UMACTF-15-3 Assignment Sample Corporate Financial Strategy

 

Module Code And Title : UMACTF-15-3 Assignment Sample Corporate Financial Strategy

UMACTF-15-3 Assignment Sample Corporate Financial Strategy
UMACTF-15-3 Assignment Sample Corporate Financial Strategy

Introduction

Strategy in terms of corporate finance is a complementary way to achieve the long-term benefits of the company as Diageo Plc” in the UK. It consists of the proper way of addressing the issue regarding the fund’s increase, the way of price increase as well as a price hike for shareholders. The corporate financial strategy has mainly worked into major core areas such as “capital structure”, “capital budgeting”, and “working capital management”.

It evaluates the strategies regarding the market strategy and scope of the company. However, it improves the business efficiency as well as consumer effectiveness to achieve the corporate business objectives.

Issue 1. Environmental, Social, and Governance

The nature of   the issue faced by the company

Diageo Plc is a global as well as premium brand that serves its consumer by providing quality products with more than 200 brands.  As stated by Ketter et al. (2020), this company mark as the only popular brand deeply understands the needs of the consumer through. The company is creating quality brands and exploring the nature of the product worldwide to reach consumer efficiency.  However, the giant retail brand provides quality-drinking beverages by promoting moderation and identifying the use of harmful drinking products responsibly.

Moreover, the company is facing a serious issue in terms of environmental, social and Governance policies that generate a huge impact on its investment procedure. As stated by Marsh et al., (2020), it affects the entire policy of investment and changes the nature or behavior of the company.

Climate change

The stakeholders of the organisation has raised by increasing their activity in engaging with the various companies in terms of collaborations. As per statement Dimson et al., (2021), it has identified that the current financial position, as well as a performance of Diageo Plc, expected to be more than € 200 million. The movement of the report that identifies the raising finance of more than 9% follows this and the total volume of organic products is 12% by the annual financial business data of 2021.

However, the shareholder to identify challenges in terms of engaging investors across the world invests the equity funds. As opined by Nakamoto et al., (2019), therefore, the difficulties occurs due to climate change has affected the overall policy of governance, and environmental challenges of carbon emission that is equally responsible for such disruptions.  This issue affect as health issue and therefore, the organisation may face some obstruction from the government or the higher authority.

Regaining community trust

The current annual data identified another issue regarding the retail drinking company as Diageo Plc. This happens due to the company lose the loyalty factor in a financial institutions as banking. It may dissertate as the financial institution such as a bank face some loyalty issue from the organisation and therefore, such organisation needs to focyuus on that area to rectify the loyalty error to gain reputation in social.

This may improve the trust factor in community also.This is due to the misunderstanding and behavior of the operational leaders of the company. However, the company fails to improve the financial challenges and millions of consumer targets. As per the annual survey data, it record as the annual revenue of the company marks as 13 million Euros that is 15% more than the previous year of the organisation. Hence, the company tried to contribute its best efforts in order to gain the trust and loyalty of the consumer.

Discuss the strategies for dealing with those   issues

The investors within their investment decision have utilized the innovative policy as environmental social and governance. It increases the interest of the investors by considering more opportunities for investing. There are several possible ways to improve the disruptions within the ESG policy and enable the performance of the company.

ESG policy refers as a standard measurement of a process in the company that create awareness among the investors about the usage of potential investment in the organisation. This policy considers both the environment and the social factor to improve the community trust of a company and follows the economic factor of an organisation to maintain the company revenue and helps the organisation to grow the business market.

Integrating business strategy

The shareholders and the major investors have been able to identify entire risks and trends in the microeconomy. As stated by Nakamoto et al., (2019), it generates various opportunities in terms of financial as well as long-term business success.

However, the giant drinking brand as Diageo Plc fully engages with the severe impacts of environmental social, and climate-related challenges. Therefore, the operational leaders of the company embed all such factors into a successful strategy to boost the business model.

Aligning the global and regulatory framework

It has identified that in between 2019-2020 there has been an increase of more than 90% voluntary framework. As stated by Kawase et al., (2019), it has been able to boost the global standards of the company through identifying the overall risks and uncertainties within the company. However, the global framework plays an essential role in terms of making companies more reliable and engaging several investors to improve the investment process. However, the shareholder to identify challenges in terms of engaging investors across the world invests the equity funds.

