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1. Select an organistion of your choice and discuss the cash Management system
in that organization. Give your Views or suggestions on the prevailing system of
cash management in that organization and any suitable changes to be brought
about, to improve the present system.
2. Discuss the critical decisions that you need to take in working capital
management. Emphasize the important ways in which these decisions differ
from those concerned with the management of the fixed capital of a business.
3. “High dividend payout ratio goes in hand with high price earnings ratio and low
dividend payout ratio goes hand in hand with low price earnings ratio.”
Comment your views on this statement elobrately.
4. Identify the macro factors which are prevailing in the global economy, leading to
mergers and acquisitions.


I  will send  the balance  asap.

3. “High dividend payout ratio goes in hand with high price earnings ratio and low
dividend payout ratio goes hand in hand with low price earnings ratio.”
Comment your views on this statement elobrately.

The percentage of earnings paid to shareholders in dividends.
Calculated as:

- A reduction in dividends paid is looked poorly upon by investors, and the stock price usually depreciates as investors seek other dividend-paying stocks.
- A stable dividend payout ratio indicates a solid dividend policy by the company's board of directors.
The payout ratio provides an idea of how well earnings support the dividend payments. More mature companies tend to have a higher payout ratio.
High dividend payout ratio goes in hand with high price earnings ratio and low
dividend payout ratio goes hand in hand with low price earnings ratio
Benefits of Low Payout Ratios
In many situations, you should be happy to find low payout ratios. If you’re investing in a company, you’ll want its leaders to make wise decisions with the company’s profits. When a company pays a dividend, the profits are no longer at the disposal of the company. Holding on to some cash, instead of paying everything out, allows a business to:
•   Invest in more efficient technology and machinery
•   Hire additional staff and expand skill sets
•   Prepare for economic uncertainty
•   Operate effectively in bad economic environments
•   Maintain consistent, stable dividend payments over short- and long-term periods
•   Take advantage of high-growth opportunities like new product lines
•   Consider attractive acquisition properties
•   Invest in affordable real estate or new facilities
When a company retains a large percentage of quarterly or yearly earnings and uses the money to invest in growth, you can expect the value of the stock to climb. And that increased value will be more lucrative than a slightly higher dividend payment. But companies that have a policy of overpaying dividends don’t have enough liquidity to take advantage of such opportunities. A low payout ratio, therefore, saves the company from these undesirable options:
•   Passing up valuable opportunities and losing out on the potential gains
•   Selling debt bonds, which the company would need to repay along with any accrued interest
•   Selling more equity shares, which lowers the value of your shares
•   Raising capital by suspending dividends altogether
In short, lower payout ratios allow companies to consistently reward investors and maintain valuable growth. In the end, this business practice should lead to a continually rising stock price, providing more long-term value than quick bursts of higher dividend payments. Plus, you won’t be subject to fluctuation – or cancellation – of your dividend payments.
If you want your dividend-yielding company to have enough money to reinvest for decent growth and to maintain a stable dividend, look for payout ratios less than 50%.
Benefits (and Cautions) of High Payout Ratios
Of course, a high payout ratio seems to have an obvious benefit: a nice big check one to four times per year. And that payout is a more legitimate cause for celebration if it doesn’t come at the expense of hindering growth. What if you invested in a large and efficient company that generated huge piles of cash, but the business had already achieved market saturation? The company won’t benefit as much from hoarding cash when no further growth opportunities exist, so large-value stocks with little expected growth opportunities are good candidates for a high payout ratio.
A large-value company should still exhibit some discretion to avoid trouble in a recession or from an unexpected hit to its business model, but these businesses can still afford a much higher payout ratio than comparably smaller companies.
High payout ratios have more obvious benefits, making due diligence more crucial. If you see a large-value company that has significant cash reserves but doesn’t have room for growth, make sure they either maintain a high dividend payment ratio or have a reason to hold on to that cash. If they don’t justify the cash reserves, be wary about investing in that company. It’s possible that management has insider knowledge of some future turbulence that will hurt the company, or perhaps management wants to pay its cash out to themselves in the form of higher bonuses.
4. Identify the macro factors which are prevailing in the global economy, leading to mergers and acquisitions
on a  political  map, country  borders  are clear  as  ever. But on the
competition  map, financial,trading, and  industrial activities  across
national  boundaries have  rendered  that  political borders increasingly

Not only  firms  that compete internationally  but  also  those whose
primary  markets  is  considered domestic  will be   affected  by
competition  from  around  the  world.

