A Brief for a financial case Essay Example | Topics and Well Written Essays - 500 words

A Brief for a financial case - Essay Example However, in the past few months, the market share of Teletech Corporation failed to maintain pace with general stock market and with the telecommunication business index. Security forecasters had commented on the company’s uninspiring rates of return, particularly in comparison with the strong competition in telecommunication industry as well as unsatisfactory financial performance in the product and system division (Bruner, R. F., â€Å"Case Studies in Finance: Managing for Corporate Value Creation†). The product and system division was recognized as industrial leader in the telecommunication business and maintenance of this leadership status necessitates substantial outlay in research and development. As the entry of numerous companies in the telecommunication sector improved, the technological transformation and competition had also raised considerably. Converting the mission statement of Teletech Corporation into real world performance had become a difficult task for Margaret Wetson, the Chief Financial Officer (CFO) of Teletech Corporation in order to maintain its position in the market. Therefore, first significant requirement was to create a value of the company. In order to create value, Teletech had implemented economic profit as a measure of developing strategic decision regarding capital distribution, promotion, and incentive recompense (Bruner, R. F., â€Å"Case Studies in Finance: Managing for Corporate Value Creation†). The other method for value creation was evaluation of capital investment offers by using the hurdle rate. Hurdle rate is helpful for providing an amount of net present value (NPV) of each offer. The implementation of hurdle rate has become an issue of conflict within the senior managers of Teletech Corporation. The Vice President of telecommunication service division, Rick Phillips had depicted that without hurdle rate the threat of investment cannot be managed and telecommunication service segment will face lack of capital. He