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Essay / Research Paper Abstract
This 10 page paper examines an important financial decision made by a company to consider the various influences and pressures that impacted on the decision. The decision examined was that of British Telecom to de-merge with its' subsidiary O2, which now trades as MMO2. The paper looks at the financial issues surrounding the decision such as the build up of debt and the increased risk profile of the company and the way the decision was reached as well as assessing the results of the decision. The bibliography cites 9 sources.
Page Count:
10 pages (~225 words per page)
File: TS14_TEdemerge.rtf
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Unformatted sample text from the term paper:
The decision made will reflect not only the risk profile of a company but also the views and perception of influential shareholders and other stakeholders as well as the competitive
position of the company and their future plans and goals. There are many companies which can be seen as taking important financial decision, that have impacted on the way they
have developed. To examine how decision may reflect these different factors we can pick a single company which has made a single important decision and consider how and why the
decision was made. The company we will use is British Telecom, also known as BT and there decision to de-merge with a business unit it had created as a
subsidiary company. This is a UK based company with global interests. The company is a telecommunication provider and was once the state owned monopoly providing the UK with telephone
services. The liberalisation and privatisation policies of the 1980s saw the sale of shares in tranches. When this occurred the company was aware if its advantages, but also acutely aware
of the threats that were posed by new entrants and the need to retain a competitive advantage. Unable to compete freely with the land based services mobile services were seen
as a good potential market. As a result the BT set up Cellnet, a mobile or cellular services provider. In 200/2001 the decision was made that the financial condition of
the company was such that Cellnetwas holding back BT and although having a positive future it was creating a financial position that was unsustainable for the demands of the company
and its stakeholders. Cellnet was not the only diversification. BT had undertaken a rapid growth strategy, with the development of Cellnet as a subsidiary company and the desire to
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