Why Globalization?

To some the word "Globalization" may seem a cliché. To others, it may
appear an end in itself. Competitive pressures are creating the need for
most companies to become Global.

Globalization is one means for
becoming and remaining a world-class competitor — a goal encased in
the mission statements of most corporations.

When developing a globalization strategy, it is clear that the emerging
markets present the greatest opportunity. The growth projections for
Europe, Japan and the United States pale in comparison to some of the
emerging markets.

Emerging Markets
Throughout the emerging markets an unprecedented consumer market
boom is driving up demand for western-style goods and services. The
largest segment of consumers in these markets is a decade short of its
peak spending years. In India alone, sales of consumer goods are rising
at 14% per year, while China is growing at almost 20% per year.
Couple the consumer-spending boom with the still burgeoning need for
infrastructure improvements and you’ll have a range of opportunities that
extends into the trillions of dollars. Projects are planned or underway in
many of these countries to upgrade transportation and
telecommunication systems, explore energy resources, build power
generation facilities and provide health care facilities.

In addition, the privatization efforts are presenting an incredible range of
opportunities for investors, lending institutions, service providers and

Four key trend  influence  emerging  market potential

There are four key trends that are influencing the emerging market
1. Demographics:
Overall world population growth is now concentrated in the
developing world. Where industrial nations are facing an
increasingly older population, the emerging markets remain
young. The developed world comprises only 11% of the world’s

2. Governments:
Many countries that once relied on centrally planned economies
are becoming market-driven. Industries that governments
previously restricted to foreign companies are now opening to
foreign investment.

3. Communications:
Access to the emerging markets is increasing due to huge
developments in communications technology such as the Internet
and electronic commerce. Cyberspace represents a profound shift
in the nature of communications as well as our perception of

4. Urbanization:
As infrastructure improvements are made, urban growth in the
emerging markets will continue to explode.
Estimates indicate that the emerging markets' share of world imports will
double by the year 2010, rising to over 38%. Companies dazzled by the
magnitude of these numbers must be equipped with the appropriate
knowledge, information, and strategy to make its market forays

MACRO  LEVEL  Industry Globalization
   is  due  to  such  factors  as :

•   Level of international trade
•   Intensity of international competition
•   Worldwide product standardization
•   Presence of key competitors in all key international markets.
•   Intra-firm trade
•   Technological intensity
•   International linkages of value-added activities among countries
•   International integration of value-added activities among countries
•   ETC  ETC


Market Drivers

•   Per capita income converging among industrial nations
•   Convergence of lifestyles and taste
•   Growth of global and regional channels
•   Establishment of world brands
•   Spread of global and regional media

Cost Drivers

•   Continuing push for economies of scale ( but offset by flexible manufacturing)
•   Accelerating technological innovation
•   Advances in transportation (e.g., use of FedEx to deliver urgent supplies from one continent to another)
•   Emergence of newly industrializing countries with productive capability and low labor costs (e.g., China, India and Indonesia)

Government Drivers

•   Reduction of tariff barriers (e.g., North American Free Trade Agreement)
•   Reduction of non-tariff barriers (e.g., Japan’s gradual opening of its markets)
•   Creation of trading blocs (e.g., European Union, and Euro Currency in 1999)
•   Strengthening of world trade institutions (e.g., formation of the World Trade Organization)

Competitive Drivers

•   Continuing increase in level of world trade
•   More countries becoming key competitive battlegrounds (e.g., rise of Japan to become a “lead” country)
•   Rise of new competitors intent upon becoming global competitors (e.g., Japanese firms in the 1970’s, Korean firms in the 1980’s, Taiwanese firms in the 1990’s, Chinese firms in the 2000s, and probably Indian and Russian firms in the 2010’s.


•   In a Globalized industry, firms must simultaneously accomplish:
•   Global Scale Efficiency
•   Local Responsiveness
•   World-Wide Learning


- creating a  global mind-set within the HR group, creating
practices that will be consistently applied in different
locations/offices while also maintaining the various
local cultures and practices, and communicating a
consistent corporate culture across the entire
-considering  the HR function not as just an
administrative service but as a strategic business
Companies are  involving  the human resources
department in developing and implementing both
business and people strategies.

- Communicate  to all locations about a common
corporate culture.
- Allow   local cultures to maintain their identity
in the context of the corporate culture.
- Establish   common systems (e.g., accounting,
marketing, MIS).
- Provide   management with education outlining
how the company does business.
- Create  an organizational mission with input
from all locations.
- Create a written strategy outlining the
corporate culture.

Technology-related skills
• Skills in identifying new applications of technologies
• Skills in developing new technologies, or advancing existing technologies
• Skills in identifying technological solutions to problems

Operative/Technical skills
• Skills in operating new tools or equipment, or applying new methods/processes
• Skills in applying new processes or tools to existing work
• Skills in installing and maintaining new products, and
• Skills in manufacturing new products.


Management skills
• Skills in identifying which innovation outcomes are appropriate for commercialisation
• Skills in knowing when and how to market a new product, tool or process (or other innovation outcome) successfully
• Skills in securing intellectual property rights over innovation outcomes
• Skills in setting up efficient manufacturing processes for new products
• Skills in negotiating appropriate training provision with education and training providers
*Building an educated and highly skilled workforce.
*Becoming a leader in knowledge creation and innovation.
*Developing linkages, clusters and networks to become a more integrated and networked local economy.
*Fostering high levels of enterprise formation and business growth.
*Becoming a globally focused and internationally integrated economy.
*Creating a business environment and infrastructure base that facilitates business success.
establishing a culture of innovations  THRU
#Co-operative Research Centres
#Knowledge and Technology Diffusion
#Technology, Research Parks and Precincts
-more  systems / more  software  for  the  business  means
different  methods  of  working, which  affect  the  working  human resources.
HRM have  to  face / meet/  manage  the  human  resources  to deliver  the  results.
-the  demand  for  cheaper labor  forced  the  companies  to
seek  more  destinations  in the underdeveloped countries.
This  created  an  enormous  challenge  to  the  HRM
to seek/develop/manage  overseas  HR.

-the  rapid  development  of   underdeveloped  countries
forced  many companies  to  shift  their  production  base
overseas.This  created  an  enormous  challenge  to  the  HRM
to seek/develop/manage  overseas  HR.
-the  rise in per capita  income  created  more  educated
human  resources.

-some  employees are losing jobs  due  to  global  job  shifts.
-employees  can  seek  jobs  in  other  countries.
-employees  are  moved to  other  countries  as  part
of  the  restructuring.
-more  jobs  are  created in  the business  service  sector.
-more  jobs  are  lost  in  the  industrial / manufacturing  sector.
-employees, who  are  shifted to other  locations, needs  to manage
employees  of  diverse background.
-employees  have  to live  with  different  cultural  issues.
-the  negative   effectiveness   is  loss  in employees' jobs.
-the  positive  effectiveness  is  gain in  skilled  jobs.
-employees  have  to  learn  new  skills to meet  the  modern  demand
on  the  job.
-employees  have  to  upgrade  their  knowledge   level
through  effective  knowledge  management  program.
-where a new interplay is called for between job  designed to improve flexibility
and those designed to provide security.
--Change in the gender balance in working life, where equal opportunities bring new issues and requirements in terms of social protection
- As labour markets have become more flexible, the forms of work have multiplied.
-Part-time workers and workers with fixed-term contracts (who are the first loops in the flexibility chain),
-turn into on-call and
-self-employed workers.
-Like unemployment, flexible forms of work pose a challenge to social security arrangements. Flexible forms of work lack continuity. Spans of work and unemployment alternate, as do weekly working hours. Defining the periods during which flex-workers are entitled to various benefits (e.g. to unemployment benefits), is becoming more difficult as the forms or work continue to multiply and definitions of various forms of work become blurred. Home workers resemble the self-employed, the self-employed resemble on-call workers, employees resemble entrepreneurs, etc.
-employees  with  higher skills   will  earn  more.
-employees  with  lesser  skills  will  earn  much  less.
-there will be  commitment  by  the company,
if  the performance  is  upto  the mark.
-right people  in the right  way  to  meet competitive  success.
-right  package  for outstanding  talents.
-profit  sharing/ productivity  based  payments.
-well  informed employees  for  successful   results/ competitive  advantage.


