FINANCIAL MANAGEMENT

AN ASSIGNMENT ON
“WHAT SHOULD BE THE ULTIMATE OBJECTIVE OF A BUSINESS”

MASTERS OF BUSINESS
ADMINISTARATION (2019-2021)

SCHOOL OF MANAGEMENTAND BUSINESS

STUDIES JAMIA HAMDARD
HAMDARD NAGAR NEW DELHI-110062

Submitted to
DR. KAPIL MATTA
(Assistant Professor, Jamia
Hamdard) Submitted by:

FAROOQUE AZAM 2019-502-037 HUMMAM 2019-502-

ABDUL HANAN 2019-502- AASHNA 2019-502-
HAMID MIR 2019-502- ALWAZ 2019-502-
HARSH NAGPAL 2019-502- ADIL JAVED 2019-502-
HARSH GAUTAM 2019-502- DUSHYANT 2019-502-
ASIF ALAM 2019-502-
 INDEX

TOPICS PAGE NO.

CHAPTER 1 INTRODUCTION

CHAPTER 2 LITERATURE REVIEW

CHAPTER 3 RESEARCH
METHODOLOGY

CHAPTER 4 FINDINGS

CHAPTER 5 CONCLUSION

REFERANCES
 CHAPTER 1
INTRODUCTION

Before knowing the main objective of a business we have to understand what is business? So, it
refers to an organization or enterprising entity engaged in commercial, industrial, or professional
activities. Businesses can be for-profit entities or non-profit organizations that operate to fulfill a
charitable mission or further a social cause. 

The term business also refers to the organized efforts and activities of individuals to produce
and sell goods and services for profit. Businesses range in scale from a sole proprietorship to
an international corporation. Several lines of theory are engaged with understanding business
administration including organizational behavior, organization theory, and strategic
management and sales of goods and services with the view of earning profit to satisfy their
needs which undertaken various activities such as:-
 Economical activities
 Business Employment
 Profession
 Non-economical activities
So the business have their own objectives, some are same and some of them are different
but the ultimate objective of both the business is MAXIMIZATION OF SHARE
VALUE.
Objectives are the end of the results towards which all the activities of an organization are
directed. It refers to all that business people who want to get in return for what they do.
Generally it is presumed that earning profit by increasing their share value is the sole objective
of every business as, it is source of:

 Income of businessman

 Financing operations

 Building up reputation

 Growth and etc.

But this is practically incorrect, although earning profit is the main objective but not the
sole objectives actually it links with different objectives which serves the company and
when step by step we follow them it will reach directly to the share value maximization
part.
 ECONOMIC OBJECTIVE
In any business where we earn to survive and growth development, maximum of the persons
starts their business with loan, debt and lots of fund which is taken from other shareholders
and different peoples which invested in which company weather they are internal investor or
external, whether they are sole investors or wide market investors. But still we always think
about all the investors to pay them their money with divided which is equally distributed to
them and also have to save for the future risk and deposit time to time premium and interest
as well.
It’s a financial objective where we study about economy (country and world form) to do any
kind of business because things are different for each one of them.
SOCIAL OBJECTIVES
These companies are like NGO’s and different organizations which work for welfare as well
as company labor organizations. They deal for betterment of human welfare and improve
the cultural, behavioral and environmental culture.
Many people’s thing why they do this is it any profit in this so that why we said profit is not
only a sole objective many times people work for their satisfaction according to their demand
and goals of their life.
INDUSTRIAL OBJECTIVES
Their main objective is to increase production and provide good quality products to our
customers according to their needs at low prices and production happens when sales happens
and this circle and hierarchy continues and follows
Here all the core or primary producers are very much dependent like farmers who are cooperate
with them and get good amount of their resources and these linked as a chain till their final
product.

These all objectives helps the business to maximize their share value and these helps in the business
for growing there activities.
Introduction towards financial management
Financial Management determines how funds are procured and used. They relate to a firm's
financing and investment policies. To make unavoidable and continuous financial decisions as
rationale, the firm must have an objective. The properly defined and understood objectives are
the key, to successfully moving from the firm's present position to a future desired position.
Since business firms are profit making organizations, their objectives are frequently expressed
in terms of money. Two primary objectives commonly encountered are maximization of profits
and maximization of wealth. The latter is an operationally valid criterion to be adopted to
maximize the welfare of owners
It deals with finding out various sources for raising funds for the firm. The sources must be suitable and
economical for the needs of the business. The most appropriate use of such funds also forms a part of
financial management. As a separate managerial activity, it has a recent origin. This draws heavily on
Economics for its theoretical concepts
In the words of, Weston and Brigham, “Financial management is an area of
financial decision-making, harmonizing individual motives and enterprise
goals”.

