4 Analyse the situations in which return to shareholders can be the right business objective. [6]

[Sir Afzal Shad]

Q4 Analyse the situations in which return to shareholders can be the right business objective. [6]

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Possible Structure
[KN]
[AN]
[AN+]

[KN]
[AN]
[AN+]

[Syed Mustafa Ali]

[KN] Public Limited Companies
[AN] Publicly limited companies often have a primary objective to deliver returns to their shareholders, who have invested in the company's stock with the expectation of receiving dividends and seeing an increase in the stock's value.
[AN+] Maximizing returns to shareholders is a fundamental objective in such cases for the business.

[KN] Competitive focus
[AN] Companies operating in highly competitive markets may need to focus on delivering shareholder returns.
[AN+] This is done to maintain their loyalty and attract investment for future growth.

[Kumail Alvi]

[KN] Shareholder Expectations
[AN]When shareholders have put money into a business with the hope of earning dividends or capital gains through buybacks
[AN+] Sustaining investor trust requires that the business objective be in line with these expectations.

[KN] Mature Business
[AN] Refunding excess profits to shareholders may be the best course of action in established industries or businesses that have reached a stable growth phase.
[AN+] These businesses might not need large sums of money to grow, which makes paying shareholders a desirable alternative.

[Salman Khalid]

[KN]already established businesses
[AN]the primary focus may shift towards maximizing shareholder value through cost control, and returning profits in the form of dividends
[AN+]This approach recognizes that sustaining profitability is critical for long-term viability.

[KN]capital intensive industries
[AN]These businesses may need to generate steady returns to cover capital expenditures, debt service, and maintain financial stability
[AN+]providing returns to shareholders ensures a balanced approach to capital allocation.

[Talha Asim]

[kn] high profits [an] during such times the extra money can be used to attract more shares as they are just extras [an+] this can help get even more funds to finance other business ventures

[kn] public ltd company [an] lets say the business just converts into a plc, it would require share holders and a substantial amount too[an+] this can help the business to improve their start up into a plc as well

[ayyan ali]

[kn] to get an competitve edge t the business
[AN]companies that proritize share to shreholder are competitive bcz more return will attract more investors to the businss .
[AN+]thus this could increase the coman stocl value and increase the market share of the businss

[KN]attracting capital
[AN]companies that consistently eturn t share holder are often seen as attractive investment opportunities.
[AN+]thus make it easier to raise capital and finance fort he business

[Ibrahim Aamir]

[KN] competitive markets
[AN] when there is an competitive market then the shareholders has many other options rather then one business
[AN+] so the business should do extensive efforts keep shareholders loyal

[KN] high cost of production
[AN] when the business is facing high cost then they should make sure that the shareholder does not pull out their investment because it would result in business going in loss or in debt
[AN+] so the lifeline of the business is in shareholders hands

[Ahmed Zunair]

[KN] increased competition
[AN] this increases the options for the shareholders to where to invest
[AN+] so to avoid such shifts the business do return on shares

[kn] High profits
[an] in this situation the busines should return on shares
[an+] thus this would result the share holders to buy more shares resulting in an increase in the profits

[Maham fatima]

[KN]When profits are high
[AN] when a business is making high profits,it may be able to reward shareholders with high dividends
[an]thus this may help to retain them

[KN]When the business is at its saturation stage
[AN]At this point a business has reached its maximum potential and has maximized its market share
[AN]Therefore now it may not be in a position to reinvest and grow thus returns to shareholders may be the most suitable objective

[Hadia Zia]

[KN] If the business is mature and stable.
[AN] Returning dividends to shareholders especially when the business have reached a point of stable growth will help enhance shareholder satisfaction.
[AN+] Thus this will contribute to increased investor confidence and loyalty.

[KN] Competitive market.
[AN] Since the chances of shareholders going towards an competitor are high so business may aim to earn high profits so that return to shareholders can be moderate enough to keep them.
[AN+] Thus this may lead to a broader and more stable investor base.

[hafsa kashif]

[kn] in case of higher competition levels (other businesses are giving higher dividends to shareholders)
[an] if other businesses are providing higher dividends the business must increase its own to match with competition
[an+] as if they won't they will risk losing their shareholders investments which will lead to a loss in retained earnings
[kn] when business growth is phenomenal for quite sometime
[an] business has already reached max profits
[an+] so now they can focus on other ways to increase their profits which includes long term shareholders investments

[Shaliza khawaja]

(kn) in the situation of high competitive level as business would want to secure their investor
(an) to keep a steady income to work towards creative products to gain maximum market share
(an+) the profit that you get from the product can be provided dividends to secure investor and maintain market share
(kn) when business has achieved economies of scale
(an) they would be doing exceptionally good
(an+)and now can work on giving dividend to the investors