-increase  employee participation to  improve employee satisfaction.
-empower  to broaden  participation/ control  their  work/workload.
-for  effective teamwork.
-to retain talent.
-more  use  of  metrics.
-programs to  manage  work/life better.
--------- -----------------------------------------------------

The purpose for an offeror company for acquiring another company shall be reflected in the corporate objectives. It has to decide the specific objectives to be achieved through acquisition. The basic purpose of merger or business combination is to achieve faster growth of the corporate business. Faster growth may be had through product improvement and competitive position.

Other possible purposes for acquisition are short listed below: -

(1)Procurement of supplies:

1.   to safeguard the source of supplies of raw materials or intermediary product;
2.   to obtain economies of purchase in the form of discount, savings in transportation costs, overhead costs in buying department, etc.;
3.   to share the benefits of suppliers economies by standardizing the materials.

(2)Revamping production facilities:

1.   to achieve economies of scale by amalgamating production facilities through more intensive utilization of plant and resources;
2.   to standardize product specifications, improvement of quality of product, expanding
3.   market and aiming at consumers satisfaction through strengthening after sale   
4.   services;
5.   to obtain improved production technology and know-how from the offeree company
6.   to reduce cost, improve quality and produce competitive products to retain and
7.   improve market share.

(3) Market expansion and strategy:

1.   to eliminate competition and protect existing market;
2.   to obtain a new market outlets in possession of the offeree;
3.   to obtain new product for diversification or substitution of existing products and to enhance the product range;
4.   strengthening retain outlets and sale the goods to rationalize distribution;
5.   to reduce advertising cost and improve public image of the offeree company;
6.   strategic control of patents and copyrights.

(4) Financial strength:

1.   to improve liquidity and have direct access to cash resource;
2.   to dispose of surplus and outdated assets for cash out of combined enterprise;
3.   to enhance gearing capacity, borrow on better strength and the greater assets backing;
4.   to avail tax benefits;
5.   to improve EPS (Earning Per Share).

(5) General gains:

1.   to improve its own image and attract superior managerial talents to manage its affairs;
2.   to offer better satisfaction to consumers or users of the product.

(6) Own developmental plans:

The purpose of acquisition is backed by the offeror company’s own developmental plans.
A company thinks in terms of acquiring the other company only when it has arrived at its own development plan to expand its operation having examined its own internal strength where it might not have any problem of taxation, accounting, valuation, etc. but might feel resource constraints with limitations of funds and lack of skill managerial personnel’s. It has to aim at suitable combination where it could have opportunities to supplement its funds by issuance of securities, secure additional financial facilities, eliminate competition and strengthen its market position.

(7) Strategic purpose:

The Acquirer Company view the merger to achieve strategic objectives through alternative type of combinations which may be horizontal, vertical, product expansion, market extensional or other specified unrelated objectives depending upon the corporate strategies. Thus, various types of combinations distinct with each other in nature are adopted to pursue this objective like vertical or horizontal combination.

(8) Corporate friendliness:

Although it is rare but it is true that business houses exhibit degrees of cooperative spirit despite competitiveness in providing rescues to each other from hostile takeovers and cultivate situations of collaborations sharing goodwill of each other to achieve performance heights through business combinations. The combining corporates aim at circular combinations by pursuing this objective.

(9) Desired level of integration:

Mergers and acquisition are pursued to obtain the desired level of integration between the two combining business houses. Such integration could be operational or financial. This gives birth to conglomerate combinations. The purpose and the requirements of the offeror company go a long way in selecting a suitable partner for merger or acquisition in business combinations.  


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