BUS650: Managerial Finance Professor Leon Daniel Jr. August 26, 2013 According to Gitman, the goal of the firm, and therefore of all managers and employees, is to maximize the wealth of the owners for whom it is being operated (2009). The financial manager is responsible for acquiring sources of financing and allocate amongst competitive investment alternatives. The ultimate goal is to invest in projects yielding higher returns than amount of financing used to invest, so profits can be used satisfy claims and increase shareholder wealth. The issues facing financial managers are therefore to 1) increase sources of financing from investors and 2) increase shareholder wealth while maintaining a …show more content…
Monopolistic competition and Oligopoly are considered imperfectly competitive markets that are a result of few to many firms offering differentiated products. Differentiation of products impede substitution, which allow producers to earn higher than normal profits and thereby enhance shareholder wealth (Byrd, J., Hickman, K., & McPherson, M., 2013). Oligopolies are highly interdependent, with actions of one firm will resulting in a reaction from another. The interdependence results in higher efficiency as a necessity to compete with rivals. According to Claessens "greater development, lower costs, enhanced efficiency and a greater and wider supply resulting from competition will lead to greater [financial] access (2009). Market power in banking, for example, may, to a degree, be beneficial for access to financing. With too much competition, banks may be less inclined to invest in relationship lending .At the same time, because of hold-up problems, too little competition may tie borrowers too much to an individual institution, making the borrower less willing to enter a relationship (Claessens, 2009). More competition can then, even with relationship lending, lead to more access. Financial managers must be aware of its firm's competition and ensure a proper balance for financial
Advantages of Doing Business in China: As mentioned previously, there are many organizations around the whole world that perform their business in China. They do business in China due to the fact that China has a reliable market. It is also expected that the organizations doing business in China will continue to grow. Some advantages of doing business in China are that it is a major emerging market around the world. Also there are a lot of opportunities for organizations to invest in China for a longer period of time due to expanding of technology and
A tenet of that theory is that enlightened egoists will recognize that socially responsible behavior will benefit them.
Note Exhibit 3, Year 2 cash flows, the “add total change in cash” is an incorrect number. It should be $1,371,350.
The financial mangers goal is acquisition, financing, and management of assets. The challenges are investment, financing, and asset management decisions.
Competition is an important factor in maintaining a healthy economy, or at least in terms of America’s free enterprise system. This competition between two business to secure the money of a third party
The primary objective of the manager is to please the stockholder by maximizing stockholder wealth.
The assignment for this week was to review the video which discusses the four types of markets: perfect competition, monopolistic competition, oligopoly, and monopoly. In order to review this effectively there must be an understanding of the terms. According to our text, perfect competition involves products competing clients and that they offer corporations less potential profits than imperfectly competitive markets do. (Bryd, Hickman and McPheson, ) The text also referenced imperfect competition and this is when entry is restricted or goods are differentiated. (Bryd, Hickman and McPheson, ) Monopolistic competition, oligopoly, and monopoly according to research are deemed as imperfect competition. Monopolistic competition is considered imperfect because there are a lot of producers sell products that are distinquished from each other and there are not feasible substitutes. The oligopoly is a when there are many small companied that take up a large part of the market share. It is close to a monopoly but it is more than one company. A monopoly is normally one company that controls almost all of the market.
The word “efficiency”, in economists’ dictionary, is often interpreted into the degree of an economy allocates scarce resources to meet the needs and wants of consumers. As we can see that a free market economy is the one in which resources are allocated based on the principle of self-interests. Where there are profits, there are firms, and where there are firms to produce identical goods and services, inevitably, there is competition. The degree of competition determines the market structure which is the main determinant of the behaviour or conduct of firms. This in turn determines the efficiency in the use of scarce resources. It is often argued that competition leads
In an era of “cut-throat” competition where strict financial requirements may lead to financial instability and bankruptcies, the key should be an achievement of a harmonized approach between the extremes.
Monopolistic competition refers to a competition where monopoly exists, and is neither a perfect competition nor an oligopoly. As the market competition become intense, the distribution of resource becomes rational; therefore, the level of competition in the monopolistic competition is more intense than it is in the oligopoly and perfect competition (Roberts et al, 1977). Another reason caused this is that the products in the monopolistic competition can be easily replaced. Nowadays, smartphones of different brands are similar on their appearance, details and even functions.
The document Banking Competition and Capital ratios, is some interesting material that gives the reader some insight into the banking systems and their competitions. This document makes the point of how the competition in the banking systems even at this moment have all long been subject to debates that are among policymakers and supervisors. Cross-border mergers and association that goes on inside of the national limitations have encouraged apprehensions about market power appreciated by banks, and its impressions on competition among monetary organizations and financial constancy. With that said, this paper will give a summary of the document.
Today, corporate finance managers must make decision in a much more coordinated manner and generally has direct responsibilities for a control process. Because there are financial implications in virtually all segments of business, she/he must have sufficient knowledge of finance to work these implications into the area.
In the past and in many jurisdictions, the banking industry has been exempted from the full rigours of competition policy, owing to concerns that competition in banking might be harmful to the stability of the financial system. Critically evaluate the rationale for such an exemption, and examine developments in thinking concerning the application of competition policy to financial services following the financial crisis of the late-2000s.
Management of credit risk in financial institutions is a core concern for policy makers, practitioners, and regulators, particularly from the start of the fiscal crisis. A singled out driving force of financial unsteadiness is too much competition in the financial sector. As a result, special attention has been received since the beginning of the financial crisis (Sealey & Lindley, p.2009). Interested stakeholders have produced studies that investigate the relationship between competition, efficiency, and stability.
This study is intended to see the factor of competitor among banks in Malaysia. The objective of research: