NORTHWEST MARINE SERVICES PRIVATE LIMITED Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

NORTHWEST MARINE SERVICES PRIVATE LIMITED Case Solution

REQUIREMENTS

Question 1 (2 marks)The regulatory environment for firms listed on the ASX is significantly different when compared to private companies that are unlisted. In no more than 500 words contrast the benefits of a company listing on the stock exchange against the increased regulatory burden. In your answer be sure to discuss the sources of additional regulation.

There are so many advantages for the companies that are listed on the stock exchanges by going public whereas, there is also some cost associated with it. The merits of listing on the stock exchange and demerits regarding the increased regulatory burden will be discussed below:

The company by listing on the stock exchange sells it to public through the initial public offering. With the help of listing the company gains a lot. The first and the foremost is that the company would then be able to improve its current financial conditions with the help of additional capital that it borrows from the public which is not required to be repaid but in the form of dividends. The company can use its stock for its expansion strategy by acquiring other company and paying them in the form of stocks. This will particularly help the company when it is about to implement the buy and build strategy where the cash can be better utilized in the other areas. The competitive edge for any company can be achieved with the help of its human resource which requires some motivational steps that should be taken by the upper management to enhance its human resource skills. With the help of stock options, the company can offer some incentive compensations to its employees to keep them motivated. With the help of stock incentive options, the employees would be in a better position to assess the worth of the incentives given to them.Moreover, with the help of changing the status of the company from private to public by listing on the stock exchange, the company can increase its visibility and prestige around the world which would help it in attracting high caliber board members. Moreover, this status of public listed company would help the company in gaining the confidence of the suppliers, investors as well as the customers which results in improving the standing in the market place.

Given the advantages of listing on the stock exchange, there is also some cost associated with the listing. The first and the foremost cost of listing is the increased regulatory requirements that are embedded with the benefits. With the increased owners and their stake in the company, the management is restricted to act independently and all its actions are with their approvals with which they lose their freedom of actions. The shareholders often view their investment with the ability of the company in generating revenues which provides the return on their investment, which causes the management of the company to get distracted from the long term goals and to just focus on the short term alternatives to increase profits, dividends as well as the stock prices. The cost required is high by the company to pay in order to become listed on the stock exchange, which includes the payment of the underwriter’s commission, legal and the accounting fees, cost of printing the shares as well as the registration fees. For every public company there is a requirement of SEC to reveal all its sensitive information on yearly basis which includes all the business strategies that they are implementing, its financial outcomes, the salaries of the executives as well as all the other compensation benefits.

The management of the company by the proper analysis of the benefits as well as the cost related to the listing on stock exchange should go further...............

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