Share
Explore BrainMass

Business Strategy

Your company plans to build a new factory next year that cost $100 Million? Identify three methods to finance this expansion. Choose one method to finance your expansion. Explain your choice and explain why it is better than the other two alternate source of funding you identified.

Explain the term "Economy of Scale." Briefly explain how and when a firm might benefit from using the Economy of Scale.

Explain why a company should analyze the actions of their competitors. What is likely to happen if you do not analyze your competitors? What is likely to happen if you analyze your competitors? Explain both.

Briefly explain the five forces of the Competition Model. Which is the most important and Why?

Identify and explain your CapSim team strategy. Explain why you selected that strategy and defend how your team implemented the strategy to top management of the company. Explain why some products succeeded and others failed. Considering Round 3 results, and you were the CEO what would you do to improve your company.

Solution Preview

Your company plans to build a new factory next year that cost $100 Million? Identify three methods to finance this expansion. Choose one method to finance your expansion. Explain your choice and explain why it is better than the other two alternate source of funding you identified.

Three methods of financing the factory are a public issue of shares, bank loan, or an issue of bonds. The method that I will chose to finance the new factory will be IPO. The reason is that my company has a good reputation and has been profitable in the past so it will not have difficulty in raising equity in the stock exchanges. The other two options namely bank loan and bonds are ruled out because they increase the financial risk of my company. The company in case of the other two options will be forced to make interest and loan repayments which may cause a financial drain on the company.

Explain the term "Economy of Scale." Briefly explain how and when a firm might benefit from using the Economy of Scale.
The economy of scale is the savings that a big firm can achieve because the cost of initial investment can be spread across very large number of production units. This is a situation where the increase in the scale of the firm leads to a fall in the long term average cost. In other words if the cost of producing each unit decreases with increasing output there is economy of scale.

A firm will ...

Solution Summary

This posting gives you an in-depth insight into Business Strategy

$2.19