Newly Industrialised Countries Essay Example | Topics and Well Written Essays - 2000 words

Newly Industrialised Countries - Essay Example The Asian countries of India, China Korea, Taiwan, Hong Kong, Singapore, Indonesia, and Malaysia are notable examples NICs and their dramatic successes in economic growth have often been referred to as the East Asian Miracle. Other Asian countries like China and India have also achieved successes in economic growth. The 'economic miracle' of these East Asian countries is however not exclusive to Asia as countries in the Americas like Chile, Brazil and Mexico have also achieved appreciably high growth rates in their economies and could thus be referred to as NICs as well. It must be said though the growth rates vary amongst all the NICs and as such some growths may be relatively higher compared to others in other NICs. Countries like China, India Singapore and Hong Kong however standout of the rest due to the rapid nature of their growth within a space of about 30 years. Also, the use of NICs is a matter of definition and as such a country like South Africa that was largely secluded f rom the international economy due to its apartheid policies may now be categorised as an NIC by some, while others may classify it as a developed country. This essay will first conduct a generalised or panoramic view of the features that underlie the development experiences of NICs before undertaking a closer look at the experiences of selected NICs. It must be said that though the development experiences may be very varied, some common cardinal features can be seen in the experiences of all NICs. Most NICs were able to achieve high growth rates by instituting market reforms that favoured exports. (Hamilton 1987) There was also a strong emphasis on value added manufacturing that changed their economies from predominantly agrarian economies into industrial and manufacturing based economies. Increased capital investments from foreign and domestic sources played a key role in the development experiences of NICs and so did the development of domestic corporations that could compete with other foreign corporations both on the domestic market and on the regional or international markets as well. (Bhagwati, 1996) Typical examples are the automotive, steel and ship building companies of Korea. Political leadership also contributed significantly to the high growths in the economies of NICs. As stated earlier, though the 'authoritarian' thesis is a disputed one, the fact that relative political stability pertained in the countries that recorded significant growths in their economies goe s to show that political leadership played a crucial role in the development experience of NICs (Combie, 2000). The next segment of this essay will undertake a closer look at selected country experiences of NICs. China has been undergoing a dramatic transformation to a market economy. As a result, it currently is the world leader in terms of economic growth, industrial expansion, and exports. It contains an array of potential consumers that far exceeds the markets in Europe or the Western Hemisphere, and it is rapidly emerging as a new epicentre for industry, commerce, and finance. In addition, the so-called "greater China" has substantial amounts of technology and manufacturing capability, outstanding entrepreneurial, marketing, and services acumen in Hong

E-learning Essay Example | Topics and Well Written Essays - 3250 words

E-learning - Essay Example University Senate Regulations: www2.le.ac.uk/offices/sas2/regulations/documents/2012-13/Senatereg11-discipline.pdf Unintended plagiarism as well as deliberate plagiarism will result in the award of a fail grade. In recent years, the proliferation of the latest technologies and easy access to a wide range of Internet tools, the lives of people has been changed significantly. Even the learning sector has been impacted due to the robust growth in the technological gadgets; it has revolutionised the learning and teaching areas of the field simultaneously (Conole et al., 2003). As a result, there is a surge in the demand of workforce which makes learning a part of their training and development agenda during the career growth (Newton & Ellis, 2005). In order to cultivate an E-learning culture within the organisation, it is mandatory for the management team to seek help from the professionals so that they can enhance the morale of the workforce (Wall & Ahmed, 2008). The Information and Communication Technology (ICT) has been playing a dual role in the digital era. At one extreme, it is expected that the information oriented society in future will have to face various challenges. Likewise, these challenges ignited by the technology driven, knowledge intensive and dynamic working life will facilitate the lifelong and continuous competence development of the working people in various aspects of life (Tynjala & Hakkinen, 2005). On the other extreme, it is believed that ICT will assist in developing solutions for the posed challenges. The rapid changes in the field of E-learning have taken place due to evolution of the technologies which is also considered as a problem in this arena (Tynjala & Hakkinen, 2005). It is evident from the history of E-learning that there was dominance of the technology-driven approaches such as CAI (Computer-Aided Instructions), mobile learning, blended learning and distance learning; the basic learning process remains consistent just the

Indigenous Peoples and Globalization Essay Example | Topics and Well Written Essays - 750 words

Indigenous Peoples and Globalization - Essay Example Citing the impact, the research has also mentioned history reference to globalization and colonization in Canada; followed by discussion related to responses from indigenous people on local and international levels to retain their originality and identity from this cultural invasion of globalization. Hence, concluding to the point of various meanings that can be extracted from both terms and so varied impacts it had in pre and post colonization era in Canadian territory. The aim of research is to study the impact of cultural and social impact of globalization on indigenous people; the research has picked the North American territory that has been acknowledged for the legacy of colonialism in North America. North America has settlement of natives apart from the main system to flourish the people’s relationship to the land with all factors of spirituality and community that remained directives of their lives. First Nations, People in Canada, taken as the narrowed domain for the study of indigenous people, has historical continuity with pre-invasion and pre-colonial societies. First Nation considers themselves as different from other on the same mainly due their connectivity to the ancestral pattern of lifestyle has resisted to its best invasion from surrounding cultural factors. To United Nations Special Rapporteur of the Sub-Commission on Prevention of Discrimination and Protection of Minorities, as well as a set of 7 guidelines set out by the UN has been adopted as the most suiting definition for indigenous people as also refers to pre-colonial and pre-invasion system of life with link to the land and distinct culture are common features. With reference to this definition, globalization has resulted as the domination attempt from imperialist or western culture of developed nations. In case of Canada’s First Nation is Britain and France. This invasion traces its inception in mid 16th Century when European Settlers initially developed trade ties and eventually resulted in military alliances. Growing European invasion was first resisted from Royal Proclamation of 1763 to take back rights of land that was initially their own. First nation had to surrender land under treaties, creation of reservations and other land invasions that all resulted in impact on the lifestyle of the First Nation. The formal attack on the cultural and social life of indigenous people can be defined as time British self picked responsibility to develop First People with imposition of the Christianity and agriculture considering them to be superior to the hunting-gathering lifestyle of Indigenous peoples. This phase also has counts for large number of deals. Network of 132 residential schools is most reflective of intended attempt to kill the original lifestyle of inhabitants that also have examples of physical, mental, and even sexual abuses within the residential school system. In the mid-1940s First Nations leaders first officially reported the cultura l assimilation and worsened conditions in residential schools, rejected 1969 White Paper and resulted in Indian Brotherhood set up in London to lobby British MPs assuring First Nations rights are accounted within the new constitution. Other examples include Congress of Aboriginal Peoples (CAP) and finally the Permanent Forum on Indigenous Issues was formed by UN assuring the voice of Indigenous pe

Management Consulting Assignment Research Proposal

Management Consulting Assignment - Research Proposal Example Each type of their product has a specific focus. This paper is intends to provide a clear understanding of what Taylersons Malmesbury Syrups brand is, why and how it is managed, and what are the dynamics involved in managing brands in the present context of competitive market. Taylersons Malmesbury Syrups is a privately owned company, incorporated in April 2007. All of their product processing is done at their plant in Maple Heights, Ohio. They own the real estate, building etc, and all of the manufacturing equipment are a debt free, profitable operation. Taylersons Malmesbury Syrups is inspected, and approved, by the Federal FDA, State Agricultural Department and local Health Department. The company's primary business is the manufacturing of concentrated fruit juices, cocktail mixes and beverage syrups sold to the Food Service market and to national restaurant chains, hospitals, and nursing homes. They are constantly researching and developing new products that fulfil the customers' requirements. TAYLERSON'S MALMESBURY SYRUPS are flavoured syrups, using the finest ingredients including pure Madagascan Vanilla or natural Apple & Cinnamon. The company makes it a point to use only the finest ingredient of purely natural components as raw materials in production. Another salient features of their products is that these are very easy to prepare, and are healthy for human consumption. TAYLERSON'S MALMESBURY SYRUPS Products Taylersons Malmesbury Syrups produce a wide range of flavours of Malmesbury Syrup, including: Amaretto flavouring for coffee, on ice cream, as a white wine mixer or Frappes' (Ice, milk and flavour) or fruit desserts. Apple & Cinnamon makes great coffee or flavours hot water, tea, or can be used as a dessert topping. Caramel for flavouring coffee, Frappes', ice cream, pancakes, or hot milk. Cinnamon puts a zing in apple pie and it tastes great in coffee and hot milk too. Espresso for coffees, cakes, ice cream, Frappes' Fine Vanilla on

