Dreamworks Animation Skg Inc Overview Film Studies Essay

Dreamworks Animation Skg Inc Overview Film Studies Essay DreamWorks SKG was founded in 1994 by three entertainment enthusiasts, Steven Spielberg, Jeffrey Katzenberg, and David Geffen (The Cornell Daily Sun). The SKG appended to the title is representative of the first letter of each of their last names. DreamWorks SKG is involved in a variety of entertainment segments such as film, music, and television. At the time of its creation, all three individuals were involved in film production. Jeffrey Katzenberg had been recently fired as a studio chairman at The Walt Disney Company, Steven Spielberg had temporarily suspended his lucrative directing career, and David Geffen was involved in film production as well as the record industry. Each of the individuals had something to offer, Spielberg with his experience in making live-action movies, Katzenbergs animation movies, and Geffen with his music background (Reference for Business). Financially, the company began with two billion dollars, supplemented with various high-tech partnerships. A portion of the initial money, $500 million, was contributed by a very interested Paul Allen, co-founder of Microsoft. Spielberg, Katzenberg, and Geffen also contributed roughly $33 million to the initial funds (Reference for Business). During the first few years in business, DreamWorks success was like a roller coaster. Its first film, The Peacemaker, was released in 1997, and only reached $12 million on opening weekend. In the years to follow, DreamWorks released several more successful films such as Mouse Hunt, Deep Impact, and Antz. In an attempt to delve into other entertainment segments, DreamWorks released two television shows High Incident and Champs, which were failures. However, in 1996 DreamWorks released Spin City for ABC, which turned out to be quite successful (Reference for Business). By the late 90s and early 2000s, DreamWorks was pumping out very successful films, many earning multiple awards such as American Beauty, which received Best Picture at the Oscars in 1999. In 2000, DreamWorks created a new division called DreamWorks Animation, which produced animated feature films. With the release of Shrek in 2001, DreamWorks started competing head-to-head with Disneys animated movies. In 2004, DreamWorks Animation became its own publicly traded company (Reference for Business). COMPETITIVE STRATEGY The revenue generated by the film industry is massive, with very few players responsible for the total. In 2008, the U.S. box office generated nearly ten billion dollars (Ars Technica). The eight major film companies responsible for most of the gross revenue include DreamWorks SKG, Fox Entertainment Group, MGM Holdings Inc., NBC Universal, Paramount Motion Pictures Group, Sony Pictures Entertainment, Time Warner, and Walt Disney Motion Pictures Group (Motion Picture Access). Most of the previously mentioned film companies are involved in a variety of film production methods including live action, digital animation, animation/live action, hand animation, and stop-motion animation. Live action films account for the majority of the gross revenue generated domestically, at $8.6 billion with a little over 87% of the share. Digital animation accounted for $1 billion and held over 10% of the share. The other film production methods accounted for the remaining 2.4% (The Numbers). Many of the eight major film companies have a subsidiary that produces animated movies. The companies include Fox Entertainment Group with Blue Sky Studios, Sony Pictures Entertainment with Sony Pictures Animation, Time Warner with Warner Bros. Animation, MGM Holdings Inc. with MGM Animation, and Walt Disney Motion Pictures Group with Walt Disney Pictures (Motion Picture Access). DreamWorks Animation, on the other hand, is its own publicly traded company, strictly dedicated to animated film production (DreamWorks Animation SKG). With this advantage, DreamWorks Animation is attempting to outperform some of the broadly-oriented rivals in that segment. DreamWorks Animation has accomplished this by partnering with various high-tech companies such as Pacific Data Images (PDI) (Reference for Business). These partnerships allowed DreamWorks Animation access to advanced imaging technology without the costs of recreating the technology in-house. In addition, DreamWorks Animation uses a unique system to create its animations that allows for lower costs (Linux.com). Lastly, DreamWorks Animation can better serve the animation market because of its primary focus on animation. Therefore, DreamWorks Animation is using a Focus Differentiation strategy to penetrate the film production market. STRATEGY EXECUTION In order to be successful in the animated film segment, DreamWorks Animation has made several strategic actions. To begin with, in 1995, DreamWorks SKG purchased a portion of Pacific