dividend signalling

Dividend is a term that most of people might have heard about even if those are not engaged with finance. For those who was or is studying or working in investment banking they might be exposed to many types of dividend payment forms. companies may have dividend reinvestment plans which takes all dividends that are supposed to be distributed to shareholders to reinvest for the continues business the company is undertaking. Doubtlessly, shareholders have the right rather than obligation to contemplate whether or not to reinvest their dividends into a new project that seems not as good as evaluated. most companies would offer bonus share plans also dividend reinvestment plans. The distinction between these two is that the later is treated as though they have received the case dividend and then reinvested it, so the investor is liable for tax on it. The good new, however, is that they can receive franking credit for the dividend, which means pay less tax than it is supposed to be.

The critical point here is that why'd companies continue paying dividends as usual?  Even many of them would pay dividends by borrowing more debts, which can change the leverage or we would say the changing structure of capital. By paying dividends on the continuous basis investors would not be signalled any change for the company. Nonetheless, when investors are informed the dividend is not going to be paid for the next dividend payment date, share price definitely would go down as shares are   sold out by investors. 

A more stronger point of view from dividend signalling is that some investors know how managers behave and would interpret dividend changes as signal about future prospects.

Yet dividend signalling are believable but costly unfortunately, high payout policy would be costly to companies if CFs do not support it. 

Next time we will further mentioning about dividend from other perspective. "Why dividend policy is irrelevant".

SWAPS for hedging

Swap contract is a type of means to hedge risk for companies. Suppose there are two companies whose they want to hedge the interest rate for borrowing as they are afraid of the rate is gonna go up at the maturity date. Also different markets may have vary rates for borrowing, which that's why we would be  mentioned comparative advantages.

swaps can be used for currency hedging as well. Let's take a example to illustrate.

Two companies A and B are offered fixed  rates in Australian dollars and pounds. Provided company A wants to borrow sterling and B wants to borrow dollars

The difference between the in rate facing the two companies in dollars market is 2%(10%-8%) and the difference between the rate facing them in the currency of pounds market is 0.4%(12%-11.6%).

Therefore the net gain is 1.6% (2-0.4)%.

As the diagram has been set up, we may see company A can be 0.6% pa better than if went directly to dollar markets because 11.6% is higher than 11%. Whereas the company B can be better off of 0.6% as well because less expensive than went directly to sterling markets, which can be borrowed at 9.4% rather than 10%

Thus, the intermediary of financial institution can gain 0.4% in this case as the total gain is 1.6% and less the gains for two parties with 0.6% respectively.

profit patterns involved option strategies

the most common patterns we might have seen for options trading could be the following patterns. when an investor conduct a portfolio which consists of a long position in a stock plus a short position in call option. we simply call is as writing a covered call. more of concepts would not be mentioned here as have been available either textbooks or online dictionary.

As can be seen to the following diagrams. from(a), investors do not have to consist of a single portfolio by conducting a short put position. Instead, go long a stock and short call also can get the similar effect for the trading of investment. Similarly, for (b), long call+short stock=long put, (c) long put+long stock=long call. (d) short stock+short put=short call.

 

Additionally, a more sophisticated strategies would be illustrated as following. (bull spreads by using call or put options, bear spreads created by using put or call options. box spreads, butterfly spreads calendar spreads diagonal spreads, straddle, stripes and straps strangles)

As it may take quite a long while to go through all of them, here i am gonna introduce some of them that are regarded as most valuable tips when involved trading.

Initially, for a box spread, it is a combination of a bull call spread with strike price K1 and K2 and a bear put spread with the same two strikes prices. why'd be valuable to be mentioned here as an arbitrage opportunity can be shown if trading with European options.

Butterfly spread, on the other hand, can create a more aggressive trading for investors. A butterfly spread involves positions with three different strike prices. An investor reckon the stock price is gonna be stayed close at K2 which means that the price does not change dramatically, it can be created by buying a call option with a relatively low strike price K1, buying a call option with a relatively high strike price K3 and selling two call options with strike price k2 which halfway between K1 and K3. However, it would lead to small loss if the price move significantly in either direction.

