Internal Finance Company

 

Please present a business case for an existing business starting a finance company for the products it currently sells. The existing business (Company A) is well funded and currently has 250 million of its sales (equipment) being financed by an outside finance company on a yearly basis. Company A has beginning free cash of 25 million to finance existing customers in future purchases. The goal would be to finance 10% of all credit worthy customers and send 90% of those customers remaining business to existing Finance company to diversify risk.
Example:
If “Customer A” buys 1 Million dollars of equipment a year, then new Finance Company would finance 100K and send remaining 900K to outside finance company.

New Finance Company would be set up as an LLC, with 33.33 % ownership between Individual A, Individual B and the existing Company A. Company A would provide all capital but individual A and B would provide all “sweat equity”. Due to the competitive nature of the finance business the interest rates that new Finance Company could charge range between 3.5% up to 9%, with associated risk determining return. The new Finance company would like to risk spread to be 75% low risk (low return), 15% Mid risk (mid return) and 10% high risk (high return).

Sample Solution

According to Hamel, the people who invented modern management in the 19th century would be stunned in finding out that the inventions they made back then, are even today, bases of management in the 21st century(2016). The inventions made included; workflow optimization, which is a significant method of decreasing costs and providing improved services for clients. With incompetent workflows, it takes a longer time to complete things as well as costing more in getting them done. They also include functional specialization and variance analysis, which is the quantitative study of the difference between planned and actual conduct.

Hamel, states that three discontinuities will end management as everyone would expect(2016). He goes on the name them as; 1) Dramatic changes, which will in turn lead to ultra-low-cost rivals, and there will be extra power to the customers. The author states that fresh social demands highlight invention above optimization and also change above continuity. 2) Collaboration tools that are web-based and networks a substitute to a formal chain of command; 3) the fresh anticipations that Generation Facebook comes up with. This generation sees the web as a universal life operating system in which they have fun with.

A bureaucracy is a model of organization centered on guidelines, chain of command, impersonality and labor division. It has been the leading system of organization for more than a century. Grey argues that Post-bureaucracy is built on confidence, enablement, personal conduct as well as collective responsibility(2006). But it carries its own difficulties in control loss, inequity as well as risk. The generation Facebook expect the work’s social environment to be a reflection of the social content in the web. The author says that they will utilize the 12 realities so as to determine whether a company is with it.

The first reality that the author states is that all ideas on the web compete on an equal footing. In the Web, ideas ought to compete sovereign from the individual who came up with them. Every idea has merit and has to be treated in an equal way. (Hamel, 2016). Another reality which the author talks about is that contribution counts for more than credentials. It’s what one is capable of and the actions they take, not their school of education or what they are qualified to do. What mat

This question has been answered.

Get Answer
WeCreativez WhatsApp Support
Our customer support team is here to answer your questions. Ask us anything!
👋 Hi, Welcome to Compliant Papers.