Data Images, and collectively the two companies created the movie Antz, which was released in 1998. With the success of the movie, in 2000, DreamWorks SKG acquired most of PDI. The partnership with PDI created competitive advantage for DreamWorks; because of the cutting-edge technology they had available for use. DreamWorks has continued to make use of this partnership, and the conglomerate is often referred to as PDI/DreamWorks (Reference for Business). Several years later DreamWorks Animation was spun-off from DreamWorks SKG to become a separate company with the sole purpose of creating animated movies (Reference for Business). This action was to focus on a segment in which the other, larger, film companies only had subsidiaries. By creating a entirely separate publicly traded company, DreamWorks Animation has a unique advantage in that it can focus on what it does best, animated movies. In the film industry, the target market for animated films varies greatly from that of live-action. This creates an environment where DreamWorks Animation can avoid being trampled by larger companies and focus on a smaller market. DreamWorks Animation has exploited this niche to become a leading player in film animation. DreamWorks Animation has cut costs by creating a unique system for generating its animations. After analyzing requirements, the company decided that it needed a system that was easily upgradeable, reliable, and had advanced capabilities. To accomplish this, it selected to use a Linux based platform, which is an alternative Microsoft Windows or Mac OSX operating systems. Because computer generated animation is such a demanding process, it can be quite time consuming to develop. This, in turn, creates huge costs for producers because of the time necessary to make minor changes. With DreamWorks advancements, it was able to reduce the time necessary to create one scene, from three hours to real-time. Therefore, when changes to the animation were required, they could be made nearly instantaneously (Linux.com). In recent years, an increasing number of film production companies are releasing 3D movies because of their popularity. In addition, many companies are beginning to realize that 3D movies are cash cows as a result of their high ticket prices. With this in mind, Katzenberg, CEO of DreamWorks Animation, stated that every film DreamWorks makes from now on will be made in 3D (CG Society). Katzenberg is betting that 3D films are here to stay this time around, unlike the 3D craze in the 1950s. One of the largest contributing factors to this renewed interest is the fact that 3D movies can now be produced in a more cost effective manner. This is largely due to the advancements in technology, which allows companies such as DreamWorks to use the latest stereoscopic 3D technology to build its movies from the ground up (CG Society). Katzenberg explains that 3D film production will be quite rewarding for DreamWorks Animation: I believe CG animation is in the best position to take advantage of the latest advancement in 3D technology, said Katzenberg. Since our films are made digitally, it presents numerous opportunities for our filmmakers. And by moving into this area now, DreamWorks Animation is developing expertise that will differentiate our films and provide a lasting competitive advantage (CG Society). FINANCIAL PERFORMANCE In spite of a tough economic climate the past few years, DreamWorks Animation has performed above and beyond expectations. In 2009, DreamWorks reported double-digit year-over-year growth in revenue and earnings per share (Market Watch). Revenue increased by 12% from 2008-2009, and earnings per share increased 10% (Market Watch). The following table demonstrates the performance of DreamWorks Animation for the past few years: Figure1. Adapted from DreamWorks Animation SKG, Inc. Morningstar Equity Research, p. 2. Copyright 2010 by Morningstar. In comparison to other film production companies, DreamWorks Animation is quite small in size. The following table compares DreamWorks Animation with the more broadly-oriented Walt Disney Company: Figure 2. Adapted from DreamWorks Animation SKG, Inc. Morningstar Equity Research, p. 2. Copyright 2010 by Morningstar. COMPETITIVE ADVANTAGE / VRIO FRAMEWORK When DreamWorks SKG spun off DreamWorks Animation, this did not create a true first-mover advantage, because it was not the first occupant in the segment. However, it can be thought of as a first-mover strategy in the sense that DreamWorks Animations was an entirely separate company dedicated to animation, unlike the other broadly-oriented film companies. DreamWorks did this to become a significant occupant in the animation segment of the film industry, which created a competitive advantage. DreamWorks Animation partnered with high-tech companies such as PDI, which allowed access to important technology. As a result, this created