Wagner Dodge Retreats in Mann Gulch Case Study Example | Topics and Well Written Essays - 2000 words

Wagner Dodge Retreats in Mann Gulch - Case Study Example Interaction between team members and the team leader plays an important role in assessing existing situations, understanding the need of the time and effective resolution of existing problems. The case study of Wagner Dodge provides interesting insights into these aspects of leadership and how certain situations test the leadership abilities of an individual. Background Wagner Dodge headed a fire fighters team of 15 into Mann Gulch, a remote place in Montana to control a huge fire that had broken out in the prairies region. Dodge was an experienced fire fighter and he was responsible for putting out the prairie fire. The team was flown to the area and parachutes were used to drop them down to the fire affected region. However, on landing in Mann Gulch, the team realized that the fire was more aggressive than they had initially thought. The flames were catching on at great speed and there was no escape route since the radio with one of the team members had broken on landing and the ma p was lost too. Left with no possibilities of surviving the fire, Wagner lit a fire and let the area burn out before he landed himself in the middle of this fire circle to protect himself from the prairie fire. He signaled him men to follow him but only one of them joined him in the circle of fire. The rest of the team members did not trust his decision and felt that it was crazy to go into the fire circle started by Wagner. Thus, 13 members out of the 15 perished in the prairie fire (Useem, 1998). Wagner Dodge – decision making and leadership The Mann Gulch fire incident raises a number of pertinent questions relating to the team behavior and understanding existing between Wagner Dodge and his team members. Why did they choose not to follow him and how could the team be unaware of the ground realities? The first question strongly raises doubts over the capabilities of Wagner Dodge as a leader and the lack of trust existing between the chief and his team members. His order to his team to stick to the burned area were met with disbelief and anger from most of the team members and each of them decided to escape the fire in their own ways. The results were tragic and there was nothing much that Dodge could do at the moment to convince them his ways. A review of the situation reveals that though Dodge was a good and experienced firefighter, he had very limited success in achieving the trust and confidence of his team members. He failed to articulate his thoughts and plans in an effective manner to the team members. His inability lay in the fact that he did not communicate emergency plans and guidelines that the team members could follow in such situations. The crew was fairly inexperienced or they would have realized the potential escape route offered by Dodge. If Dodge had explained some possibilities and means of surviving such emergencies earlier, probably all 15 could have been saved from the prairie fires (Useem, 1998). Wagner Dodge also failed to comm unicate the effectiveness of the burnt patch of ground to his team members at the critical hour. This could be associated with lack of time to explain the details to the team members and the inability of the team to grasp in times of the pending crisis.

Chapter 2 Quiz + Answers Essay Example for Free

Chapter 2 Quiz + Answers Essay 1. When companies adopt the strategy-making and strategy execution process it requires they start by developing a strategic vision, mission and values 2. The strategic management process is shaped by external factors such as the industrys economic and competitive conditions and internal factors such as the companys collection of resources and capabilities 3. When a company is confronted with significant industry change that mandates radical revision of its strategic course, the company is said to have encountered a strategic inflection point 4. A companys strategic plan consists of a vision of where it is headed, a set of performance targets, and a strategy to achieve them 5. Top managements views about where the company is headed and what its future product-customer-market-technology will be constitutes the strategic vision for the company 6. Well-conceived visions are distinctive specific to a particular organization free of generic, feel-good statements not innocuous one-sentence statements All of these 7. Effectively communicating the strategic vision down the line to lower-level managers and employees has the value of  not only explaining where we are going and why but, more importantly, also inspiring and energizing company personnel to unite to get the company moving in the intended direction 8. A companys mission statement typically addresses which of the following questions Who we are, what we do, and why we are here 9. A companys values relate to such things as  fair treatment, integrity, ethical behavior, innovativeness, teamwork, top-notch quality, superior customer service, social responsibility, and community citizenship 10. The managerial purpose of setting objectives includes  converting the strategic vision into specific performance targets  using the objectives as yardsticks for tracking the companys progress and performance  challenging the organization to perform at its full potential and deliver the best possible results  establishing deadlines for achieving performance results 11. A company needs financial objectives  because without adequate profitability and financial strength, the companys ultimate survival is jeopardized 12. Strategic objectives  relate to strengthening a companys overall market standing and competitive vitality 13. A balanced scorecard for measuring company performance entails striking a balance between financial objectives and strategic objectives 14. A balanced scorecard that includes both strategic and financial performance targets is a conceptually strong approach for judging a companys overall performance because financial performance measures are lagging indicators that reflect the results of past decisions and organizational activities whereas strategic performance measures are leading indicators of a companys future financial performance 15. A company needs performance targets or objectives for its operations as a whole and also for each of its separate businesses, product lines, functional departments, and individual work units 16. Business strategy concerns ensuring consistency in strategic approach among the businesses of a diversified company 17. In a single-business company, the strategy-making hierarchy consists of business strategy, functional strategies, and operating strategies 18. Functional strategies concern the actions, approaches, and practices related to particular functions or processes within a business 19. Operating strategies concern the relatively narrow strategic initiatives and approaches for managing key operating units within a business and for performing strategically significant operating tasks 20. Management is obligated to monitor new external developments, evaluate the companys progress, and make corrective adjustments in order to decide whether to continue or change the companys strategic vision, objectives, strategy and/or strategy execution methods

