Dwell upon different launch strategies used when breaking into a market.

Companies decide on different launch strategies for different categories of products. For example, Toshiba launched the Digital Video Disk (DVD) in different countries at different times: in Japan in November 1996, in the USA in March and in autumn in Europe. However, Intel launched its latest PC chips simultaneously in all countries. The launch decision also includes marketing mix decisions. When Citibank introduced its credit card in the Asia-Pacific region, it launched it sequentially and tailored the product features for each country while maintaining its premium positioning.

 

Say how new products are launched into the market and what strategies are used.

New product development that coordinates efforts across national markets leads to better products and services, but companies develop products in different countries in markedly different ways.

Japanese companies tend to believe much more in getting products to market and then gauging the reaction to them. US comp tend to use more formal market research methods. And for German comp, product development schedules tend to be more important. Clearly, companies decide on different launch strategies for different categories of products. The launch decision also includes marketing mix decision.

The promotional, pricing and distribution strategies also differed from country to country. The introduction of the Internet has the potential to accelerate the process of mining all markets for relevant information and for features that can be included in new products.

 

Management of a company’s capital. The structure of the working capital. Decisions about the Gearing of the Company. (2.5.3)

Say what you’ve come to know about the management of the company’s capital and its structure.

When a company is said to be "high geared", the level of borrowing is higher than its ordinary share capital. Main source of funds for high-gearing are long-term loans from banks and pension funds.

Advantages: secured over fixed assets, better return on net profits in prosperous times.

Disadvantages: high interest payments in difficult times.

A lowly-geared company has borrowings which are relatively low.

Main source of funds of low-gearing are: owner’s capital, venture capital, unlisted securities market, stock exchange.

Advantages: low gearing claim on all profits, does not interfere in company, outside investors? No loss of control.

Disadvantages: low gearing demand very high rate and it is most exposed.

There is a permanent and temporary working capital. The former keeps the business flowing throughout the year, while the latter is needed from time to time to take account of seasoned, cyclical or unexpected fluctuations in the business. The temporary working capital is usually serviced from an overdraft facility.

Inventories (raw materials, work in progress and finished goods) are part and parcel of working capital. If inventories are not well managed there will be an enormous amount of excess working capital. It is the job of financial manager to minimize the stocks of raw materials, the level ot the work in progress and the quantity of finished goods.

 

Dwell upon the structure of the authorized capital.

Authorized share capital is the number of stock units (shares) that a company can issue as stated in its memorandum of association or its articles of incorporation.

The authorized capital consists of market value of all the shares issued.

If any person owns 51 per cent of the shares he would have a controlling interest, & would be in a good position to take over the firm. Person owning a large proportion of the shares could ask to join the Board.