a competitive advantage for the company. The capabilities that DreamWorks Animation has at its disposal are costly to implement in-house, and may be costly and/or difficult to acquire. In addition, because it has majority interest in PDI, DreamWorks Animation can readily employ the capabilities. With the necessary technology in its grasp, DreamWorks Animation is able to grow within its segment. Another capability advantageous to DreamWorks Animation is its custom system used to generate the animated films. Because the system environment has been modified to better suit the specific needs of the company, this capability is difficult to match. By using this capability DreamWorks Animation can reduce time-related costs that other industry companies are faced with. This allows the producer to focus on animations, without having to worry about the time needed to edit a scene. STRATEGIC FIT / FUTURE PERFORMANCE As a focus differentiator, DreamWorks Animation has penetrated the animation segment of the film industry and has become a pivotal player in that market. With the many supportive capabilities available to the company, it has successfully expanded within its niche, and continues to grow. Strategically, DreamWorks Animation fits seamlessly within the film industry, because of its focus on a single, smaller segment. The arrival of more advanced 3D technologies, and the associated cost savings definitely provides a promising outlook for the company. Because of its advanced capabilities, DreamWorks Animation will be able to fully take advantage of this opportunity. Therefore, in the next few years, the performance of the company should meet and possibly exceed expectations.

Electra Product Case Study Analysis

1. 0 Introduction This case study is based on the company Elektra Product Inc . It is enough mature publicly held company that had once been a leading manufacturer and retailer of electrical products and supplies. But, nowadays the company is facing a host of problems. Market share was declining in the face of increased foreign and domestic competition, new product ideas were few and far between and departments such as manufacturing and sales barely spoke to one another. The confidence was becoming low and many employees were switching other jobs.Few decisions are taking which are not productive for the company and the employees as well. Barbara Russell is the one of the top management tries to make a change for the company. But her assumptions are not good enough for betterment of the organization. 1. 1 LESSON LEARNED FROM THE CASE Barbara Russell, Elektra's Vice President of Manufacturing, has been tasked by Martin Griffin, Elektra's new President, to head one of the teams that wil l devise a plan to change Elektra's management style from a traditional top-down firm to a de-centralized organization that emphasizes employee empowerment in the management process.Ms. Russell forms an enthusiastic team that works extra hours to compile management changes that would allow employees at all levels to make decisions appropriate to their positions. However, When the recommendations are presented to department heads, they receive a cold reception when Mr. Griffin is called away from the meeting. Ms. Russell is now faced with the problem of implementing change against the resistance of the mid-level management. 2. 0 ANSWER TO THE CASE QUESTIONS 2. 1 QUESTION 1How might top management have done a better job changing Elektra Products into a new kind of organization? Elektra products are facing many problems that we have already mentioned earlier. At this time they need some solution in order to recover from this dangerous situation. Company management has launched some imp lementation programme in the business. Here Barbara Russel who is the one of the top management could restructure the function of management. The problem is they have not discussed the matter with all department heads.After that, few skills should need to apply in this company like human skill, technical skill. Barbara Russel must need to use management theories to change the company in a new organization. Managers must need to work perfectly in their positions by following the instructions of top management. In the company there is dispute between themselves and newly appointed CEO Martin Griffin. Barbara Russel must need to handle the situation tactfully because conflict could be larger in future. Without that, she needs to follow the managing roles and use it properly to solve the problems.He should follow the basic functions of management Planning, Organizing, Leading and Controlling. At last, top management should need to follow the theories of management perfectly, and then th ey can change Elektra Product Inc. into a new kind of organization. What might they do now to get the empowerment process back on track? Martin, who take the situation as a challenge was