Evolution of Financial Management:

Corporation finance emerged as a distinct field of study only in the early part of this century
as a result of consolidation movement and formation of large sized business undertakings. In
the initial stages of the evolution of corporation finance, emphasis was placed on the study of
sources and forms of financing the large sized business enterprises.
The grave economic recession of 1930’s rendered difficulties in rising finance from banks
and other financial institutions. Thus, emphasis was laid upon improved methods of planning
and control, sound financial structure of the firm and more concern for liquidity. The ways
and means of evaluating the credit worthiness of firms were developed.
The post-World War II era necessitated reorganization of industries and the need for selecting
sound financial structure. In the early 50’s the emphasis shifted from the profitability to
liquidity and from institutional finance to day to day operations of the firm. The techniques of
analyzing capital investment in the form of ‘capital budgeting’ were also developed.
Thus, the scope of financial management widened to include the process of decision-
making within the firm.
The modern phase began in mid-fifties and the discipline of corporation finance or financial
management has now become more analytical and quantitative. 1960’s witnessed
phenomenal advances in the theory of ‘portfolio analysis’ by Microwitz, Sharpe, Lintner etc.
Capital Asset Pricing Model (CAPM) was developed in I970’s.
The CAPM suggested that some of the risks in investments can be neutralized by holding of
diversified portfolio of securities. The ‘Option Pricing Theory’ was also developed in the form
of the Binomial Model and the Black-Scholes Model during this period. The role of taxation in
personal and corporate finance was emphasized in 80’s.
Further, newer avenues of raising finance with the introduction of new capital market
instruments such as PCD’s, FCD’s, PSB’s and CPP’s etc. were also introduced. Globalization
of markets has witnessed the emergence of ‘Financial Engineering’ which involves the
design, development and implementation of innovative financial instruments and the
formulation of creative optimal solutions to problems in finance.
The techniques of models, mathematical programming and simulations are presently being
used in corporation finance and it has achieved the prime place of importance. We may
conclude that financial management has evolved from a branch of economics to a distinct
subject of detailed study of its own.
Importance of Financial Management:
Finance is the life blood and nerve centre of a business, just as circulation of blood is essential
in the human body for maintaining life, finance is very essential to smooth running of the
business. It has been rightly termed as universal lubricant which keeps the enterprise dynamic.
No business, whether big, medium or small can be started without an adequate amount of
finance.
Right from the very beginning, i.e. conceiving an idea to business, finance is needed to
promote or establish the business, acquire fixed assets, make investigations such as market
surveys, etc., develop product, keep men and machine at work, encourage management to
make progress and create values. Even an existing concern may require further finance for
making improvements or expanding the business.
Thus, the importance of finance cannot be over-emphasized and the subject of business
finance has become utmost important both to the academicians and practicing managers. The
academicians find interest in the subject because the subject is still in its developing stage and
the practicing managers are interested in the subject because among the most crucial decisions
of a firm are those related to finance.
The importance of corporation finance (which is a constituent of business finance) has arisen
because of the fact that present day business activities are predominantly carried on company or
corporate form of organization.
 Financial management is indispensable to any organization as it helps in:
Financial planning and successful promotion of an enterprise;
Acquisition of funds as and when required at the minimum possible cost;
Proper use and allocation of funds;
Taking sound financial decisions;
Improving the profitability through financial controls

Factors Influencing Financial Decisions:

There are a number of (both external as well as internal) factors that influence the financial
decisions.

A list of the important external as well as internal factors influencing the

decisions is given below:
External Factors:
 State of economy
 Structure of capital and money markets.
 Requirements of investors
 Government policy
 Taxation policy
 Lending policy of financial institutions.
Internal Factors:
 Nature and size of business
 Expected return, cost and risk
 Composition of assets
 Structure of ownership
 Trend of earnings
 Age of the firm
 Liquidity position
 Working capital requirements
 Conditions of debt agreements
Functions of finance:
The financial functions relate to three major decisions which very finance manager has to
take

 Investment decision

 Financing decision

 Dividend decision

Maximization of share
Often, maximization of profits is regarded as the proper objective of the firms. However, this
concept is somewhat newer than the goal of maximizing the value of the firm. The term profit
maximization is deep-rooted in the economic theory. In simple terms, the rationale behind profit
maximization objectives is that it guides financial decision making. Profit is a test of economic
efficiency of the firm.

It provides the tool by which economic performance can be judged. Moreover, it leads to
efficient allocation of resources as resources tend to be directed to uses which interims of
profitability are the most desirable. It also encourages social welfare. Financial management is
concerned with the sufficient use of an important economy resource i.e. , capital. It is therefore
said that profitability serves as the criterion for the financial management decisions. The profit
maximization criterion suffers from three basic weaknesses.

i) Vague
Profit in the short run is quite different from profits in the long run. If a firm continues to operate
a piece of machinery without proper maintenance, it may be able to lower the operating
expenditure in that year leading to increase in profits. But the firm will pay for the short-run
saving, throwing the burden in future years, when the machine is no longer capable of operating
because of prior neglect. In other words, maximizing profits does not mean neglecting the long-
term picture in favor of short-term considerations.

