MBA 640 Finance Classmate Response

MBA 640 Classmate Response 

My name is XXX I am a graduate of the University of Louisville with a degree in Business Administration and a concentration in Finance. I currently reside in XXX, XXX. For the past 5 years I have been a professional soccer player and I hope to keep playing for as long as I can. Unfortunately this career will one day end, so I am starting to prepare for life after soccer by obtaining my MBA.

The difference between quantitative and qualitative information is relatively cut and dried. Quantitative research gathers data in numerical form which can be put into categories, or in rank order, or measured in units of measurement. Simply put, it’s based off of numbers. Qualitative research gathers information that is not in numerical form. It is more “descriptive” data (McLeod, 2008).

Quantitative

For New Earth Mining, there was a lot of quantitative information to take it in. It started with their executives being worried that the gold prices wouldn’t stay at the levels they were at. Gold’s prices can be very speculative. This led to the company wanting to diversify into new capital investments, which led them to Iron Ore. Iron Ore makes steel, and steel represents 95% of metal in the world. The price of Ore appreciated from 2002-2012. New Earth Mining realized this could be a profitable investment as the price was expected to stay at or above $80 per metric ton, since there is a global demand for Iron Ore (Fruhan & Wang, 2013). New Earth hired Drexel Corporation to analyze a location found in South Africa. This location would yield 30 million tons of ore, with about 60% iron content. This quantitative information further enhanced New Earth Mining to consider this investment.

The last bit of important quntitative information relates to how New Earth Mining would finance the project. It was estimated that the total investment cost would be around $200 million; 40% would have to be put up at the start, and the remaining to be put up at the start of the next year. New Earth Mining obtained $100 million to help fund the project from overseas customers, and had domestic lenders loan the other $100 million (Fruhan & Wang, 2013). By understanding this quantitative information, New Earth Mining was able to plan out the investment, and see what it would cost, as well as how much they could potentially profit.

Qualitative

One of the most important qualitative data was the information about South Africa. New Earth Mining conducted most of their work in the U.S. and Canada. They had major concerns about doing such a big investment in South Africa for multiple reasons. South Africa’s political system was unstable and corruption in the country was a major concern. The risks and concerns included: political risk affects the mining system, the constant threat of civil war in neighboring countries, as well as less-developed countries like South Africa having their govenment nationalize natural resource operations (Fruhan & Wang, 2013). While the quantitative data made the investment look promising, this qualitative information made New Earth Mining second guess themselves. Luckily for them, China, Japan, and South Korea are top countries in importing ore and steel production. They rely on having long term supply of raw materials to for steel, as it stimulates their economy. China, Japan and South Korea’s government had credit guarentees in these less developed countries for mining operations (Fruhan & Wang, 2013). This qualitative information helped New Earth Mining ease their concerns of political risk in South Africa, thus making it seem like a worthwhile investment.

Reference

Fruhan, W. E. & Wang, W.  (2013, Oct 11).  “New Earth Mining, Inc.”  Retrieved from Harvard Business School.
McLeod, S. (2008). “Qualitative vs. Quantitative” Retrieved from https://www.simplypsychology.org/qualitative-quantitative.html

Course: MBA 640 – Finance, Economics, and Decision Making
School: Southern New Hampshire University

  • : 07/04/2017
  • : 5.00