The Role Of Efficient Market Hypothesis

The Role Of Efficient Market Hypothesis Corporate finance provides the skills which Spry Plc needs to identify and select as corporate strategies that add value to the firm such as investments. Throughout this paper, capital market and efficient market hypothesis has been discussed critically to evaluate Spry Plcs market position; then possible finance sources has been discussed to obtain finances, and lastly cost of capital and its consequence on large companies has been assessed (Lo, Mamaysky and Wang, 2000); (Lakonishok, Schleifer and Vishny, 1994). Capital markets are the place where Spry Plc can meet investor who has finance to offers for long term. This finance may be equity finance involving the issue of new ordinary share or debt finance from a wide range of loans and debts securities. Capitals market is also a place where investors buy and sells company and government securities (Grossman, Sanford and Stiglitz, 1980); (Campbell, 1987); (Lakonishok, and Smidt, 1988). Capital markets are divided by two parts: primary market and secondary market. primary market help the companies to issues new securities to the new or existing shareholders by marking a public issue or right issues. This can help company perform better to influence shareholders that the company is willing to be stronger over the time both financially and operationally (Lo, Mamaysky and Wang, 2000); (Shiller, 1981); (Keim, and Stambaugh, 1986). Secondary market is the market in which previously issued securities are traded. An active secondary market after the Initial Public Offering (IPO) provides the pre-IPO shareholders with a chance to convert some of their wealth into cash makes it easier for the Spry Plc to raise additional capital later and makes it easier for the company to use their stock to acquire other companies. This is to ensure Spry Plc stock will trade in an active secondary market before they incur the high costs of an IPO (Fama, Eugene and French, 1988); (Campbell and Shiller, 1988). The Role and Importance of Capital Market The primary role and importance of the capital market is to raise long term funds for corporation while providing a platform for the trading of securities. This is to protect increment of the market share and price of securities to protect their investments in future (Lo, Mamaysky and Wang, 2000) (DeBondt, Werner and Thaler, 1995). Efficient Market Hypothesis (EMH) Efficient Market Hypothesis (EMH) asserts that financial markets are efficient or that prices on traded assets such as share and fixed interest securities are already reflect all known information. In can state that the companies may expect that they can develop more efficient market, more random the cycle of price changes generated by such a market and the most efficient market of all is one in which price changes are completely random and changeable (Fama, Eugene and French, 1988); (Lakonishok, Schleifer and Vishny, 1994); (Keim, and Stambaugh, 1986). The role and importance of Efficient Market Hypothesis Efficient Market Hypothesis (EMH) information is defined as anything which may affect the share price that is not known in present and appears randomly in the future. The role of EMH is how Spry Plc mangers consist of analyzing and investing appropriately based on an investors tax consideration and risk profiles (Ariel, 1990); (Poterba, and Summers, 1988) (Cooper, Dimitrov and Rau, 2001); (Roll, and Shiller, 1992). EMH will not consistently outperform the market by using any information that the market already know except through luck. The share prices may not determine to future stock performance example the market may not know about an events which will lead to lower profits. This can not be controlled by anyone when the share prices will be changing depending on the markets (Grossman, Sanford and Stiglitz, 1980); (DeBondt, Werner and Thaler, 1995); (Fluck, Burton and Quandt, 1997). Weak form of Efficient Market Hypothesis In this stage all past market prices and data are fully reflected in the price of securities and stock. It is based on information about event shaping the Spry Plc may not fully replicate in price. This state that future price movements are determined entirely by information not contained in the price series (Fama, Eugene and French, 1988); (Lakonishok, and Smidt, 1988). Semi-strong form of EMH This form emphasize that all publicly available information is fully reflected in securities prices. This implies that neither fundamental analysis nor technical analysis techniques will be able to reliably produce excess return (Campbell, 1987) (DeBondt, Werner and Thaler, 1995). Strong form of EMH This states that all information is fully reflected in securities price. A markets need to