Homework answers / question archive / SITUATION 1 1)   If a firm has weak financial position and competes in an unstable industry, in which quadrant will the SPACE vector lie?   2

SITUATION 1 1)   If a firm has weak financial position and competes in an unstable industry, in which quadrant will the SPACE vector lie?   2

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SITUATION 1

1)   If a firm has weak financial position and competes in an unstable industry, in which quadrant will the SPACE vector lie?

 

2.   What major limitations of the BCG Matrix does the IE Matrix overcome?. Is this limitation applicable only to corporate structured firm?

 

3.   What do you think is the appropriate role of a board of directors in strategic management? Why?

 

SITUATION 2

 

ABC Corporation is a corporation with business address at Philippines. Top management is contemplating of expanding its operations globally. ABC's financial staff estimates that it needs to raise PhP1 billion to expand its operations globally.

 

Being ABC'smanagement consultant, make recommendations to top management whether ABC should have to use all debt, all stock, or a 50-50 combination of debt and stock to finance this market-development strategy. Your decision should be based on the following facts:

 

a.   38 percent tax rate, 5 percent interest rate

 

b.   Price of stock is PhP50.00 per share and an annual dividend of PhP0.30 per share of common stocks.

 

c.   The EBIT range for the previous year is between PhP6.332 billion and Php9 billion

 

d.   A total of 1 billion shares of common stocks are outstanding.

 

Develop an EPS/EBIT chart to reflect your analysis.