Question

Thumbs Up Will Be Given For Answer.

A) Discuss some of the actions that managers may engage in to erode shareholder value.

B) What are some of the advantages and disadvantages associated with a firm’s expansion into international markets?

Answer 1

Explanation:

Ans: A - Managers actions that can erode shareholder value

- Acquisitions:

When managers take an active role in the setup of other company buying current company and taking hold of it.

- Egotism:

Managers self-centred decision to feed their ego which focuses on strategies that involve their personal interest instead of acting on increasing long term shareholder value.

- Strategic takeover

When managers have a deep interest and greater offer from rival companies which opting to perform strategic takeover of companies with the help of these managers.

- A prearranged contract with the help of the manager about the hostile takeover by another firm which will eventually pay a hefty package to those managers.

Ans: B -

Advantage and disadvantage of firms international expansion

Advantage:

- With the expansion in the foreign market, the company will get exposure in that particular local market which will bring more revenue ultimately for the company.

- Potential growth from foreign investment in foreign markets bringing more new opportunities.

- Company will have access to foreign talent and understanding of new foreign work culture.

- Increase in brand value of company and reputation as a multinational company which will attract more opportunities from investors.

Disadvantages:

- Increase in the cost of expansion into a foreign market. The company have to invest lots of money from and arrange investment also to tap into the foreign market.

- There will be a cultural barrier for the company in selling items as well as in the workplace since people are new and company don't know all the regulation and tradition of doing business in that country.

- There are many economical as well as political risk for the company when they expand into a new foreign market. Political situations can greater impact the operation and the existence of the company.