ii) Ignoring the timing of returns

Profit maximization strategy ignores the differences in the time pattern of the benefits received
from investment proposals or courses of action, because money received today has a higher
value than money received next year. A profit sealing organization, therefore, must, consider the
timing of cash flows and profits. The reason for superiority of earlier benefits over future
benefits lies in the that that the former can be reinvested to earn a return. The profit
maximization criterion fails to consider the distinction between the returns received in different
time periods and, thus, treats all benefits equally valuable. But it is true that, benefits in early
years should be valued highly than benefits in later years.
iii) Ignores risk
Profit maximization does not consider risk. The shareholder of the firm may expect to receive
higher returns from investment of higher risk. This fails to consider that shareholders may wish
to receive a portion of the firm's return in the form of regular dividends.
In the absence of any preference for dividends, the firm can maximize profits from period to
period by reinvesting all earnings, using them to acquire new assets that will boost future profits.
But the non-payment of dividends usually leads to declaim in the market value of the firm's
share.
 CHAPTER 2
LITERATURE REVIEW
A Study on “The ultimate objective of a business is to maximize its share value”

VALUE MAXIMIZATION, STAKEHOLDER THEORY, AND THE CORPORATE

OBJECTIVE FUNCTION  2001 Michael C. Jensen

This paper examines the role of the corporate objective function in corporate and efficiency,
social welfare, and the accountability of managers and directors. The author argues that because
it is logically impossible to maximize in more than one-dimension, purposeful behavior requires
a single‐valued objective function. Two hundred years of work in economics and finance implies
that, in the absence of externalities and monopoly, social welfare is maximized when each firm
in an economy maximizes its total market value.The Objective In Corporate Finance

While corporate finance states it to be maximizing firm value, it is often practiced as

maximizing stock price.  Aswath Damodaran

Stock is ownership in a company, with each share of stock representing a tiny piece of
ownership. (Lawrence J. G., 2005). The more shares you own, the more of the company you own,
and the more dividends you earn when the company makes a profit. In the financial world,
ownership is called equity. Stocks are in two primary classes. The one you choose depends on
what you want from a stock. Preferred stock typically pays regular dividends, and investors who
want income foremost from their stocks favor it. Common stock represents ownership of a
company and may offer more rights and privileges than preferred stock.

Despite some evidence of share price inefficiencies, the speculative component of real share
prices is insignificant in the same investment equations implying that the short-term departures
from share-market efficiency do not significantly influence investment spending. (Micheal A. &
Robert S., 1996)

It is also expected that abnormal profit earn can be earn by chances in future because there are a
lot of researchers two decades ago already prove the Efficiency Market hypothesis (EMH) again
and again. (Elroy D. & Massoud M., 2000)

Even in Malaysia stock market, there are researchers found that the stock market is in weak
efficiency form. (Annuar N., Ariff’ M. & Shamser M., 1991)

As the researchers always found similar conclusion; it is not always the stock price react or
sensitive to the information or news and the variation of stock price may be reflected by the other
factors. (David M. C., James M. P. & Lawrence H. S., 1989)
According to researchers (Akintoye, et al. (2009), there are some other factors that could
influence the stock price. This means that the stock price is notably influenced by a number of
factors such as book value of the firm, dividend per share, earnings per share, price earnings ratio
and dividend cover. The authors also stated that the conditions could appear whether it is primary
or secondary market.
 CHAPTER 3
RESEARCH METHODOLOGY
Research Methodology chapter of a research describes research methods, approaches and
designs in detail highlighting those used throughout the study, justifying my choice through
describing advantages and disadvantages of each approach and design taking into account their
practical applicability to our research.
The study is based on the secondary data which have been collected from various sources
viz., published annual reports and records of the company, journal, websites, etc.,

RESEACH OBJECTIVE
Research objectives describe concisely what the research is trying to achieve. They
summarize the accomplishments a researcher wishes to achieve through the project and
provides direction to the study.
To determine the ultimate objective of business with taking an example of The
walt Disney , baidu,TATA and SAMSUNG TATA (maximization of share value)

RESEARCH DESIGN
Qualitative research design, on the other hand, is exploratory in nature as it tries to explore
not to predict the outcome. It seeks to answer the questions of what and how.
A qualitative research design is used to explore the meaning and understanding of
complex social environments, like the nature of people’s experience, using case studies. A
quantitative research design shares similar characteristics with scientific research in the
following ways.

An outline question stating the problem that needs to be solved.

Has a set order and procedure used to answer these questions?
Analyses the data generated.
Draws its conclusion after the data has been collated and analyzed so that the
conclusion drawn from the findings is not predetermined.
 Besides the similarities identified above, a qualitative research design also intends to
understand, describe or discover the findings. The researcher is usually the primary instrument
that formulates the question and interprets the meaning of the data. This is a significant
procedure for any association. It can assume a significant job in by and large accomplishment
of any of the organization. It very well may be seen from our business world that the greater
part of the fruitful organizations are utilizing a viable innovative work procedure to
accomplish their objective
An examination configuration is the particular of strategies and methodology for getting the
data expected to structure or to take care of issues. It is the general activity example or casing
work of the undertaking that stipulates what data is to be gathered from which source, and be
what systems. An exploration configuration is the course of action of condition for assortment
and examination of information in a way that plans to consolidate Significance to the
examination reason with economy in strategy'.
Sorts of Exploration
This is Exploratory Exploration on the grounds that right now is investigated from
different sources which includes both Essential and Auxiliary.

