Question 1
Considering that the forecasted growth rate was 10 percent, and that the operating costs would drop to 75 percent, expanding westwards is the right move for the company. The company has a chance of increasing its revenue and market reach as a result of the marketing strategy. In addition, the changes witnessed in the pro forma statement, the profit margin will eventually stand at 10 percent. As a result, the shareholders will be content with the company’s performance.
In most companies, agency conflicts are a common occurrence. However, I do not foresee any conflicts due to the six ways managers and their actions might affect the desires of the value shareholders by being an impediment to the expansion ( Brigham & Ehrhardt 2016). Since the company’s performance is healthy and it is projected to be sustainable in the near future, the interests of the management and the shareholders are aligned, since it move to expand will result in higher revenue, profits, and market reach.
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Question 2
Some of the recommended characteristics of the board of directors include the following. Firstly, the board members should be supportive. They should not undermine the management in their efforts to make strategic moves that benefit the company in the long term. However, they should not hold back when they have an opinion about the running of the business or its strategic interest ( Madura, 2006) . They should also have passion for the company and what it stands for. Passion will drive the board members to do what is best for the company. Instead of thinking about their individual interests, they will be more invested to the success of a company, rather than other short term goals and gratifications.
References
Brigham, E & Ehrhardt M. . (2016). Financial Management: Theory & Practice. Cengage Learning.
Madura, J. (2006). International financial management . Southbank, Vic: Thomson/South-Western.
