insurance and reinsurance of property and casualty risks also reinsure life, accident and health risks world-wide.

Ticker: BRKA ISIN: US0846701086Address:

3555 Farman Street, USA, Omaha, NE, 68131

Website: Berkshire Hathaway Inc.

Phone #: 1-402-3461400 CSR Web Area: SUBSCRIPTION INFO

Basic Corporate Social Responsibility (CSR) Ratings

Overall Community EmployeesEnvironmentGovernance

Berkshire Hathaway Inc.

40 38 38 43 38

Conglomerates SUBSCRIPTION INFO

All company average 55 56 57 58 52

USA SUBSCRIPTION INFO


Appendix II

This appendix Illustrates Berkshire Hathaway’s SOWT Analysis Review


References

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