When an investor believe there is a significant movement the share price, it can be simply to conducting a butterfly spread of put options. By buying two puts with strike price K2, one with a low strike price K1 and one with a high strike price K3 can be exposed to mega profits if the share price goes up sharply.   

week 11---Analytics(Topic 11)

Building up a business online maybe is not a difficult thing, but how to run or monitor the business is much difficult than that. We need to keep track of our brand constantly and we might wonder if our brand has been attacked or how is the brand running, which that’s why we need monitor systems give us the answer. They are probably not the solvers, but they are truly the one that help find the problem, actually, a successful social media marketing strategy not only have an outstanding plans, but also need to have a great assistance of metrics platform, providers and information source. Some of information search engine like Google Alert help us get up-to-dated information, so if one’s organization or company release new information every day, and more and more people will be more easily to receive it when they search, which increase brand awareness greatly. In addition to this, some of metrics providers like research tools, which give a direction on how to target audience and how to manage their social media tools that used to interact with people more efficiently. Some of tools like Hootsait, TweetDeck which not only do they help business to look for organizations that are relevant to the business, but also managing some social media tools simultaneously, and this save a lot of time and increasing efficiency in providing feedback to people.

As to metrics platform, most of them both can give us a clear statistics about the number of social media users and guide us select the best social media for our marketing strategy to meet customers, of course, some of them can protect brand from attacking. When designing a social media marketing strategy plan, we need to consider how people think of some media tools or what sort of content we release can attract them, or if the way we engage in having conversation with people is the most effective way, all these doubts can be solved by those platforms that having mix of vertical industry knowledge, social media expertise, analytics technologies, data control and real-time measurement system. It seems like all those can help organizations or marketers save a lot of efforts to do research more easily achieve their goals. 

week 10---preventing and managing social media marketing mistakes

Coordinated brand attacked
Brand attacked, it is a quite common issue in the current competitive world and competitors will use that as a strategy to beat that company down and the sad thing is that no one will care about the truth and people will continue to spread the news even though they do not know if it is real. Most of information can be found via the search engine, and the best way to consider reducing the exposure of negative event of a brand is give a positive response back immediately, trying to post as many positive responses as possible. But here is an issue as the article mentioned, there might be a case of what is being said is false, what we need to do not just only focusing on the search engine, but also try to use different ways to inform the original senders and ask for removing. However, what if you are not present to face the situation, I think the only way to tackle it is to use a series of back up implementation in case situation gets serious. And there will be two ways involved about brand attack, I suppose, one is before the attack, the other is after the attack, that’s, we need to prevent brand attacks, we can building up a warning system that monitor in which way would be attacked, or the company can keep track of those suspicious referral links. As to how to detect the brand has been attacked, the good ways can be employed is to monitor those blogs and blog comment fields, not just focusing on the content of the blogs.

If the brand has been attacked, the company must not avoid confronting the general public, instead, talking to their customers whatever the fact it is, which it is the only way the company can reduce the damage degree of the brand reputation and re-attract customers and that’s why I believe an outstanding brand or company will have set up a crisis response plan. When you give response to the general public, making sure that the word addressed to them must be realistic and truly listening more than speaking. But the company would better not to believe they can always deal with the customers very well, once customers have alternative choices to their products and services, they will abandon it without any reasons.

Exercise: A recent case myself

 Link: http://www.huffingtonpost.com/2011/10/13/starbucks-juice-bar_n_1009161.html

The case I introduce is about the rumors of Starbucks, as the article mentioned, the Huffington Post believe that CEO Howard Schultz Poaches Liquiteria Employee and hired veteran juicer Yohana Bencosme to train their employees about how to make fresh juices. The rumor has caused Jamba Juice stocks to take a tumble as investors do not believe the company can continue to make much profit as usual, but the Starbucks have been very quiet about the stock price.

As to the case, I think they have dealt with the rumor very well as one of representatives from Starbucks asked Huffington Post to release a statement on the rumors and admitted the employee Yohana has joined in, but refuse the rumor and did not talk much about it.