TYPE OF RESEARCH DESIGN

Exploratory research
Exploratory research design is conducted for a research problem when the researcher has no
past data or only a few studies for reference. Sometimes this research is informal and
unstructured. It serves as a tool for initial research that provides a hypothetical or theoretical
idea of the research problem. It will not offer concrete solutions for the research problem.
This research is conducted in order to determine the nature of the problem and helps the
researcher to develop a better understanding of the problem. Exploratory research is flexible
and provides the initial groundwork for future research. Exploratory research requires the
researcher to investigate different sources such as published secondary data, data from other
surveys, observation of research items, and opinions about a company, product, or service.

Types and methodologies of exploratory research

While it may sound a little difficult to research something that has very little information about
it, there are several methods which can help a researcher figure out the best research design,
data collection methods and choice of subjects. There are two ways in which research can be
conducted namely primary and secondary.. Under these two types, there are multiple methods
which can used by a researcher. The data gathered from this research can be qualitative or
quantitative. Some of the most widely used research designs include the following:

Primary research methods

Primary research is information gathered directly from the subject. It can be through a group
of people or even an individual. Such a research can be carried out directly by the researcher
himself or can employ a third party to conduct it on their behalf. Primary research is
specifically carried out to explore a certain problem which requires an in-depth study.

 Surveys/polls:
Surveys/polls are used to gather information from a predefined group of respondents.
It is one of the most important quantitative method. Various types of surveys or polls
can be used to explore opinions, trends, etc. With the advancement in technology,
surveys can now be sent online and can be very easy to access. For instance, use of a survey
app through tablets, laptops or even mobile phones. This information is also available to the
researcher in real time as well. Nowadays, most organizations offer short length surveys and
rewards to respondents, in order to achieve higher response rates.

 Interviews:
While you may get a lot of information from public sources, but sometimes an in person
interview can give in-depth information on the subject being studied. Such a research is a
qualitative research method. An interview with a subject matter expert can give you
meaningful insights that a generalized public source won’t be able to provide. Interviews
are carried out in person or on telephone which have open-ended questions to get
meaningful information about the topic.

 Focus groups:
Focus group is yet another widely used method in exploratory research. In such a method a
group of people is chosen and are allowed to express their insights on the topic that is being
studied. Although, it is important to make sure that while choosing the individuals in a focus
group they should have a common background and have comparable experiences.
Observations:
Observation research can be qualitative observation or quantitative observation. Such a
research is done to observe a person and draw the finding from their reaction to certain
parameters. In such a research, there is no direct interaction with the subject.

 Secondary research methods:-

Is gathering information from previously published primary research. In such a research
you gather information from sources likes case studies, magazines, newspapers, books,
etc.

Online research:
In today’s world, this is one of the fastest way to gather information on any topic. A lot of
data is readily available on the internet and the researcher can download it whenever he needs
it. An important aspect to be noted for such a research is the genuineness and authenticity of
the source websites that the researcher is gathering the information from.

Literature research:
Literature research is one of the most inexpensive method used for discovering a hypothesis.
From library, documents from government agencies, specific topic related articles, literature,
Annual reports, published statistics from research organizations and so on.
Case study research: Case study research can help a researcher with finding more
information through carefully analyzing existing cases which have gone through a similar
problem.
For the better understanding of this topic we will be taking
examples of four companies:
1. TATA Inc.
2. Baidu
3. The Walt Disney Company.

Briefing about these companies

1. TATA Inc.
Tata Group is an Indian multinational conglomerate holding company headquartered
in Mumbai, Maharashtra, India. Founded in 1868 by Jamsetji Tata, the company gained
international recognition after purchasing several global companies. One of India's largest
conglomerates, Tata Group is owned by Tata Sons. It is one of the biggest industrial groups
in the country, founded 152 years back in 1868.
Each Tata company operates independently under the guidance and supervision of its own
board of directors and shareholders. Significant Tata companies and subsidiaries
include Tata Chemicals, Tata Communications, Tata Consultancy Services, Tata Consumer
Products, Tata Elxsi, Tata Motors, Tata Power, Tata Steel, Voltas, Tata Cliq, Titan, Trent
(Westside), Taj Hotels, and Jaguar Land Rover
Tata Group operates more than 80 companies ranging from software and automobiles to
steel, consumer goods and telecommunications. With above 424,365 employees across
India, it is the nation's largest private employer
The 2009, annual survey by the Reputation Institute ranked Tata Group as the 11th most
reputable company in the world. The group takes the name of its founder, Jamsedji Tata, a
member of whose family has almost invariably been the chairman of the group. The current
chairman of the Tata group is Ratan Tata, who took over from J. R. D. Tata in 1991.

Chairman
The Chairman of Tata Sons is usually the Chairman of the Tata Group.