appreciateable, because the company had no hope of recovery. He needs a new idea and new force to make this company great. So he wishes some help from the top management and employees.The company needs to reform its Planning process since there is a problem of future forecast of product innovation and the competition is very high; managers shifts from control to facilitation and Coordinating of work process, Selection of right people for the right place at the right job is an important for a good flow of efficiency in work; currently employees from different departments facing the problem of communication barriers between department to department so it should be down by communicating each other. For the employee empowerment few things are needed.At first, training in the skills necessary to carry ou t the additional responsibilities. Lack of knowledge in work will reduce efficiency and effectiveness, so it should be developed by training in the skills an important task for employees to carry out the additional responsibilities. Then, initiative and confidence is needed to the employees to take greater responsibility. Empowerment management means granting authority to subordinates. Her team actually tried to â€Å"empower† lower level management without including them in the solution. Employee communication is one of the strongest signs of employee empowerment.Managers also must take on new roles, knowledge and responsibilities for employee’s empowerment. The Research & Development department must study about current development in the electrical product which improves the innovativeness of the company products. Actually, the main objective is to implement empowerment and innovation as a form of salvation to the company’s declining market share, lack of new product ideas, lack of communication, low morale and lack of employee’s trust to the corporation. 2. 2 QUESTION 2 Can you think of ways Barbara could have avoided the problems her team faced in the meeting with department heads?There are other ways that Barbara could have done to avoid the problems her team faced in the meeting with department heads. First and foremost, even though the top management has already assigned several problems-solving teams, Barbara and her team should not limit the idea to implement Employees Empowerment Process from their own team perspectives alone. Instead, they should seek inputs or opinions from other managers as well. Surely, other managers will feel pleased to be given the opportunity to express their views on the issue and will appreciate being consulted before decisions are made.Eventually, Barbara and her team will be deemed as more collaborative in the workplace, and the rejection is unlikely. Second, they should have more convincing su ggestions that mention personal benefit that everybody will get if the suggestions are implemented. The personal benefits mentioned could be in the form of increased job security or more profit to the company that will lead to salary increment not only for the employees, but also for everybody from top to the bottom of the organization.This kind of suggestion, according to Jack Welch in his book â€Å"Winning: the Answer† will answer the question of â€Å"What’s in this for me† on everyone’s mind. Lastly, they should always come out to the meeting with good preparation and planning by having contingency proposals. They have to come out with Plan A and Plan B. In fact, the more alternative is the better. By doing so, it will give the top management choices that will significantly help them in making an informed decision and deal with the crisis faster. 2. 3 QUESTION 3 If you were Barbara Russell, what would you do now?Why? Elektra Product is a mature compa ny, so there should be rapid growth of production and sales. But due to some mistakes in decision makings, conditions of the company have become critical. Barbara Russell, the vice president of manufacturing who has lots of responsibilities. Barbara Russell has several options to consider after what happened to the meeting. Her first option was to keep her mouth shut. In doing so, nothing can ever be proficient. Although it can eliminate argument from the other department heads, it will not solve the problem.Her ideas would only be put to waste if she decides to keep quiet about them. Another option is to deal with the CEO. This will open the line of communication for managers. If she confronts Martin Griffin about the ideas, he might even back her up if they see eye to eye. He is an important figure in the implementation of the empowerment campaign as he directs and decides for the organization. Approaching him would help Barbara gain more confidence in her ideas. Barbara Russell c an choose to push for reform slowly and work for gradual support from the other teams.Because change does not happen overnight, Barbara Russell can take small steps in trying to gain the support of her losses. She can try to communicate with them first and slowly they can begin to understand the advantages and benefits of her suggestions. And finally, she can choose to leave the company and work for another. In cases when all hopes are lost, this may be her only option as she hopes to be heard and acknowledged in another company. If I ware Barbara Russell I would have doing this types of activities to reform the organization. 