Financial strategy (like dividend policy, debt policy) can best be understood as a consequence of corporate strategy.. this ppt shows the connection

1. Senior Management Program, IIM Indore Feb 2011

2. Internal RivalrySupplier Power Customer Power
substitutes

3. Internal Rivalry:
Margin pressures,Supplier Power Customer Power
substitutes
High receivables
High investment in
intangibles
High backward
integration
High capex
Higher margins?
High capex, to build
scale, reach

4. Indian Companies, 2010

5.  Debt Policy: Capital Structure
 Dividend Policy

6. Company Debt/Equity Dividend/Equity
Infosys 0 3.6%
Mahindra and Mahindra 37% 2.4%
Hindustan Unilever 0 11.6%
Maruti Suzuki 6.9% 1.5%
GMR 44% 0
HDFC Bank 794% 0.6%

7.  High Assets
 Transparent
 Predictable
 High Debt
 Conserve Dividends

8.  Economies of Scale
 Natural Monopolies

9.  Technology: R&D, Patents
 Brands

10.  Intangibles
 Unpredictable
 Difficult to Communicate
 High Equity, Low Debt
 High Dividends