 Jamsetji Tata (1868–1904)
 Sir Dorab Tata (1904–1932)
 Nowroji Saklatwala (1932–1938)
 JRD Tata (1938–1991)
 Ratan Tata (1991–2012)
 Cyrus Mistry (2012–2016)
 Ratan Tata(2016–2017)
 Natarajan Chandrasekaran (2017 till date)[6]
 2. Baidu, Inc. 
Baidu, Inc. (Chinese: 百度, BY-doo) is a Chinese multinational technology
company specializing in Internet-related services and products and artificial intelligence (AI),
headquartered in Beijing's Haidian District. It is one of the largest AI and internet companies in
the world. The holding company of the group is incorporated in the Cayman Islands. Baidu was
incorporated in January 2000 by Robin Li and Eric Xu. The Baidu search engine is currently
the fourth largest website in the Alexa Internet rankings. Baidu has origins in RankDex, an
earlier search engine developed by Robin Li in 1996, before he founded Baidu in 2000.
Baidu offers various services, including a Chinese search engine, as well as a mapping service
called Baidu Maps. Baidu offers about 57 search and community services, such as Baidu
Baike (an online encyclopedia) and a keyword-based discussion forum.
Baidu Global Business Unit (GBU) is responsible for Baidu's international products and services
for markets outside of China. Baidu GBU's product portfolio includes keyboard apps Simeji and
Facemoji Keyboard, content recommendation platform popIn, augmented reality network
OmniAR, Japanese smart projector popIn Aladdin, and ad platform MediaGo, which is focused
on Chinese advertisers looking to reach overseas users. In 2017, Baidu GBU entered into a
partnership with Snap Inc. to act as the company's official ad reseller for Snapchat in Greater
China, South Korea, Japan and Singapore. The partnership was extended in 2019.
In 2018, Baidu divested the “Global DU business” portion of its overseas business, which
developed a series of utility apps including ES File Explorer, DU Caller, Mobojoy, Photo
Wonder and DU Recorder, etc. This business now operates independently of Baidu under the
name DO Global.
Baidu has the second largest search engine in the world, and held a 76.05% market share in
China's search engine market. In December 2007, Baidu became the first Chinese company to be
included in the NASDAQ-100 index. As of May 2018, Baidu's market cap rose to US$99
billion. In October 2018, Baidu became the first Chinese firm to join the United States-based
computer ethics consortium Partnership on AI.

Baidu, Inc. is a Chinese language Internet search provider. The Company offers a Chinese
language search platform on its Baidu.com Website that enables users to find information online,
including Webpages, news, images, documents and multimedia files, through links provided on
its Website. In addition to serving individual Internet search users, the Company provides a
platform for businesses to reach customers. Its business consists of three segments: search
services, transaction services and iQiyi. Search services are keyword-based marketing services
targeted at and triggered by Internet users' search queries, which mainly include its pay-for-
performance (P4P) services and other online marketing services. Its transaction services include
Baidu Nuomi, Baidu Takeout Delivery, Baidu Maps, Baidu Connect, Baidu Wallet and others.
iQiyi is an online video platform with a content library that includes licensed movies, television
series, cartoons, variety shows and other programs.
 3. The Walt Disney Company

The Walt Disney Company, commonly known as Disney, is an American diversified

multinational mass media and entertainment conglomerate headquartered at the Walt Disney
Studios complex in Burbank, California. Wikipedia
CEO: Bob Chapek
Founded: 16 October 1923, Los Angeles, California, United States
Headquarters: Burbank, California, United States
Subsidiaries: Pixar, Hulu, shopDisney, Marvel Entertainment, MORE
Founders: Walt Disney, Roy O. Disney

Companies owned by Disney 

Here's an aggregated list of what Disney actually owns. 

o ABC
o ESPN (80% stake)
o Touchstone Pictures
o Marvel
o Lucasfilm
o A&E (50% equity holding with Hearst Corporation)
o The History Channel (50% equity holding with Hearst Corporation)
o Lifetime (50% equity holding with Hearst Corporation)
o Pixar
o Hollywood Records
o Vice Media (10% stake)
o Core Publishing

What about the Disney brands? 

Disney has been smart about acquiring many valuable properties over the years and turning them
into Disney brands. 
This is an adjusted list of the franchises owned by Disney.

o Star Wars
o The Muppets
o The Marvel Cinematic Universe (but not the X-Men — yet!)
o Disney Princesses/Princes (such as characters from Cinderella, Mulan, Frozen, Aladdin,
and The Lion King)
o The Chronicles of Narnia Franchise
o The Pirates of the Caribbean Franchise
o Pixar Films (such as Toy Story, The Incredibles, and Cars)
o The Winnie the Pooh Franchise
o The Indiana Jones Franchise
o Grey’s Anatomy (and other popular ABC shows)

I love visualizing how insane it is that Disney owns this much stuff. Just in entertainment, the
ownership of ESPN, ABC, Fox, Pixar, LucasFilm, FX, Marvel, among others is an insane idea.
But that doesn't even begin to be the tip of the iceberg. Because included with all those catalogs
are all their affiliates and programs. And all the rights of everything purchased since each of
those companies existed. 
 CHAPTER 4
FINDINGS

The objective of any business is to maximization its share value and this is considered to one an
only value According Aswath Damodran.
Rest other objective is secondary and can only be achieve if this objective is fulfill.
“Maximizing firm value by maximizing stock price”
We considered four companies that help in understanding “How to maximize their its share
value”
1. TATA Inc.
2. Baidu
3. The Walt Disney Company.

