The ability of firms to create value for their shareholders is related to the way they treat their customers, employees and community.
Corporate Decision Making requires the following:
1- Capital Bufgeting Decision: Measure the NPV and IRR, if the NPV is +ve then the project creates value, if the IRR>WACC then we should invest.
2- Capital Structure Decision: Calculate the WACC, how much of the firms assets should be financed by equity and how much should be financed by debt?
3- Business Acquisition Decision: How much should be paid to acquire another company?
4- Foreign Investment Decision: How to account for multiple currency cash flows and for the different risks of operating in a foreign country.
Entry Barrier strategy to prevent competitors from entering the market:
1- Patents and Trademarks on Products
2- Building a Powerful brand name similar to Cocacola
3- Produce an innovative and attractively designed products that cannot be easily immitated by competitors such as APPLE products
4- Create a unique Distribution Channels similar to Dell computers, manufactured to order and delivered by mail
5- Try to be the market’s lowest cost producer such as samsung