In: Finance
Choose a publicly traded company and answer the following questions:
1. Explain the importance of considering the financial risk of rivals, customers, suppliers, and other counter-parties.
2. Then discuss what company should take into consideration in terms of how it might affect their financial decisions.
3. Analyze and rank the level of time a company should spend on financial planning/protecting their business from risk and competitors.
Publically traded companies are those who have issued securities through IPO (Initial Public Offering) and is traded in one of stock exchange.
Lets take example of Mutual Fund industry and consider the choosen company as the industry leader.
1. importance of considering the financial risk of rivals, customers, suppliers, and other counter-parties.
It is very important to keep a close track of the rival''s strategies to handle financial risk and managing customers and suppliers and other stake holders such as employees and distributors/broking houses. The leader should compare the parameters and should offer the same or relativly more to his stake holders to be competitive in market and continue to be the leader.
2. what company should take into consideration in terms of how it might affect their financial decisions?
The market leader should check what brokerage does other fund houses are offering to the distributors and what kind of salary pay scale have they adopted, because slight diffrence in incentive created a huge diffrence. These decisions help fund house to decide expense ratios of all schemes.
3. Analyze and rank the level of time a company should spend on financial planning/protecting their business from risk and competitors
There are various welfare activities the fund houses do, distributor training, invetor awaeness programme, fund manager's seminars etc. where the company can promote himself and his products in mass and protect their space in marketapart from this it is also necessary to have loyalty club and its incentves through with distributors are offered an incentive for appropriate share in market.