The reason why I think the representative address to the general public very well, it is because he make everything peaceful as he speak less about it, the company knows that the impact of rumor will be reduced and gone as time goes on, the good thing the company had done is that it delegates a person to show up give a brief response rather than avoiding confronting it. At least he has given response to their customers, the company knows it will be backlash which affect the stock price if they do not response it.                                                                                                         

week 9----promoting social media marketing programs

In this week's topic, I realized that there are some of things might be considered when we designing a campaign of social meidas program for our business, we need to know why people join social networking, once we figure out what sort of platforms or why put their attention on that, we can better to design a campaign strategically to capture their attention, like if we have no idea what features of network would like, we just lose our way to find a direction to move on, it seems like all thes things both are challenges and opportunities, when we design the campaign of social media programs, we should not just only focus on the how much profits for the sales, instead keep track of the way of how to bulild relationship with people in order to get their support mentally.

Building critical mass is really a good way matketers go into, when we employ social media tools for the particular business, we need to consider the way we use if can disseminate messages to most part of people and be noticed for particualr target markets. the more people you get them in through critical mass, the more awareness for your campaign or brand you can earn.

speaking of awareness, there are probably some traditional ways to do like advertising, personal selling, but the most succeessful business or campaign is to spend less budget and human force to achieve that rather spend large amout of capitals, I turly believe. we might use peer-to peer recommendations, word of mouth recommendation or digital word of mouth, I think the ways we cannot make sure they will buy the products, but at least what we can do is to have a good start of capturing and making relationship with them.

week 8--social CRM

when it comes to CRM(customer relationship management), there will be a concept in our my mind that building up relationship with cusotmers in person rather than via the way of social media. nowadays, most part of customers get involved with online stuff, what we need to do for dealing with customers is to keep in touch with the ways that cusotmers will use, like twitter, facebook, blog, email,ect. the impact of CRM through soical media at times is greater than in person of CRM, I suppose. if the problem or issue can be solved through email conversation, customers will earn lot more satisfaction than on the spot, which means save cusotmers plenty of time.

I also realize the different social media for different type of customers when it involves with customer relationship management.

the essence of sCRM is a tight cycle where critical elements like collective intelligence,customers, community, and customers can be divided into different group like self-service, community generated activity put into the cycle. every element can contribute to the relationship management, that's why the social CRM can have massive influence on business.

the way of sCRM on business will impact on the reputation, there is no doubt about it and it is one of strategy to marketing of one's marketing. most of time  keeping customers is much difficult than attracting new customers, I believe.

due to the wide spread of social media, business will adopt it to promote cutomers service, but a matter of fact that we lose the basic value of customer service, that's to ignore the actual exprience of the organization, instead, what we need to do is to employ both ways rather than focusing on soical media to promote customers service if we want, I suppose.

and blog is one of platforms to capture people's attention, but some of them does not do very well, which I think maybe due to the content they post does not fit the general concerns or lacks of using media toos like video clip or never allow people to make an cmment.

we might have received apologies about products or service or changes from the organization, but some make their apologies work as they truly listen what customer want rather than what the organization want to address to their customers, I always believe that customers is the support foundation of the organization, no matter what desicions the organization make must be depending on the perspective of customer.

Exercises
the key word for google alert is social meida for blogs and I have been monitoring the information form my email for 3 weeks, I found that all the information was up-to dated, but they are not all blogs and most of them are some articles about social media.

there are three blog sites that I found differently. one is very good, the other is average and bad.

the good one:

http://www.socialmediaexaminer.com/author/admin/
the author try to make a response to those commenters and insert vedio clips that related to the topic, which I think it is pretty visual and attractive to make interaction with readers. one thing the blog do very well is that lot of readers will be willing to make comments on it.

the average one: http://thenextweb.com/asia/
it has wide variety of topics and readers can be made comments through facrbook and Twitter, but you cannot receive from the author.



the bad one: http://soshable.com/, the author of the blog never make response to their commenters which reduce the interaction and the the layout of the blog is too simple, it never use social media tools like vedio clip, and most of improtant thing is just few people make comments on that blog site,