4. 0 REVIEWS FROM THE ISLAMIC PERSPECTIVEOne of the best characteristic of Islam is its comprehensive approach of human life. There is no field in our life except Islam has given directions and rules to be applied there. This is why we can see the business field is also full with Islamic rules and laws in order to make success and satisfaction for both seller a nd buyer. The importance of business in Islam Islam encourages hardworking to earn money for life and to take care family, it is considered as the responsibility of a Muslim after his worships as it is explained in Qura’n: â€Å" † (Al Jumu’a: 10). The last prophet Muhammad(s) himself was also a businessman in the starting of his youngster and he was known as an expert in this field before his prophet hood. It is written in Islamic history that the prophet has been given the name of â€Å"Al Ameen† because of his honesty in the dealing with the people. If we send our eyes through the Islamic history we see that the companions of Prophet(s) like Abu baker, Abdurrahman bin awf (r) were businessmen, those who helped Islam with their health and wealth.Planning and good behavior The best way to get the elements of a successful business is to analyze the Islamic teachings which belong to the dealings. The plan and strategy are most important parts in a business project. Islam doesn’t allow a Muslim to work rapidly without any planning as it is discouraged by Prophet Muhammad (s): â€Å"the urgency is the act of Satan†. All ideas should be consulted and discussed to other workers and keep attractive behavior with both colleagues and customers. So we can see the Qur’an gives more importance for discussion and consultation as Allah says â€Å" † ( : 159) Holding best techniques It is worth to mention here that the Prophet advises that a Muslim should hold best techniques whatever he does â€Å" â€Å". A businessman should not try to finish his project the way he likes, but he has to finish it in its best quality. Satisfaction of both parties Another teaching of Islam for a successful business is considering the satisfaction of both seller and buyer.We should not focus on our profit unless we care that whether buyer is satisfied or not. The disappointment of the customer wil l lead to decrease the popularity of a product. So we see the Qur’an states very clearly that the satisfaction of both parties is necessary for dealing. â€Å" † Cheating In quality of product and its quantity There are many Islamic teachings which order to avoid bad behaviors in business like cheating, black market and hording. Islam has strongly handled the cheating in business where it is in the quality of a product and its quantity.The best evidence of this is that the one chapter in Qur’an is named as â€Å"one who reduce the quantity† â€Å" â€Å". Its first fourth verses talk about the cheating in quantity. â€Å" . . . . † ( 1-4) There are many understandings related to this matter as we mentioned before. So it is our responsibility to take these teachings and bring to the light in order to understand the miracles of the Holly Quran and to make a standard business project. 4. 1 Conclusion and recommendationIt is imperative for the entire company to become aware of their roles, responsibilities and worth in the company. Once they become aware that they mean something and that they can contribute to the betterment of the organization, this will surely uplift their morale and they can all start working and cooperating towards the common goal. More importantly, managers must be completely aware of their specific tasks and that they effectively and efficiently accomplish their tasks in the company because their subordinates rely on their capacity to direct the entire company towards their goal.It may take time to open this line but slow reform is better than none. And once communication is open it becomes easier to gain the support of the other teams. Another recommendation is team-building. If the company works as one and each member works towards one common goal, then empowerment and all other campaigns are attainable. If the employees learn how to cooperate and participate, then no problem can put down a united Elektra Products, Inc. References: http://www. eham. net/reviews/detail/4212 http://www. antiessays. com/ http://www. scribd. com/doc/ http://www. papercamp. com/group/

Which Countries Speak in German

