The advantages and disadvantages of issuing shares

In fact all corporations must issue at least some shares to the owners of the business upon formation.

Generally speaking there are only 3 ways money can come into the corporation, selling shares (equity financing), taking on debt (debt financing), and revenue.

There are really no disadvantages to having corporate revenue as a source of funds so when talking about the advantages and disadvantages of equity financing it is in the context of comparing it to debt financing.

The basic advantages of equity financing are that the funds can usually be kept indefinitely, no payments are required on the funds (dividends may be paid out but only on earnings) and no collateral is required for equity investment. If these companies have been bankrupt because they were lose in their business, However they do not have to bear the pressure of debt, and reset their company easier  

The basic disadvantages are that dividend payments are not tax deductible for the corporation, and the more shareholders a corporation takes on with equity financing the more shared control there is of the corporation (which can impose restrictions on how it operates), and the less profit there is for the corporation and its principal owners. These companies can be effected by changing of the world economic, Special about big companies were listed in Stock exchange they can met risk easier. Lehman Brothers is a victim of the financial crisis world recently. Companies rated investment from Wall Street filed for bankruptcy protection in September 2008 when the debts exceed 691 billion dollars more for the strength of the ownership company in New York as well as the investment bank North American was sold to Barclays British Bank, while even 80 affiliated companies of the smaller banks were closed.

In comparison, debt financing allows for tax deductions on interest payments, has little or no impact on control of the corporation and allows leverage of company profits.

Evaluation about Strategic made profits decline in Chocolatier Thorntons Company

Good strategies in Chocolatier Thorntons Company 

Issues about associate with distributor is very important, Chocolatier Thorntons Company have choose the distributors were supermarket is excellent strategic which brought a lot of benefit for them. However to products of company have been known more and have good revenue, they should distribute to retail shop. Thorntons, which is celebrating its 100th anniversary this year, reported that pre-tax profits declined 8.5% to £8.3 million in the 28 weeks to January 8 as it battled higher commodity prices, although revenues increased 4.8% to £133.5 million helped by strong sales to supermarkets.  Mr Robson said there were exciting opportunities to grow the commercial arm, which sells chocolate to supermarkets and saw sales increase 31% to £45.2 million.

Franchise is goof method, which bring good revenue because they have not been loose position cost, labor cost and that also help them to expand market. Sales through the business' 229 franchise stores declined 5% to £7.8 million in the period and were also hit by the snow.

Weak Competitive Strategic have made profits decline in Chocolatier Thorntons Company 

In the market have many big company produce Chocolate with good marketing and price in reason as Cadbury, M&M. In Chocolatier Thorntons, they have not use many marketing methods to improve picture about produces of company, that may be the main cause of their profits decline in 2011 

All strategies have been performed well but they have not considered measures to introduce products to the customer. Besides, they need to prevent periods of bad weather when Production costs, shipping cost increase which would affect profits. When that they can reduce the amount of goods or improved products quality and higher selling prices

Relationship Shareholders Management in Public Limited Company

Development strategy in Public limited company, special is Listed Companies are complex than other companies. Because these companies have to solve dynamics and interests between three main of partners in the company as: the board, the existing shareholders and investors.

With companies that are not Public Limited Company, development strategies often only consider business factors, ie brand, position, capacity, competition, industry prospects ... because these companies mostly have only a owner, so it may decide everything easy. However, with Public limited company, special are companies listing shares on the stock market, the percentage of ownership in the company, the company's outlook will determine the benefits and motivation of the three partners on the development strategy for the company.

Executive board includes members of the control broad and management. They are driven and controlled company, but in listed companies, their percentage of ownership is often not too large. Existing shareholders are funded in the past for companies. Investors are willing or not willing to put more capital into the company. Harmony of motivation and benefits of these three partnerships have meaning decide to the development of a public company.

Do not want to develop for fear of losing control, in many companies have potential projects such as real estate, ... Raising new capital for these companies is not difficult, but leadership does not do it because they fear reduce ownership rate lead to reduce in corporate control. So they try to borrow to the maximum. This makes damage to the interests of other shareholders in the company.

Conflicts between the old shareholders and new shareholders. For example, James Kwak showed summarize sales of company in U.S such as: Thomas H. Lee Partners (THL) spend $ 327m buy up Simmons in 2003 and owns 100% of this company. To 2004, Simmons issued $ 137m bonds and used this money to pay the dividend for THL. Until 2007, Simmons continued to issue $ 300m bonds and pay to $ 238m for THL. Thus THL spend $ 327m and was received $ 375ms, and then Simmons declared bankruptcy. Obviously after the sale of Simmons, the creditors shared only with together all remains, but cannot constrain THL have to compensate losses. Anyway Simmons is a limited company so its owner (THL) is not responsible for the outside book of the Simmons.

Price of capital issue: Issuing additional shares to more capital is matter of survival of listed companies. Normally, the board wanted to issued high price to earn money without pressure EPS (earnings per share) when the stock was "diluted". However, large shareholders may not want to issue shares with high price because it depends on shareholders have to put more money to buy more. Also, only small shareholders to buy at low prices to get a feel "benefit."

Shareholder structure and stock price, Not only the business results of companies, but also shareholder structure affects to stock prices. Now, when many shareholder want short-term business in Stock Exchange, that make conflict between shareholders or big group shareholder can effect to managers of distributive interest between terms, declare information … direction benefits for their trading. That can make conflict with benefits of other shareholders and investor.  

How to harmonize and develop? Many businesses have not realized the complexity of the problem development strategy with harmony and interests of the parties as stated. Then, management or major shareholders need consultancy firms have experience to consult about issues interest harmony of the parties. This is a condition prerequisite for the development of public limited companies or listed companies.