Understanding Strategic Planning
What is Strategy? Strategy means consciously choosing to be clear about your company's direction in relation to what's happening in the dynamic environment. The fine points of strategy are as follows: Establishes unique value proposition compared to your competitors Executed through operations that provide different and tailored value to customers Focuses on activities that fit together and reinforce each other Drives continual improvement within the organization and moves it toward its vision A strategic plan is the formalized roadmap that describes how your company executes the chosen strategy. A plan spells out where an organization is going over the next…
Read MoreUnderstanding Cost of Capital – Finance
Equity Capital When a company raises capital through the issue of ordinary shares it is effectively borrowing from the capital markets on a permanent basis. There is no maturity date associated with the shares and hence the loan is never repaid. Since the company is permanently in debt to the ordinary shareholders, the latter are the ultimate owners of the enterprise - a relationship recognized in law. The implication is that the enterprise’s business activities ought to be guided by the shareholders’ interest in wealth maximization. In other words, it should seek to maximise the rate of return on equity.…
Read MoreUnderstanding Debt Capital and Eurobonds
Debt Capital When a company borrows funds, it creates a creditor rather than a shareholder. Debt capital occurs in a variety of forms. The simplest option is a fixed-rate, fixed-term, unsecured bank loan. Alternatively, a company can sell loan stock, either unsecured or in the form of debentures. Mortgage debentures are secured against specified assets of the company (usually land and buildings), while other debentures are secured against the current and future assets of the company in general. The advantage from the viewpoint of the company is that, unlike the case of mortgage debentures, it remains free to dispose of…
Read MoreSources of Investment Finance
When the management of a company addresses the issue of financing it investment decisions, it faces, in principle, a wide range of options. The personal wealth of the manager(s) is one potential source of investment funds. A bank loan is another. Another possibility is to sell shares in the company to outside investors. Or the company could sell loan stock (bonds). Profits arising from previous business activity are another possible source of finance. The matter is complicated by the fact that there is also considerable scope in deciding on the detail of a particular fund-raising initiative. For instance, a company…
Read MoreInternational Law, Challenges and Allegiance
Challenges in the Subsidiary A home-country manager is sent by the home office to a subsidiary to manage the subsidiary. Home-country managers of foreign subsidiaries face several challenges. The foreign subsidiary business is usually conducted in a language different from that of the home office, and it is governed by laws of the host country. It operates in a cultural environment that is not the host-country cultural environment, and it is not the corporate cultural environment, but rather, a blend of both. Law and Ethics There will be cases in which the home office will request the application of legal…
Read MoreA view on Childhood and Family Life
Development stages of childhood Early childhood Early childhood follows the infancy stage, and begins with toddlerhood when the child begins speaking or taking steps independently. While toddlerhood ends around age three when the child becomes less dependent on parental assistance for basic needs, early childhood continues approximately through years seven or eight. According to the National Association for the Education of Young Children, early childhood spans the human life from birth to age eight. Middle childhood Middle childhood begins at around age seven or eight, approximating primary school age and ends around puberty, which typically marks the beginning of adolescence. Adolescence Adolescence is…
Read MoreOrganization Forms and Ethics
Business Organization When we organize a business enterprise, we need to think of more than the great product, innovative service, or brilliant marketing campaigns that will make the business successful. We must also think of the enterprise from the perspective of its legal rights and obligations. Business concerns are established with the objective of making profits. They can be established either by one person or by a group of persons in the private sector by the government or other public bodies in the public sector. The law of business organizations deals with the subject of the specific kinds of organizational…
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