Deluxe Corporation Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

Deluxe Corporation Case Study Help

Question 3

The business will,deprived of a doubt,needs finances in the future to continue the intense times and have the alternatives of accessible finances and access to different sources of assets at a sensible cost. Therefore, the financial flexibility is accomplished by cash in hand or the ability to borrow or to raise the equity. In an event the company might want to raise reserves utilizing bonds, it should maintain good credit rating score to appreciate flexibility. The reality of the matter is that commercial paper is an alternative to draw about $150 from its $300 million as is a credit extension of $350 million is open for them to use, while notes worth $300 million can be used.

Along with this, he should recommend the maximum and minimum amount of debt in order to achieve the desired rating scale for the firm. Target the appropriate bond rating that would help to maintain the reserves even in bad situations. The financial policy should focus on the low cost of capital. The financial policy should be feasible in current and future times. The recommendation should focus on the value creation and better flexibility. The organization needs to recapitalize its value by expanding, capital through the arrival of new offers, or attempt to build the assumed worth of the offers. So that, Deluxe Corporation can improve its capital structure and avoid the danger of the falling in its current ratings.

It is imperative for the firm to identify the suitable financing requirements in order to raise funds for new business activities and operations. It is, therefore, required for the company to make online payments structure that will improve alongside the Internet which would be accessible to everybody all over the place. Thedemand of paper check payment has decreasedas compared tothe online management services. In addition to this, the expansion on the utilization of credit cards and debit cards is quickly taking a huge market share from the print checks industry. Therefore, there has been an increasefor the use of credit, platinum cards and ATMs because these are the reasons for taking the market share from check industries.The company has to make and implement new strategies in order to meet the requirements for funding the operations and for acquisition with other company for leading and maintaining the market position and to provide financial flexibility.

Therefore, the financial flexibility can be acquired for the repurchasing of stocks through using the cash from operations, issuance of commercial papers and the restructuring of financial policy for paying the debt. In terms of dividend, the company should offer constant rate dividend that will increase the motivation for the shareholders. Finally, the company is required to diversify the line of products in order to meet the financing needs either by issuing bonds or equity.

Conclusion

However,since the past few years, it began to face challenges on its sales and income development and growth due to different payment system as online credit and debit card payment and some of other risks so Deluxe Corporation needs to consider some major changes. It is concluded that Deluxe has been confronting a decrease in demand of its main business product and it was a stage where the company faced many difficulties and hence required a few improvements as needs be. In this manner, it required a splendid financial policy that wouldsolve the risks it is confronting. The case specified a few answers for the funding of capital it needs, and what goals to center all together for the partnership to develop. Similarly, there are suggestions on the most strategic method to meet these targets.After the careful analysis and computations, it has been suggested that the company need to bring its position in obtaining AAA rated bonds, but in that category, the company will have higher unused debt capacity because of the high ratings. In that sense, the company will itself be in an acquisition target by other growing companies................................

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