Global Supply Chain Managment - Essay Example

However, Vivek argued that the degree of diversification is the measure for the size of benefits likely to be achieved by the shareholders. Susan believes that small benefit is achieved by the shareholder involved in the diversified project; therefore such investors are poorly inclined towards IPO of such diversified firms. Ronald is firm that the reduction in the likelihood of an IPO is linked with the increase in the degree of diversification, therefore IPO is mainly preferred by such investors who are strange to diversified companies, and as such investors have the potential to make profit from diversification of their portfolios.

Atul is his article has claimed that the firm is likely to go public if the stakeholders are diversified, and possess equal shares. The deposit-insurance hypothesis is based on the assumption that the 'acquirers would be willing to pay more for riskier, more profitable organizations whose returns are highly correlated with the acquirer's returns'. As per Vivek, the managerial-interest hypothesis is constant and consistent, and has no relationship with purchase price and exposed risk; therefore the risk management is avoidable from supply chain perspective.

Both the articles have agreed that upon the fact that the supply chain management shall be protective of share holder's stake, and the wealth of the shareholder can be increased through alliances that diversify earnings. The earnings diversification hypothesis is based on the fact that higher levels of cash flow for the same level of total risk can be achieved through acquiring banks i.e. seek earnings diversification, 'the reductions in business risk are offset by increases in financial risk'.

Catherine is of the opinion that acquisition of firms can offset the reduction in equity value, which can be achieved through issuance of additional debt; such measures diminish the probability level of bankruptcy to the previous level, there have been strong evidence that leverage is increased as a result of alliances and acquisitions between the non-financial firms. It has been observed that banks acquired by bank holding companies have reduced their capital ratios after acquisitions, and reduction has been incorporated at significant level, 'the increased leverage increases the tax shield due to debt and, hence, after-tax net cash flow'.

Ronald informed that the acquired banks reduce their holdings of low-risk securities to a greater level, and also improve their holdings of loans, this correspondingly increase the earnings.Analysis of the common grounds and variances between the two articlesAtul has referred to the Research and Development success story for the technological companies, 'R&D Credit supports technological innovations through which the creation and the perseverance of the qualitative standards of living has been possible.

It has been realized that 'many positive economic benefits are driven and motivated by performance of research and development, including increased revenue streams to U.S. companies', which is further responsible for the enhancement of the company's ability to 'recruit employees, purchase capital goods, pay dividends to shareholders and contribute to a strong country tax base'. Vivek has supported the argument and has further validated that the loans which appear in the balance