1. TATA Inc.
Tata Group is an Indian multinational conglomerate holding company headquartered
in Mumbai, Maharashtra, India. Founded in 1868 by Jamshedji Tata, the company gained
international recognition after purchasing several global companies.
Each Tata company operates independently under the guidance and supervision of its own board
of directors and shareholders. Significant Tata companies and subsidiaries include Tata
Chemicals, Tata Communications, Tata Consultancy Services, Tata Consumer Products, Tata
Elxsi, Tata Motors, Tata Power, Tata Steel, Voltas, Tata Cliq, Titan, Trent (Westside), Taj
Hotels, and Jaguar Land Rover Tata Group operates more than 80 companies ranging from
software and automobiles to steel, consumer goods and telecommunications. With above
424,365 employees across India, it is the nation's largest private employer.
STOCK RATE OF TATA inc

Current stock price

68.85 INR +1.60 (2.38%)
8 Apr, 1:04 pm IST ·

Open 66.50
High 71.60
Low 65.40
Mkt cap 227.86B
P/E ratio -
Div yield -
Prev close 67.25
52-wk high 239.35
52-wk low 63.50

Company Financials
For the quarter ended 30-09-2019, the company has reported consolidated sales of Rs 64763.39
crore, up 6.47 % from last quarter sales of Rs 60830.16 crore and down -9.16 % from last year
same quarter sales of Rs 71292.79 crore. The company has reported net profit after tax of Rs
175.76 crore in the latest quarter.

Tata shares have lost nearly half of their value since Jan. 2018 to trade at a price-to-earnings ratio
of 4.7, the lowest on the S&P BSE Sensex Index. The company, which last year got more than
50% of its sales abroad, last week outlined job cuts and other measures aimed at cutting costs in
Europe, which it called a “dumping ground" for steel.

“Indian steel prices may have found a floor, thanks to the minimum import price, and have
already started moving up,"., “That kind of stability in prices gives investors confidence."
Tata Steel has been closing and selling plants in the U.K since the 2008 financial crisis to make
its business there more profitable. It’s now focusing on India, and aims to ramp up capacity as
demand is set to expand by as much as 7% in 2020, according to the World Steel Association.
That’s the most among the top 10 steel using countries.

And in the same way Tata inc share price is also changes according to operation are changes and
this shows that Tata hits upper circuit and the investor wanted to invest in these profit generating
companies because of this the firm is able maximize their firm value by increasing their
operations in the different sectors and utilizing the fund and it attracts the different investor.
2. Baidu
Baidu, Inc. (Chinese: 百度; pinyin: Bǎidù, anglicized /ˈbaɪduː/ BY-doo) is a Chinese
multinational technology company specializing in Internet-related services and products
and artificial intelligence (AI), headquartered in Beijing's Haidian District.[5] It is one of
the largest AI and internet companies in the world.

Current Stock Price

Baidu Inc
NASDAQ: BIDU
99.00 USD +1.67 (1.72%)
9 Apr, 4:00 pm GMT-4 · Disclaimer

HISTORICAL DATA (From March to April 7) share price

Date Open High Low Close* Adj Close**

Apr 07, 2020 105.00 107.38 101.05 101.79 101.79

Apr 06, 2020 100.88 103.20 100.27 102.94 102.94

Apr 03, 2020 98.92 100.23 96.10 97.20 97.20

Apr 02, 2020 97.77 100.88 97.00 99.59 99.59

Apr 01, 2020 98.68 101.52 97.33 97.68 97.68

Mar 31, 2020 98.54 105.25 98.54 100.79 100.79

Mar 30, 2020 98.52 99.50 96.15 98.95 98.95

Mar 27, 2020 98.50 99.12 96.33 97.63 97.63

Mar 26, 2020 98.61 102.46 97.32 101.82 101.82

Mar 25, 2020 97.00 102.05 95.08 96.92 96.92

Mar 24, 2020 95.18 98.92 95.05 96.43 96.43

Mar 23, 2020 89.03 92.15 86.23 91.22 91.22

Mar 20, 2020 91.25 93.16 87.72 88.66 88.66

Mar 19, 2020 83.34 91.66 83.21 89.62 89.62

Mar 18, 2020 84.60 92.89 82.00 83.62 83.62

Date Open High Low Close* Adj Close**

Mar 17, 2020 89.72 92.28 85.05 91.13 91.13

Mar 16, 2020 90.92 96.73 89.68 89.68 89.68

Mar 13, 2020 104.71 105.61 94.66 100.29 100.29

Mar 12, 2020 100.05 102.48 97.42 99.00 99.00

Mar 11, 2020 109.60 110.70 107.56 108.25 108.25

Mar 10, 2020 110.86 111.92 106.86 111.91 111.91

Mar 09, 2020 106.94 110.06 105.05 106.65 106.65

Mar 06, 2020 114.99 116.91 112.22 113.74 113.74

Mar 05, 2020 118.37 120.32 117.60 118.24 118.24

Mar 04, 2020 119.29 121.79 119.13 121.41 121.41

Mar 03, 2020 121.40 122.62 115.68 117.97 117.97

Mar 02, 2020 122.80 122.97 117.83 120.77 120.77

Baidu's positioning
Baidu operates in the country hardest hit so far by novel coronavirus pandemic, but it's still too
early to say how the stock will be affected. The company's most recent earnings report was
strong, but it only reported earnings through Dec. 31, which was before the worst effects of
COVID-19 shut down parts of the Chinese economy. In its latest earnings, reported revenue of
28.9 billion yuan ($4.12 billion) surpassed expectations. The 9.19 billion yuan ($1.31 billion) in
non-GAAP income attributable to Baidu also came in dramatically ahead of the 6.51 billion
yuan ($930 million) for the same quarter last year.