Identifying the material topics

In today’s market trends, an organization has been able to identify or track the multiple issues and range of several ESG policies. It motivates the stakeholders by maintaining deep focus within the regulatory topics of ESG policies within the company as Diageo Plc in the UK. As stated by Kawase et al., (2019), the operational manager of the company maintains its focus on evaluating the business strategy through engaging the entire stakeholders and their specific needs.

Furthermore, it has been identified through the annual survey report of the company regarding the innovative steps of ESG policy has been able to implement sustainable business goals, reducing the emission of carbon, as well as identify the effectiveness of consumers across the world. ESG policy as stated above that this policy consider environmental, social, and economic factor of the organisation, therefore, this policy helps the organisation to reduce the environmental pollution to gain community trust of the company. Therefore, these may result as a growth in the company revenue and helps the organisation to grow the business market.

Issue 2. Merger and Acquisition Policy

The nature of the issue facing the company

Merger and acquisition are the two concepts that combine the business entity and solutions regarding the major issue that occurs within the business. This policy states as the merging of two different entities to create monopoly entity system. Therefore, this policy helps to increase the strength of both entities by collaboration the both entity.

However, the both merger and acquisition policy includes several factors in assets such as staff, money and land. However, the giant retail drinking brand as Diageo Plc helps to synchronize the business situations. As stated by Caiazza et al., (2020), mergers and acquisitions are basic concepts that increase the overall business techniques and tools for business strategy. The overall business strength may increase by measuring the error occur in the business and plan some rectification of those errors to make a profit in the business.

Multiple issues regarding failure the basic strength of the company as Diageo Plc has been illustrated below as:

Overpaying

This is the most essential reason for the failure of business transactions as well as effectively regulates the business in terms of sale, as buyers are capable of overpaying regarding the products as per their requirements. As stated by Caiazza et al., (2022), it has been identified through the current annual report of the company as Diageo Plc, estimated its increase in cash flow of more than £300 million in a year and this increment covers an equity share price of more than 85% of the company. However, buyers need to identify the specific limits to start or minimize the opportunities of overpaying.

Insufficient due Diligence

Insufficient due Diligence refer as the lack of having planned off in a organisation progress to meet with the security measurements, resources, and some needed proper policies in the business model. This occurs due to taking some irresponsible entertainment in the business model and may come due to some error in the business modules. Therefore, this may create huge problems in the organisational security and resource section and the organisation may face a huge loss in the company revenue.

In the context of deligence, the giant drinking beverages company as Diageo Plc has not emphasized. The major issue that the company faces through the overall process is acquiring the proper information that is valuable to operate the entire management system. Thus, it creates a serious issue

Misunderstanding the target company

It provides a valuable opportunity through assuring in terms of identifying the company target. As opined by Čirjevskis (2021), there is several business cases of Diageo Plc that grew up is due to some misunderstanding in the business model to manage the company risks. The business wanted to mitigate several possible risk factors of the company and therefore, the overall business target did not meet as the organisation faces several issues due to this.   However, the drinking company in the UK fails to gain the competitive advantages as compared to its rival company; as a result, it leads to a huge issue.

Discuss the strategies for dealing with those issues

Merger and acquisition policy helps the business to execute financial stability and mitigate the global strategic challenges in order to fulfill the acquisition strategy that has been able to improve the company’s global standards and turnover capital. There are multiple ways to improve the strategic issue in terms of companies merger and acquisitions has been considered below:

Checking financial liquidity and health

It determines the overall business as well as financial performance to identify the health updates. As stated by Nakamoto et al., (2021), the operational manager of the company maintains their focus on shifting the focus on identifying the income of profit or loss. However, it is a successful implementation by the managerial side to identify the business opportunities and achieve financial health stability.

