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Analysis of Finance in Hidetoseek Ltd Essay Example

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Analysis of Finance in Hidetoseek Ltd

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Analysis of Finance in Hidetoseek Ltd. Diversification of product helps in diversifying risk associated with single product entity. It also increases target market segment and opens more opportunities to capture the market. Hidetoseek’s investment to machinery for production of a leather wallet is £ 120000. The main two sources of finance that Hidetoseek can get are through issuing right issue or long-term loan. It is the right issue because as per the company’s performance a chance of getting IPO is less. Its advantages are it will get the requisite funds, don’t have to pay interest, increase market capitalization and most important its stakeholders will be motivated. Disadvantage faced by Hidetoseek will have to give the discount per share.

The second method that can be adopted for getting finance is through long-term long. Its advantage is that of easy availability of cash. Disadvantage related to this option is Hidetoseek will be legally obligated to pay interest on the principal amount and also there will be the long-term increase in liability.
Hidetoseek Ltd. is formulating its new strategy for importing raw material. Earlier it has been supplied with raw materials, accessories and leather form United Kingdom companies. The target market of Hidetoseek is that of high-end customers. There most important element in Hidetoseek’s products will be focused on quality. South American market products are cheap but of low quality and this may lead to decline in brand image of a company and also decline in sale margin in the long term. The second issue Hidetoseek can face is increasing operational cost due to increase in transportation cost of raw materials from South America. Operational cost will also increase because of trade policies followed by South American government and fluctuating global market effect on South America currency. If currency value rises Hidetoseek would have to pay the increased price to the importing companies whereas United Kingdom companies are offering them the discount in bulk purchasing of raw material. Analysis of Finance in Hidetoseek Ltd.

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