The basic answer is that share repurchases are great when the share price is undervalued, and not-so-great when the share price is overvalued. To put it into a more useful context, if you would otherwise reinvest your dividends or invest new capital into the company at current stock prices, then share repurchases are useful to you because the company basically does it for you. The alternative is that the company could pay you a higher dividend, but you’d be taxed on that dividend and reinvest it into the company anyway. On the other hand, if you would not reinvest dividends or invest new capital into the company at current prices, then share repurchases are not in alignment with your current outlook, and it would be better for you to receive a higher dividend. Something else to be considered is that when a company uses money for share repurchases when it could be paying a higher dividend instead, the company’s management is limiting your control and increasing theirs.
CASE 1: Warren Buffett a) From Warren Buffett’s perspective, what is the intrinsic value? Intrinsic value is succinctly summed up by Warren Buffett as “the present value of future expected performance” (Bruner, Eades, & Schill, 2009). This intrinsic value can encapsulate how well the company is run, its cash flow and places a premium on management competency. Why is it accorded such importance? Intrinsic value is considered important in value investing as it allows Buffett to identify stocks or businesses which are undervalued.
1.What is the definition of cooperative strategy, and why is this strategy important to firms competing in the twenty-first century competitive landscape? Answer A cooperative strategy is a strategy in which firms work together to achieve a shared objective. Cooperative strategy is the third major alternative when it comes to internal growth and mergers and acquisitions which are the first two to be considered before cooperative strategy. Firms use to grow, develop value creating competitive advantages, and create differences between them and competitors. Thus, cooperating with other firms is another strategy that is used to create value for a customer that exceeds the cost of creating that value and to create a favourable position in the marketplace.
Be sure to provide evidence to support your claims. Simply stating as a strength that the company is profitable, is NOT analysis. If they are profitable then perhaps it is more likely that they can pursue opportunities for expansion, etc. (16 marks) 4. Conclusion: Based on your analysis of the company, is it in a position to pursue a new market entry strategy?
Why would directors be more efficient than shareholders at improving managerial performance and changing their incentives? How would such a linkage tend to reduce the agency problems between managers and shareholders as a whole? Such a linkage can reduce the agency problem because it more closely ties the director’s individually efficient action with aggregate surplus; that is, the overall most efficient outcome, and optimal performance of the corporation. This means that the shareholder’s preferred outcome will more closely resemble that of the directors. Why would directors be more efficient than shareholders at improving managerial performance and changing their incentives?
Using Porter’s Competitive Advantage of Nations: Diamond Factors discuss the competitive advantage of Singapore or any country of your choice. Use theories and examples to illustrate your answer. 1. Executive Summary National prosperity is created, not inherited. While not all nations are created equally, Michael Porter’s argues the reasons on why some nations are more competitive than others; and why some industries within nations more competitive compared to others.
2. What are the critical factors for success in this industry? Some company use the phrase "key success factors" to refer to those competitive factors that are most important to the industry in question. Some company prefer to get at the same issues by asking: “What makes the difference between success and failure in this business?” Unfortunately, this type of assessment often becomes a simple exercise in developing lists. Key success factors are those few critical or strategic factors that mean the difference between success and failure.
Being in the right location is a key ingredient in a business's success. If a company selects the wrong location, it may have adequate access to customers, workers, transportation, materials, and so on but may not be able to maximize it efficiently. Consequently, location often plays a significant role in a company's profit and overall success. A location strategy is a plan for obtaining the optimal location for a company by identifying company needs and objectives, and searching for locations with offerings that are compatible with these needs and objectives. Generally, this means the firm will attempt to maximize opportunity while minimizing costs and risks.