Positive and Negative Effects of Debt

Debt can be viewed as good and sometimes also can bad too. Debt makes people and organizations that they would not allowed to do. All this while, people use it to purchase houses, cars, and others things with their cash on hand. With the debt, they can spend as much as they want on expensive things. Besides, for those companies also use the debt as to influence the investment made in their assets. This influence of debt is considered as an important part in determining the riskiness of the investment. As we know that, the more the debt per equity, the more risky we will face. The increased of risks will bring some bad effects to organizations as well as individuals. As for individuals, the cost of servicing the debt can grow beyond the ability to pay due to both external events and this cause their income loss. And there Continue reading

Corporate Governance Models – Anglo-American Model and European Model

Corporate governance comes into play in cases where the management of the organization has to be carried out by a manager or a group of managers who are not the owners of the organization. In essence, corporate governance is implemented by a business’ financers in order to monitor and regulate the organization’s utilization of its investments. In this case, the individuals hired to manage the business are paid employees and are responsible for the effective execution of the organization’s processes. As a result of this arrangement, it is only natural for a separation to exist between the ownership of the organization and the management of the organization. While this may appear to be a simple concept, modern-day business models have allowed corporate governance models to develop rapidly over the last few years and this has led to the development of different corporate governance models. The implementation of these corporate governance Continue reading

Equity Derivatives in India

In the decade of 1990’s revolutionary changes took place in the institutional infrastructure in India’s equity market. It has led to wholly new ideas in market design that has come to dominate the market. These new institutional arrangements, coupled with the widespread knowledge and orientation towards equity investment and speculation, have combined to provide an environment where the equity spot market is now India’s most sophisticated financial market. One aspect of the sophistication of the equity market is seen in the levels of market liquidity that are now visible. The market impact cost of doing program trades of Rs.5 million at the NIFTY index is around 0.2%. This state of liquidity on the equity spot market does well for the market efficiency, which will be observed if the index futures market when trading commences. India’s equity spot market is dominated by a new practice called ‘Futures — Style settlement’ or Continue reading

Case Study of Procter & Gamble: Marketing of Scope Mouthwash

Scope was introduced in 1967 by Procter & Gamble, is a green mint tasting mouthwash, and was positions as a great tasting mouth refreshing brand that provided bad breath protection. Scope held 32% share of the Canadian market for 1990. In 1970 Scope became the market leader in Canada, with many competitors, such as Listerine mouthwash that was launched by Warner Lambert in 1977 and it was a direct competitor to Scope, it had nearly the same characteristics as Scope with a 12% of the market share during that time. But the major competitor for Scope was Plax, a brand by Pfizer Inc, which was launched in Canada in 1988 on a platform quite different from the traditional mouthwashes, and gained a 10% share since launched. Plax detergents were supposed to help loosen plaque to make brushing effective. Before the entry of Plax, brands in the mouth wash market were Continue reading

Future of Indian Banking System

The interplay between policy and regulatory interventions and management strategies will determine the performance of Indian banking over the next few years. Legislative actions will shape the regulatory stance through six key elements: industry structure and sector consolidation; freedom to deploy capital; regulatory coverage; corporate governance; labor reforms and human capital development; and support for creating industry utilities and service bureaus. Management success will be determined on three fronts: fundamentally upgrading organizational capability to stay in tune with the changing market; adopting value-creating M&A as an avenue for growth; and continually innovating to develop new business models to access untapped opportunities. Through these scenarios, we can paint a picture of the events and outcomes that will be the consequence of the actions of policy makers and bank managements. These actions will have dramatically different outcomes; the costs of inaction or insufficient action will be high. Specifically, at one extreme, the Continue reading

Economic Tools for Management Decision Making

Managerial decision-making draws on economic concepts as well as tools and  techniques of analysis provided by decision sciences. The major categories of these tools  and techniques are  optimization, statistical estimation and forecasting.  Most of these methodologies are technical. These methods are briefly  explained below to illustrate how tools of decision sciences are used in managerial  decision making. 1.  Optimization Optimization techniques are probably the most crucial to managerial  decision making. Given that alternative courses of action are available, the manager  attempts to produce the most optimal decision, consistent with stated managerial  objectives. Thus, an  optimization  problem can be stated as  maximizing  an objective  (called the objective function by mathematicians) subject to specified constraints. In  determining the output level consistent with the maximum profit, the firm  maximizes  profits, constrained by cost and capacity considerations. While a manager does not  resolve the  optimization  problem, he or she may make use of the Continue reading