Identifying goals and successive factors

In order to reach the business target, the operational leaders of the business identify the global strategy to promote its business success. However, the giant drinking beverages company as Diageo plc in the UK. Therefore, the leaders of the company properly decide to identify several business segments in order to increase the profit and market shares as compared to other rival companies across the world rather than the UK. As stated by Nakamoto et al., (2021), addition, the leaders of the company especially maintain focus on its managerial decision regarding boosting the business economy. Moreover, it improves the nature of performing due intelligence.

Creating appropriate team

In order to develop a business competitively, the operational manager of the company needs to build a strategic team to identify business goals and success. Moreover, the company’s main aim is to reach consumer targets across the world as well as company expansion. As stated by Ketter et al., (2020), the board of directors successfully implemented strategies to boot the retail drinking company as Diageo Plc through making careful plans and performance indicators. Diageo consist 19 companies in the business model to grow the business market. In addition, two assets of private firms also merge with the company in the last five years.

The company also merge Mey icki sanayi Ve Company with the business model for 2.1 billon dollar. The company targets on some other sector as beverages, which cover 95 % selling rate of the company, and the company makes 6% sales in the internet and software services sector of the company. Therefore, this statistics show the M and A activivty of the Diageo Plc. and this helps the business to make earn the revenue by growing the community reputation in the business market and helps the business to grow the business market.

Conclusion

It has been concluded that the overall report regarding the multiples issued faced by the company in the recent trends. It includes multiple strategies such as Environmental social and governance policy, Merger, and acquisition policy to reduce the global effects of challenges and reach the business targets. Although, the company as Diageo Plc especially maintains its focus on improving the financial performance as compared to the past few years. However, the company needs to boost its financial stability to further achieve its business goals.

Reference list

Journal

Afreen, M., 2021. Building Sustainability Resiliency During Post Covid World Focusing ESG And Climate Risk Issue. International Journal of Social Sciences and Economic Review [online]. 3(3), pp.21-27. [Accessed on: 15/3/2022]

Caiazza, S., Galloppo, G. and Paimanova, V., 2021. The role of sustainability performance after merger and acquisition deals in short and long-term. Journal of Cleaner Production [online]. 314, p.127982. [Accessed on: 15/3/2022]

Čirjevskis, A., 2021. Exploring the link of real options theory with dynamic capabilities framework in open innovation-type merger and acquisition deals. Journal of Risk and Financial Management [online]. 14(4), p.168. [Accessed on: 15/3/2022]

Cornell, B., 2020. ESG Investing: Conceptual Issues. The Journal of Wealth Management [online]. 23(3), pp.61-69. [Accessed on: 15/3/2022]

Dimson, E., Marsh, P. and Staunton, M., 2021. Practical Applications of Divergent ESG Ratings. Practical Applications [online]. 9(3), pp.1-7. [Accessed on: 15/3/2022]

Duque-Grisales, E. and Aguilera-Caracuel, J., 2021. Environmental, social and governance (ESG) scores and financial performance of multilatinas: Moderating effects of geographic international diversification and financial slack. Journal of Business Ethics [online]. 168(2), pp.315-334. [Accessed on: 15/3/2022]

Grim, D.M. and Berkowitz, D.B., 2020. ESG, SRI, and impact investing: A primer for decision-making. The Journal of Impact and ESG Investing [online]. 1(1), pp.47-65. [Accessed on: 15/3/2022]

Gupta, I., Mishra, N. and Tripathy, N., 2020, November. The Impact of Merger and Acquisition on Value Creation: An Empirical Evidence. In International Conference on Business and Technology [online]. (pp. 1435-1456). Springer, Cham. [Accessed on: 15/3/2022]

Ketter, W., Padmanabhan, B., Pant, G. and Raghu, T.S., 2020. Special Issue Editorial: Addressing Societal Challenges through Analytics: An ESG ICE Framework and Research Agenda. Journal of the Association for Information Systems [online]. 21(5), p.9. [Accessed on: 15/3/2022]

Kobayashi, N., Nakamoto, A., Kawase, M., Ioki, M. and Shirasaka, S., 2019, July. A Proposal of Information Security Policy Agreement Method for Merger and Acquisition Using Assurance Case and ISO 27001. In 2019 8th International Congress on Advanced Applied Informatics (IIAI-AAI) [online]. (pp. 727-733). IEEE. [Accessed on: 15/3/2022]

 

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