Question

Do you think Capital Structure & Leverage and Distribution Strategies impact each other? Explain.

Answer 1

Yes, I think capital structure and leverege strategy and distribution strategy impact each other.

A perfect leverege helps in maintenance of a perfect capital structure which inturns helps in optimum utilisation of resources of the company in order to effectively attain the objectives ifvthe company.

A company with higher leverage is not able to generate the consistent core competencies as it doesn't have a command over the supply chain which delivers the products through a distribution strategy.A High debt firm is therefore not able to satisfy the consumers.

A company with lower leverage means it has control Over the equity and it doesn't have to pay to the creditors therefore it has a competitive advantage over the supply chain and distribution channels so it is able to direct the network In order to satisfy the consumers.

A firm which wants to have a better distribution channel must be focused on generation of a high level of return on capital which will help to beat the cost of debt In order to fuel growth and have a relative competitive edge in supply chain management.