Case Study: Felda Global Ventures Bhd?
This article highlights that Felda Global Ventures Bhd (FGV) is indecisive on their dividend payments to their shareholders for 2016. At the same time, they have also announced a mutual separation scheme (MSS) which will affect 3 percent of its current workforce.
A letter from Ms. Alice in The Star Online brings to light on what is actually a mutual separation scheme. She mentions how when preliminary economizing or cost-cutting methods fail to work, the final action to lessen heavy expenses is to downsize the work force and this is mutual separation scheme (MSS) are typically implemented as a last resort to keep the affected companies sustainable. (Yokyuen-Wong, 2015)
Coming back to FGV, the president and CEO said that they have not decided …show more content…
The electrician that was employed by the principal to fix a problem with the electrical circuit. Even though, the electrician’s main interest is to earn as much as money or income that he can, he is given the obligation to do whatever it takes to that brings the most benefit to the principal.
In the case of Felda Global, the shareholders wealth is threatened both by the inability of the firm to consider a potential dividend payment yet and at the same time, the firm’s measures of downsizing in various aspects.
The measures taken by the company may cause the company’s reputation will be affected. Due to the cut down of the current workforce and the company’s assets, the financial stability of the company may be questioned by the investors/stockholders as to why the management couldn’t find other better ways to solve the problem or to take other measures to cut cost. This will cause the investors that planning to invest in the company re-evaluate the ability of the management to lead the company and will affect the confidence of the current investors of the …show more content…
This is because when a single worker loses his/ her job, there will be one less person that will contribute to the country by paying taxes, and additional sales tax revenue as a person without a job will definitely reduce their spending almost immediately, and leading to the reduction in the overall tax revenue of the country. Also, the CEO didn’t mention in the article how they will compensate the workers they are going to layoff.
In order to overcome the dividend payment issue, we suggest that FGV Company should make their dividend decision and establish a potential dividend for its shareholders as soon as possible. This may allow the shareholders to feel more secured and trust the company’s operation as well as solve the agency problem.
Not only that, we also suggest that FGV Company should pay the dividend to the shareholders based on their company profits. For example, when the profit increase, they should pay higher dividend to the shareholders. This is to allow the shareholders to gain higher return on their investment and also maximize shareholders wealth. On the other hand, when the profit decrease, they should not pay high dividend to the shareholders. This is to avoid company to become unable to pay the dividend to the
A letter from Ms. Alice in The Star Online brings to light on what is actually a mutual separation scheme. She mentions how when preliminary economizing or cost-cutting methods fail to work, the final action to lessen heavy expenses is to downsize the work force and this is mutual separation scheme (MSS) are typically implemented as a last resort to keep the affected companies sustainable. (Yokyuen-Wong, 2015)
Coming back to FGV, the president and CEO said that they have not decided …show more content…
The electrician that was employed by the principal to fix a problem with the electrical circuit. Even though, the electrician’s main interest is to earn as much as money or income that he can, he is given the obligation to do whatever it takes to that brings the most benefit to the principal.
In the case of Felda Global, the shareholders wealth is threatened both by the inability of the firm to consider a potential dividend payment yet and at the same time, the firm’s measures of downsizing in various aspects.
The measures taken by the company may cause the company’s reputation will be affected. Due to the cut down of the current workforce and the company’s assets, the financial stability of the company may be questioned by the investors/stockholders as to why the management couldn’t find other better ways to solve the problem or to take other measures to cut cost. This will cause the investors that planning to invest in the company re-evaluate the ability of the management to lead the company and will affect the confidence of the current investors of the …show more content…
This is because when a single worker loses his/ her job, there will be one less person that will contribute to the country by paying taxes, and additional sales tax revenue as a person without a job will definitely reduce their spending almost immediately, and leading to the reduction in the overall tax revenue of the country. Also, the CEO didn’t mention in the article how they will compensate the workers they are going to layoff.
In order to overcome the dividend payment issue, we suggest that FGV Company should make their dividend decision and establish a potential dividend for its shareholders as soon as possible. This may allow the shareholders to feel more secured and trust the company’s operation as well as solve the agency problem.
Not only that, we also suggest that FGV Company should pay the dividend to the shareholders based on their company profits. For example, when the profit increase, they should pay higher dividend to the shareholders. This is to allow the shareholders to gain higher return on their investment and also maximize shareholders wealth. On the other hand, when the profit decrease, they should not pay high dividend to the shareholders. This is to avoid company to become unable to pay the dividend to the