exist where investor can not consistently earn excess return over a long period of time (Cooper, Dimitrov and Rau, 2001). Sources in Finance Corporate finance is an area of finance dealing with financial decision makes and the tools and analysis used to make those decision. Organization must ensure that the company are making good finance decision and all decision made are profitable for the organization (Poterba, and Summers, 1988); (Keim, and Stambaugh, 1986). Sources of finance are divided into external finance and internal finance. One example of internal finance is retained earnings which are known as company profit. Another internal sources is often overlooked is the saving generated by more efficient management of working capital. This states that the company has sufficient cash savings in accounts to pay off all the debts owned as bank overdraft, trade creditors, and other debts (Campbell and Shiller, 1988); (Lakonishok, Schleifer and Vishny, 1994). External finance is available which can be split broadly into debt and equity finance. External finance comes from outsource to invest and will pay-off based on terms agreed with interest (Ariel, 1990). Equity Finance Share capital is issued by capital and converted into small units become share of the companies. Shareholder is the person who is holding the company share. There are two types of share normally issues by company: ordinary share and preference share capital (Cooper, Dimitrov and Rau, 2001); (Keim, and Stambaugh, 1986). Ordinary Shares Capital Ordinary share is important source of raising long term capital by Spry Plc. It represents the ownership of a company. Ordinary share capital will not get the fixed dividend but shareholder will get the basic interests from the company. Ordinary shareholders have the power to vote for the rights and they have the right to choose managing directors (Shiller, 1981); (Fluck, Burton and Quandt, 1997); (Rasches, 2001). The important merits of raising funds through issuing ordinary share are as follows (Samuelson, 1965); (Odean, 1999): There will not be a mandatory burden for the company to pay dividend to equity shareholders yearly. Ordinary shareholders have the right and power to vote who will be in the management committee of the company. Ordinary share issue can be time consuming and it is considered risky. Company has less control over the management as it is decided by shareholders (Ariel, 1990); (Roll, and Shiller, 1992). Preference Shares Capital Preference shareholders enjoy a superior position over equity shareholders in two ways. Preference shareholder will receive a fixed rate of dividend out of net profits of the company before any dividend is declared for ordinary shareholders. Preference shareholders do not have any vote rights (Fama, Eugene and French, 1988) (DeBondt, Werner and Thaler, 1995). The merits of preference share as follows (Basu, 1983): Preference share is a safety share to invest and company will provide a reasonably steady income in the form of fixed rate of return. Shareholder does not have the right and power to vote for management. Preference share often is not able to raise enough fund desired by the company (Ball, 1978). Retained Earning A company generally does not distribute all its earnings amongst the shareholders as dividends. This is the profits which show in the financial statement how much the organization gains for a year and can be retained in business for future use (Grossman, Sanford and Stiglitz, 1980) (Cooper, Dimitrov and Rau, 2001). The merits of retained earning as a source of finance is as follows (Samuelson, 1965); (Odean, 1999): As the funds are generated internally, there are greater choices and flexibility available. It may lead to increase in the market price of the equity shares of a company Retained earning will not held the organization to use the capital wisely. Misuse is often occurred in this policy (Campbell, 1987); (Roll, and Shiller, 1992). Debt Finance Bank loan Bank provides funds for different purpose as well as for different time periods. For example, if Spry Plc borrows money from the bank with good understanding there can be different type of repayment like extended period, overdraft, term loans etc. though the borrower is required to provide some security assets of the firm before a loan is authorized by a commercial bank (Campbell and Shiller, 1988); (DeBondt, Werner and Thaler, 1995); (Keim, and Stambaugh, 1986). The merits of raising funds from a commercial bank are as follows (Keim, 1983): Banks provide funds when companies are in need and timely. Loan amount can be increased according to business needs and can be repaid in advance when funds are not needed. Bank often requires mortgage of assets in order to approve loan. Sometimes it takes