Germany is not the only country where German is widely spoken. In fact, there are seven countries where German is the official language or a  dominant one.   German is one of the world’s most prominent languages and is the most widely spoken native tongue in the European Union. Officials estimate that about 95 million people speak German as a first language. That doesnt account for the many millions more who know it as a second language or are proficient but not fluent.   German is also one of the top three most popular foreign languages to learn in the United States.   Most native German speakers (about 78 percent) are found in Germany (Deutschland). Heres where to find the six others:   1. Austria Austria ( Ãâ€"sterreich) should quickly come to mind. Germanys neighbor to the south has a population of about 8.5  million. Most Austrians speak German, as that is the official language. Arnold Schwarzeneggers Ill-be-back accent is Austrian German.   Austrias beautiful, mostly mountainous landscape is contained in a space about the size of the U.S. state of Maine. Vienna ( Wien), the capital, is one of Europes loveliest and most-livable cities.   Note: The various variations  of German spoken in different regions have such strong dialects they could nearly be considered a different language.  So if you study German in a U.S. school, you may not be able to understand it when spoken in different regions, like Austria or even southern Germany. In school, as well as in the media and in official documents, German speakers typically use Hochdeutsch or Standarddeutsch. Luckily, many German speakers understand Hochdeutsch, so even if you cannot understand their heavy dialect, they will likely be able to understand and communicate with you. 2. Switzerland Most of the 8 million citizens of Switzerland (die Schweiz) speak German. The rest speak French, Italian or Romansh. Switzerlands largest city is Zurich, but the capital is Bern, with the federal courts headquartered in French-speaking Lausanne. Switzerland has displayed its penchant for independence and neutrality by remaining the only major German-speaking country outside of the European Union and the euro currency zone. 3.  Liechtenstein Then theres the postage stamp country of Liechtenstein, tucked in between Austria and Switzerland. Its nickname comes from both its diminutive size (62 square  miles) and its philatelic activities. Vaduz, the capital, and largest city counts fewer than 5,000 inhabitants and doesnt have its own airport (Flughafen). But it does have the German-language newspapers, the Liechtensteiner Vaterland, and the Liechtensteiner Volksblatt. Liechtensteins total population is only about 38,000. 4. Luxembourg Most people forget Luxembourg (Luxemburg, without the o, in German), situated on Germanys western border. Although French is used for street and place names and for official business, most of Luxembourgs citizens speak a dialect of German called Là «tztebuergesch in daily life, and Luxembourg is considered a German-speaking country. Many of Luxembourgs newspapers are published in German, including the Luxemburger Wort (Luxemburg Word). 5. Belgium Although the official language of Belgium  (Belgien) is Dutch, residents also speak French and German. Of the three, German is the least common. Its mostly used among the Belgians who live on or near the German and Luxembourg borders. Estimates put Belgiums German-speaking population around 1 percent. Belgium is sometimes called Europe in miniature because of its multilingual population: Flemish (Dutch) in the north (Flanders), French in the south (Wallonia) and German in the east (Ostbelgien). The main towns in the German-speaking region are  Eupen  and  Sankt Vith. The  Belgischer Rundfunk  (BRF) radio service broadcasts in German, and  The  Grenz-Echo, a German-language newspaper, was established in 1927. 6. South Tyrol, Italy It may come as a surprise that German is a common language in the South Tyrol (also known as Alto Adige) providence of Italy. The population of this area is about half a million, and census data shows about 62 percent of the residents speak German. Second, comes Italian. The remainder speaks Ladin or another language.   Other German-Speakers Most of the other German-speakers in Europe are scattered across eastern Europe in former Germanic areas of countries such as Poland, Romania, and Russia. (Johnny Weissmuller, of the 1930s-40s Tarzan movies and Olympic fame, was born to German-speaking parents in what is now Romania.) A few other German-speaking regions are in Germanys former colonies, including  Namibia  (former German Southwest Africa), Ruanda-Urundi, Burundi and several other former outposts in the Pacific. German minority populations (Amish, Hutterites, Mennonites) are also still found in regions of North and South America. German is also spoken in some villages in Slovakia and Brazil. A Closer Look at 3 German-Speaking Countries Now lets concentrate on Austria, Germany, and  Switzerland — and have a short German lesson in the process. Austria  is the Latin (and English) term for  Ãƒâ€"sterreich, literally the eastern realm. (Well talk about those two dots over the O, called umlauts, later.) Vienna is the capital city. In German:  Wien ist die Hauptstadt.  (See the pronunciation key below) Germany  is called  Deutschland  in German (Deutsch).  Die Hauptstadt ist Berlin. Switzerland:  Die Schweiz  is the German term for Switzerland, but to avoid the confusion that could result from using the countrys four official languages, the sensible Swiss opted for the Latin designation, Helvetia, on their coins and stamps. Helvetia is what the Romans called their Swiss province. Pronunciation  Key The German  Umlaut, the two dots sometimes placed over the German vowels a, o and u (as in  Ãƒâ€"sterreich), is a critical element in German spelling. The umlauted vowels à ¤, à ¶, and  Ãƒ ¼ (and their capitalized equivalents Ä, Ãâ€", ÃÅ") are actually a shortened form for ae,  oe  and  ue, respectively. At one time,  the e  was placed above the vowel, but as time went on,  the e  became just two dots (diaeresis in English). In telegrams and in plain computer text, the umlauted forms still appear as ae,  oe  and  ue. A German keyboard includes separate keys for the three umlauted characters (plus the ß, the so-called sharp s or double s character). The umlauted letters are separate letters in the German alphabet, and they are pronounced differently from their plain a, o or u cousins.

Why do organizations preferred debt capital over equity capital - Free Essay Example

Sample details Pages: 4 Words: 1302 Downloads: 9 Date added: 2017/06/26 Category Finance Essay Type Research paper Did you like this example? The purpose of any research should be very clear and should arrive at an objective. As it is said by McDaniel and Gates (2006), targeted statements that delineate the exact information needed to solve a research problem. Therefore it is necessary to define the objective of research. Don’t waste time! Our writers will create an original "Why do organizations preferred debt capital over equity capital" essay for you Create order The objective of this study is to set out the capital requirements in such a proportion that can add value to any organization in either in debt or equity. The proportion should be in a way that should meet the capital requirement and that also can reduce the tax in comparison with dividend to save it. Another aspect of this research is that the structure is also in a way that also not affected the shareholders interest in the organization. In other words the investment opportunities should be there in order to utilise the share value in the financial stock market. Research Approach Does an optimum liability and equity structure exist, in other words, a combination of  that would allow a maximization of the value of the economic assets for the shareholders? Or, does a totally reliable financial structure such as the WACC is as low as possible? Traditional Approach According to the traditional approach, an optimal financial structure does exist, which will allow the company to maximize its value through the right amount of debts and financial leverage. The company minimizes its  HYPERLINK https://www.ecofine.com/strategy/wacc.htmWACC, in other words, the cost of financing. The cost of debt is lower than the cost of equity (Kd Ke) as there is less risk. From that standpoint, any increase in debt will reduce the  WACCHYPERLINK https://www.ecofine.com/strategy/wacc.htm. However, increasing debts creates a higher risk for shareholders. The market will therefore require a higher Ke. The more the company borrows, the higher the rate of interest as the risk increases. The optimal structure is therefore one in which the WACC is minimal. At this rate, the value of the company is maximized. (ecofine.com 2010) In order to achieve the above objective, the approach used in the research is should be vital. Study of both quantitative and qualitative aspects will be taken into account. The approach will lead the research into the point of discussion that whether the IBM capital structures in the ideal structure that meet both the requirements if yes than the research is positive if not then what could be the exact structure that can get the desired result. In order to achieve the goals IBM should change their structure that could be possible by issuing new share capital or by increasing the debt finance ratio to get the tax shield and to increase their share value in the stock market. Literature Review When a corporation receives money or property in exchange for capital stock (including treasury stock), neither Gain nor loss is recognized by the corporation. Nor does a corporations gross income include shareholders contributions of money or property to the capital of the corporation. Moreover, additional