Despite the strong showing on earnings, Baidu trades at a significant discount. Its forward P/E
ratio comes in at about 16.2. That ratio actually lags the S&P 500 average P/E of around 19.4.
Baidu also benefits from the fact that it operates in a country of almost 1.44 billion people with
an expanding middle class. And yet the market cap of Baidu dramatically lags that of its U.S.-
based counterpart. Baidu's $34.5 billion market cap means Alphabet maintains a market cap
about 23 times as large.

Baidu looks poised to see more profit growth long-term. Wall Street forecasts an earnings
decline of 12% for this year. However, over the next five years, analysts predict earnings will
grow by an average of 9.9% per year. This is more than double the rate of Alphabet.
Unfortunately for investors, Baidu is cheaper for a reason, namely the nature of Baidu stock.
Baidu stock is not actually stock in Baidu the company. Due to Chinese prohibitions against
foreign ownership, investors buy a Cayman Islands-based holding company through which
Baidu passes its cash flows. While it remains unlikely Baidu would do anything to upset this
arrangement, it places shareholders at a disadvantage that may temper enthusiasm for the stock.
From above we can understand baidu is affected because of covid19 and fluctuation is
observable by seeing the stocks but it clearly indicates that Baidu is well known company in
china and it shows that investor are ready to invest in the stocks of Baidu after crisis and
because of that company is able to recover its loss which occurs because of covid 19 and it
show that objective of any firm is to maximize there firm value by spreading a good news
abbot there organization by helping their own country in crisis and investors are willingly
wanted to invest in the Baidu and it indicates that firm objective is to maximize its market
share.
 4. The Walt Disney Company
The Walt Disney Company, together with its subsidiaries, is a diversified worldwide
entertainment company. The Company operates in five segments: Media Networks,
Parks and Resorts, Studio Entertainment, Consumer Products and Interactive Media.
Disney Stock Price History