too many formalities which take time (Ariel, 1990); (Cooper, Dimitrov and Rau, 2001); (Nicholson, 1960). Debentures Debentures are an important tool for raising long term debt capital. A company can raise funds through issue of debentures which bear a fixed rate of interest. The debenture issued by a company is an acknowledgment that the company has borrowed a certain amount of money from public, which promises to repay at a future date with interest (Lo, Mamaysky and Wang, 2000); (Lakonishok, Schleifer and Vishny, 1994). . The merits of raising funds through debentures are given as follows (French, 1980): The issue of debentures is suitable in the situation when the sales and earnings are relatively stable. As debentures do not carry voting rights, financing through debentures does not affect organizational control of equity shareholders on management. Issuing debentures is risky when company business market is not good and incurs losses because debenture amount must be paid regardless of company gains profit or losing business (Fama, Eugene and French, 1988); (Cooper, Dimitrov and Rau, 2001). Cost of Capital When investors provide a corporation with funding they expect the company to generate an appropriate return on those funds. From the companys perception, investors expects return is a cost of using the funds and it is called as cost of capital. A variety of factor influence a companys cost of capital. The cost of capital is also a key factor in choosing the mixture of debts and equity used to finance the company and is a critical element in business decision (Cooper, Dimitrov and Rau, 2001); (Keim, and Stambaugh, 1986). Weighted Average Cost of Capital (WACC) The cost of capital used to analyze capital budgeting decision is a weighted average of the components cost. Therefore, Spry Plc managers should strive to make the company more valuable and that value of a company is determined by the size, timing and risk of free cash flow (FCF). A companys value is the present value of its FCFs, discount at the WACC (Shiller, 1981). The formula of Weighted Average Cost of Capital as follows: Value = FCF 1 + FCF 2 (1+WACC) (1+WACC) 2 Cost of Equity Companies can raise common equity in two ways there are (Fama,1970): Directly by issuing share. Indirectly by retained earnings. Mature company issue new share of common stock. In fact if there are less than 2 percent of all new corporate funds come from the external equity market because of high floatation cost, investors perceived issuing equity as a negative signal with respect to the true value of the companys stock. An increase in the supply of stock will put weight on the stock price, forcing the company to sell the new stock at a lower price than existing, before the new issue was announced (Campbell and Shiller, 1988) (Lakonishok, Schleifer and Vishny, 1994); (Nicholson, 1960). Rate of return (rs) is investors expectation to earn that return by simply buying the stock of the company. Therefore, rs are the cost of common equity raise internally by reinvesting earning (Poterba, and Summers, 1988); (Cooper, Dimitrov and Rau, 2001). Whereas debts and proffered stock are contractual obligations that have easily determined cost, is more difficult to estimate rs. There are few methods to compute such as Capital Asset Pricing Model (CAPM), Discount Cash Flow (DCF) and others. CAPM approach is to estimate the risk free rate, estimate the current expect market risk premium, estimate the stocks beta coefficient and substitute the preceding values into the CAMP equation to estimate required rate return on the stock (Ariel, 1990); (DeBondt, Werner and Thaler, 1995); (Jensen, 1968). Ks = Krf + à ¯Ã‚ Ã‚ ¢ (Km Krf) Cost of Debt Cost of Debts determines the rate of return debts holders required to pay. Companies use both fixed and floating rate debt straight and convertible debts and debt with sinking and without sinking funds and each form has a somewhat different cost. Therefore, Spry Plc should know at the start of the planning period, the exact types and amounts of debt that will be used during the period. The types used will depend on the specific assets to be financed and on capital market condition as they develop over time. The relevant cost is the marginal cost of new debt to be raised during planning period. The after tax cost of capital is used to calculate the WACC (Lo, Mamaysky and Wang, 2000); (Nicholson, 1960). After tax component cost of debt = Interest rate Tax Saving = rd r d T = rd (1-T) Market value of equity and debt The formulation of market value of equity and debts as below: Market value of common equity (Market value common equity + market value of debt + Markey value of preference equity) In this stage, market value use to compute how much company share