money or property received from shareholders through voluntary pro rata transfers also is not income to the corporation. This is the case even though there is no increase in the outstanding shares of stock of the corporation. The contributions represent an additional price paid for the shares held by the shareholders and are treated as additions to the operating capital of the corporation.25 Contributions by non shareholders, such as land contributed to a corporation by a civic group or a governmental group to induce the corporation to locate in a particular community, are also excluded from the gross income of a corporation.26 However, if the property is transferred to a corpor ation by a non shareholder in exchange for goods or services, then the corporation must recognize income. Significant tax differences exist between debt and equity in the capital structure. The advantages of issuing long-term debt instead of stock are numerous. Interest on debt is deductible by the corporation, while dividend payments are not. Further, loan repayments are not taxable to investors unless there payments exceed basis. A shareholders receipt of property from a corporation, however, cannot be tax-free as long as the corporation has earnings and profits. Such distributions will be deemed to be taxable dividends to the extent of earnings and profits of the distributing corporation. E X A M P L E: Mr XYZ transfers cash of  £10,000 to a newly formed corporation for 100% of the stock. In its initial year, the corporation has net income of  £4000. The income is credited to the earnings and profits account of the corporation. If the corporation distributes  £950 to Mr XYZ, the distribution is a taxable dividend to Mr XYZ with no corresponding deduction to the corporation. Assume, instead, that Mr XYZ transfers to the corporation cash of  £5000 for stock and cash of  £5000 for a note of the same amount. The note is payable in equal annual instalments of  £500 and bears interest at the rate of 9%. At the end of the year, the corporation pays Mr XYZ interest of  £450 ( £5000 ÃÆ'Æ’- 9%) and a note repayment of  £500. The interest payment is deductible to the corporation and taxable to Mr XYZ. The  £500 principal repayment on the note is neither deducted by the corporation nor taxed to Mr XYZ. Reclassification of Debt as Equity (Thin Capitalization Problem) Institutions where the corporation is said to be thinly capitalized, the IRS contends that debt is really an equity interest and denies shareholders the tax advantages of debt financing. If the debt instrument has too many features of stock, it may be treated for tax purposes as stock. In that case, the principal and interest payments are considered dividends. The tax advantages of financing a corporation with some debt are clear and beyond question. In fact, debt is so advantageous from a tax perspective that some corporations overdo it. Nonetheless, some well-known, successful corporations choose to operate without long-term debt. Microsoft, Walgreen, and Cisco Systems apparently have decided that the nontax advantages of avoiding debt (e.g., not having to contend with debt service costs) outweigh the tax advantages of using debt. Such debt-free companies may be the envy of corporations that have relied on debt, perhaps excessively, as a means of financing growth (e.g., US Air ways and WorldCom). In some cases, corporate debt does little to enhance a shareholders investment and may even destroy it. Methodology Methodology explains the research plan, it discusses the advantages of data collected and it also forms the base of formatting hypothesis and regression. However, this part of research focuses on the collection method and also explains the right kind of technique and methods used to analyse the data in this study. The most important source of data collection in my research will be secondary but the primary data will also be included. As the research question is why organizations prefer debt finance rather than equity finance? So from this the methodology is very simply based on the comparison. The study will be designed in a way that some advantages and disadvantages of both the financing options will be defined in order to drive at a conclusion which would lead the organization in a way that the organization will get all the benefits of tax shield and the dividend reduction but improvement in the share value to give an opportunity and value to their shareholders. There are d ifferent ways of research, however i will try to obtain both primary and secondary data, primary data will be obtained by emailing the questioners to the managers and other people related to this field and also a survey in London which would enable me to gather information which could help in understanding the policy and strategies of the organization in the same field, in order to see the whole pictures with a wider range.