Date Open price High Low

2020-04-07 104.65 105.83 100.20

2020-04-06 97.51 100.07 94.56

2020-04-03 96.27 96.81 92.66

2020-04-02 94.32 97.17 94.30

2020-04-01 93.61 97.33 92.53

2020-03-31 100.46 103.10 96.16

2020-03-30 95.59 100.27 92.10

2020-03-27 100.14 100.44 95.54

2020-03-26 100.81 107.68 100.80

2020-03-25 100.34 105.84 95.52

2020-03-24 92.12 99.01 91.77

2020-03-23 84.20 87.16 81.07

2020-03-20 95.77 96.91 85.84

2020-03-19 87.57 97.32 85.08

2020-03-18 87.51 89.15 79.02

2020-03-17 95.52 97.26 91.13

2020-03-16 91.50 98.18 89.95

2020-03-13 100.20 102.75 92.21

2020-03-12 97.50 99.89 91.60

 Date Open price High Low

2020-03-11 108.00 108.72 102.82

2020-03-10 107.86 111.49 102.41

2020-03-09 108.39 110.19 104.28

Disney Stock Growth

After Disney’s CEO Bob Iger’s announcement in November 2018, regarding the expected
launch of Disney+ in a year’s time, Walt Disney (NYSE: DIS) saw its stock price increase by
34% from around $109 levels in December 2018 to around $146 in December 2019. This was
primarily driven by higher revenues and expansion in the price-to-earnings (P/E) multiple on the
back of a better revenue outlook with the launch of Disney+. The sales growth during FY 2019
(fiscal year ends in September) was driven by the acquisition of 21st Century Fox and
consolidation of Hulu’s operations. We break down the movement in Disney’s stock price into
four factors: growth in revenue, change in share count, expansion in P/E multiple and change in
net income margin. You can look at our interactive dashboard analysis What Factors Drove Over
30% Growth In Disney’s Stock In A Year? for more details.
After Disney’s CEO Bob Iger’s announcement in November 2018, regarding the
expected launch of Disney+ in a year’s time, Walt Disney (NYSE: DIS) saw its stock
price increase by 34% from around $109 levels in December 2018 to around $146 in
December 2019. This was primarily driven by higher revenues and expansion in the
price-to-earnings (P/E) multiple on the back of a better revenue outlook with the
launch of Disney+. The sales growth during FY 2019 (fiscal year ends in September)
was driven by the acquisition of 21st Century Fox and consolidation of Hulu’s
operations. We break down the movement in Disney’s stock price into four factors:
growth in revenue, change in share count, expansion in P/E multiple and change in net
income margin. You can look at our interactive dashboard analysis What Factors
Drove Over 30% Growth In Disney’s Stock In A Year? for more details. After
Disney’s CEO Bob Iger’s announcement in November 2018, regarding the expected
launch of Disney+ in a year’s time, Walt Disney (NYSE: DIS) saw its stock price
increase by 34% from around $109 levels in December 2018 to around $146 in
December 2019. This was primarily driven by higher revenues and expansion in the
price-to-earnings (P/E) multiple on the back of a better revenue outlook with the
launch of Disney+. The sales growth during FY 2019 (fiscal year ends in September)
was driven by the acquisition of 21st Century Fox and consolidation of Hulu’s
operations. We break down the movement in Disney’s stock price into four factors:
growth in revenue, change in share count, expansion in P/E multiple and change in net
income margin. You can look at our interactive dashboard analysis What Factors
Drove Over 30% Growth In Disney’s Stock In A Year? for more details.
 Revenue Growth
• Disney has added over $10 billion to its revenue base in FY 2019, led by growth across
all its operating divisions.
• Media Networks added close to $3 billion in revenues driven by higher affiliate fees due
to higher contractual rates; higher advertising revenue and TV/SVOD revenues due to Fox
acquisition benefits.
• Parks & Resorts added $1.5 billion in revenues due to higher average ticket prices for
theme park admissions and for cruise line sailings, along with higher daily hotel room rates.
• Studio entertainment added $1 billion in revenues due to higher theatrical distribution
benefiting from Fox.
• The biggest change in revenues was driven by the sharp rise of $6 billion in the direct-to-
consumer division due to higher advertising sales driven by consolidation of Hulu operations
and at Disney’s international channels, along with higher subscription fees due to Hulu and
Fox’s international program sales and higher fees for ESPN+.

CHAPTER 5

CONCLUSION
The major difference between profit maximization and economic value (maximization of
wealth) is that the profit part focuses on short-term earnings, whereas, the economic value or
the wealth part focuses on the overall value of the business over period of time.

Profit maximization focuses and ensures the growth in capital of the firm, but ignores the risk
and uncertainty that the company might face in future. The highest profit is earned when the
marginal costs and revenues of the firm becomes equal (MC=MR). Profit maximization
provides instant result and in many situations helps the firm to save it from debts, issues and
financial problems.
Meanwhile, economic value (maximization of value) involves safe steps in order to enhance
and grow the market value of its’ stock over time. Market value of a company depends on
various factors such as the firm’s services, sales, product quality, profit earned, etc. Economic
value brings into consideration both risk and uncertainty, i.e., the long-term prospects of a
company determine the time value of money, enhancing the growth rate of the firm and
thereby aims to acquire maximum amount of market share. Shareholders of a firm are keenly
interested in the economic value of the firm as it brings stability, economic attraction and
assured profit based on dividends.

Tata group is India’s largest industrial conglomerate, which withholds 90+ companies.
Reliance on the other hand is India’s largest private sector company. Reliance industry (across
the country) majorly focuses on maximizing their profits and follows it as their motto, while
on the other hand, TATA group of industries (global existence) aims to maximize its’
economic value. Considering the facts, Ratan Tata (Leader of the TATA group) donates 66%
of the annual profits as charity, whereas Mukesh Ambani (leader of Reliance industries) re-
invests the profits to increase its’ own funds; which is why TATA group tends to hold more
economic value as compared to Reliance industries.

TATA group of industries also offers its’ employees various benefits such as discounts
on appliances of croma electronic store, tanishq jewellery, voltus ACs, titan eyeplus,
etc., and various cash backs on purchases from Tata motors, Tata sky, etc. They also
offer usual annual increments and bonuses to the employees. It cannot be denied that
Reliance industry also offers perks to their workers, yet it cannot be bought into
comparison with what Tata group does.
Both profit maximization and economic value have a significant impact over each other and
in most of the situations go hand in hand. Economic Value maximization is a long-term
prospect and involves the processes of profit maximization. Although, economic value is a
highly recommended criterion for evaluating the performance of a company and stands to be
a broader concept than profit maximization, yet, every business must achieve the stage of
profit maximization first, in order to have economic value. Both the financial objectives
derive different results; and their usage completely depends upon the current situation of the
business entity. Profit maximization can be considered as an instant and short-run decision;
but those decisions which might affect the shareholders’ interests should be looked into by
considering economic value.

Hence, to conclude, it is important to note that an attractive firm cannot accept a level of
low profit, holding a high market value. Profit tends to be the basic requirement of any
business entity to avoid losing its funds and to continue in the long run.
 REFERENCES

 https://www.livemint.com/ ( Tata inc)

 http://www.economicsdiscussion.net/business/objectives-of-business/31843

 https://www.academia.edu/9379030/References_for_Business_Research_Business_R
esearch_Methods

 https://simplywall.st/stocks/in/automobiles/nse-tatamotors/tata-motors-shares/news/is-now-
the-time-to-look-at-buying-tata-motors-limited-nsetatamotors-2/

 https://www.fool.com/investing/2020/04/08/heres-why-baidus-stock-fell-16-last-month.aspx