Tracking, targeted, and letter stocks provide different classes of common stock.

1) Tracking, targeted, and letter stocks provide different classes of common stock. A tracking stock is also known as a targeted stock and it links the return to the subsidiary’s operating performance (DePamphilis, 2015).The tracking stock trades independently of the parent company stock, so it is possible for the values the differ (DePamphilis, 2015). This provides an opportunity to raise capital by selling additional stock on the market (DePamphilis, 2015). Letter stocks are unregistered shares of a company that are typically issued to executives and directors (Chen, 2021). These are also referred to as restricted stock and come with limitations on when they can be sold, known as a vesting period (Chen, 2021). This can be a motivator for the employee to stay with the company since they would lose the shares if they left prior to the end of the vesting period.
 

2) Aspin-off is a stock dividend paid by a firm to shareholders which consists of shares in a newly created subsidiary (DePamphilis, 2015). This new subsidiary, or new independent company, can be formed from the sale or redistribution of shares. This is usually done to streamline a business’s operation with sections of unprofitable or decreasing business entities dragging profits etc. General Motors spun off several divisions, including Delphi, to avoid bankruptcy.

Acarve-out is when the parent company sells some or all its shares in its subsidiary to the public through an IPO. Unlike spin-offs, carve-outs the parent company generally receives a cash in-flow. Even though the parent company retains control, there are minority shareholders created. Carve-outs are a great way for a company to raise funds for reorganization or to add new products. Gaming designer Zynga created an IPO to raise $1 billion and went public.

Asplit-up is where a corporation splits into two or more separately runs companies. Shares in the original company are exchanged with shares of the new one. After the split-up, the original company ceases to exist. Kraft foods decided to split into two new companies to increase shareholder value in 2011.

Asplit-off is where shareholders in the parent company are offered shares in the subsidiary. They do have to decide if they want shares of the parent company or shares from the subsidiary. Warren Buffet’s Berkshire Hathaway bought Duracell batteries from Proctor & Gamble in a split-off for tax-free cash purposes.

 

All the above actions are meant to do one thing: increase shareholder value.

3)Spin-offs are a stock dividend paid out by the company to their shareholders in the form of shares of a subsidiary (DePamphilis, 2015). Spin-offs offer firms a way to exit a business and do so without creating a taxable event for their shareholders (DePamphilis, 2015).

Carve-outs are similar to spin-offs since they both involve subsidiaries trading separate from the parent company, but the difference is in a carve-out, the parent company retains control of the subsidiary (DePamphilis, 2015). Equity carve-outs provide an opportunity to raise cash to put into the subsidiary (DePamphilis, 2015).

 

In a split-up, the company restructures into two or more separately managed companies (DePamphilis, 2015). When a split-up occurs, shares of the original company are cancelled and shareholders have the option to exchange their shares for shares in the new companies (DePamphilis, 2015).

 

A split-off is also similar to a spin-off since a subsidiary becomes an individual company, but the difference is in a split-off an option to exchange shares of the parent company for shares in the subsidiary usually exists (DePamphilis, 2015). This usually happens when shareholders prefer to own stock in the subsidiary over the parent company (DePamphilis, 2015).

4)Best buy and its CEO Hubert Joly are a great example of implementing a strategic plan that probably saved Best Buy. When Joly took the lead at Best Buy profits had plummeted, sales were way down, and stock price had tanked. Joly implemented what he called Best Buy’s Renew Blue strategic plan. The five key strategies are 1. Reinvigorate the customer experience 2. Attract transformational leaders. 3. Work with vendors to innovate and drive value. 4. Increase the company’s return on invested capital by growing revenue and efficiency and 5. Make the world a better place through recycling efforts and giving people access to technology. “In the following years Best Buy had five consecutive years of comparable sales growth, increased its non-GAAP operating income rate, achieved $1.9 billion in cost savings and efficiencies, improved profitability and shareholder return, increased its Net Promoter Score, and hit record-low employee turnover rates.” (Trammel, H. 2022) The main takeaways from this are that there is opportunity to fix a floundering company if the right leaders are selected and a clear vision and analysis of their situation (Strengths, weaknesses, opportunities and threats) are analyzed well, and a good plan is put together. Best Buy was being impacted by Amazon and instead of having an us against them attitude, part of their solution was to partner with Amazon and sell some of its products including the Firesticks in their stores.

5)Companies all over the world are embracing strategic planning in hopes of achieving higher revenues while gaining a competitive advantage in their market. Strategic planning is a way for managers to set priorities, focus energy and strengthen resource operations, to ensure that stakeholders share a common goal and results are achieved. An example of a leader is CEO of Tesla and SpaceX, Elon Musk who transformed a strategic plan into reality. He is probably one of the most notable innovators of our time. He revolutionized the transportation industry through the creation of fully electric cars. Before he transformed the transportation industry he earned funding by starting, operating, and selling two companies, Zip2 and Paypal (Francis, 2021). He is known for many things, but putting focus on the Tesla, his strategic plan began in 2006 where he entered the market during a period where customers were prepared to pay a premium (Francis, 2021). Therefore, he had a plan and knew where he wanted to be before he set out into the market.

Another part of his strategic plan was embracing negative feedback and ensuring that his vision was not simply for profits but also to address global issues and challenges. A key reason for his success is that he acknowledges that he is strong in some areas, but weak in other areas. He uses delegation when necessary if he isn’t skilled in a certain area. That way his vision and plan turn into action and success. He leads his company with macro-managing instead of micro-managing his team. As it provides his employees with opportunity to practice their craft. He also strives to hire and retain true talented employees. He values both talent in an employee and inspiration (Jackson, 2022). Mr. Tusk set clear goals for his strategic plan and through his effort his vision of the Tesla was successful. He is currently disrupting numerous industries such as healthcare, aerospace, deep dive, energy, industrials, and infrastructure and construction (CBIsights, 2021).

I think I could learn from Mr. Musk is to have powerful visions and execute future ideas well. Not be afraid to be an entrepreneur and to challenge myself and co-workers. At the same time practice integrity and ensure sustainability is part of the vision. Most importantly, to learn the fundamentals and use the knowledge I gain to my benefit. 

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