values at the market. The market value for equity is let publicly traded company is simply the price per share multiplied by the number of share outstanding. It can state market value of equity is similar to trade in ordinary share in market. The market value of debts similar to the company traded bonds. Most companies have a large banks loan. Therefore, this is one of the debts company holds. Preferred stock holders are fixed to gain the dividend by the company and percentages term is based on net profit for the years. The cost of common equity is usually determined using the Capital Asset Pricing Model (Grossman, Sanford and Stiglitz, 1980); (Fluck, Burton and Quandt, 1997). The formula to compute it is WACC = Weight of Preferred Equity * Cost of Preferred Equity + Weight of Common Equity * Cost of Common Equity + Weight of Debt * Cost of Debt * (1 Tax rate) Importance of cost of capital Considered as the opportunity cost, cost of capital is the minimum return required by an investor. On the other hand, for shareholders cost of capital is the dividend rate they expect to gain along with the gain on values of chares. Besides, for loan holders, cost of capital is the rate of interest for the loan provided. So company must perform well to maintain all returns effectively; other wise this finance providers will sale or transfer their funds to others with better rate or return (Fama, Eugene and French, 1988); (Keim, and Stambaugh, 1986). Capital Structures A company can obtain a long term financing in the form of equity, debts or some combination. The firms mixture of debt and equity is called as capital structure. The capital structure decision includes a companys choice of target capital structure, average maturity of its debts and specific source of financing it chooses at any particular time (Ariel, 1990); (Cooper, Dimitrov and Rau, 2001); (Jensen, 1968). Traditional Approach Traditional approach defined as an optimal capital structure. This is to compute how much the firms total value leverage for the year. When the investor is to invest their money in the company with a higher risk they may get higher interest and income. But when shareholder perceived higher risk and cost of equity is raise to the point at the level, the cost of debt will be more expensive than equity. So the company need to pay more interest and will bust to them when operate (Campbell, 1987); (Lakonishok, Schleifer and Vishny, 1994). Miller and Modigliani (I) Miller and Modigliani (I) [MM] first analyze that leverage is the value of any firm is established by capitalizing its expected net operating income (EBIT) at a constant rate that is based on the companys risk. The first proposition establishes that under certain conditions, a firms debt-equity ratio does not affect its market value. This developed a trade off theory of capital structure. It show that dents is useful because interest is tax deductible but also that dents bring with it costs associated with actual or potential bankruptcy. The optimal capital structure strikes a balance between the tax benefits of debts and the cost associated with bankruptcy (Lo, Mamaysky and Wang, 2000); (DeBondt, Werner and Thaler, 1995). Miller and Modigliani (II) The second proposition establishes that a firms leverage has no effect on its weighted average cost of capital provided the cost of equity capital is a linear function of the debt-equity ratio. This stage is showing that under some conditions, the optimal capital structure can be complete debt finance due to the preferential treatment of debt relative to equity in a tax code. MM (II) is to determine that the expected return of portfolio equal with WACC of expected return of the securities in the portfolio. This proves that Proposition II is more flexible compute compare with MM (I) for the company because signaling models use financial decisions to reveal information to make decision (Grossman, Sanford and Stiglitz, 1980); (Poterba, and Summers, 1988); (Keim, and Stambaugh, 1986). Implications of cost of capital on capital structure Using cost of capital on capital structures bring the implications that the firm must earn a minimum rate of return to cover the cost of generating funds for investments if the firm wish public to buy bonds and stocks (Campbell and Shiller, 1988); (Lakonishok, Schleifer and Vishny, 1994). Conclusion Achieving the goal of corporate finance required that any corporate investment is financed appropriately. Investment in a new market may have risk which is very often unknown. Therefore, management must identify and aware of the risk and plans accordingly with financing mix and impact the valuation to reduce capital structure that results in maximum value (Fama, Eugene and French, 1988); (Fluck, Burton and Quandt, 1997).