Question

Question 4

Sometimes corporations make Fundamental Changes. Describe the change below.

1. Alphabet Company (Google) decides to move from the US to Korea.
2. Microsoft will split into the Software Company, Cloud Company, and Xbox Company
3. Company P will buy Company E.
4. Company F will create an additional class of shares with more voting rights than existing shares.
5. Company R decides to sell all assets and give the money to the shareholders.

Answer 1

Solution :

1) Offshoring or Relocation :

Offshoring or Relocation is a process where the company shifts it's manufacturing unit or a plant or its office to another country.

2) Demerger :

​​​​​​Demerger is a process wherein, the companys separates a group or a division from the entity. In other words, a large company is divided into smaller parts.

3) Acquisition :

Acquisition is a strategy, where the company acquires another company or merges with another company to expand its operations or enjoy the synergy.

4) Shares with differential rights :

A company issues shares with differential voting rights to retain control over the company.

The superior class of rights has more voting power than the normal class.

5) Liquidation :

Liquidation is the legal death of the company. The company sells all its assets , repays all the third party liabilities and obligations. The remaining excess amount after meeting it's debts is distributed to the shareholders.