The Nature Principle

Measuring Effectiveness of Customer Relationship Management Strategies in Achieving Customer Loyal Essays

Measuring Effectiveness of Customer Relationship Management Strategies in Achieving Customer Loyal Essays Measuring Effectiveness of Customer Relationship Management Strategies in Achieving Customer Loyal Essay Measuring Effectiveness of Customer Relationship Management Strategies in Achieving Customer Loyal Essay Management strategies in achieving customer loyalty A Case Based Study of Nandos UK (Kings Cross Branch) Introduction:Businesses has grown on fast pace in last few decades. This rapid growth in business ha snot only increased the competition but also provided the customers to choose from the products . increased competition and market uncertainty has left organization to think the ways to retain and attract more and more customers. Wining the heats and minds of customers is now the ultimate goals of much organization to earn profitability. Kicaid, 2003) It is because organizations know a satisfied customer can refer many new customers to them with no cost of marketing. Customer relationship Management is concept of delivering best customer services in order to retain customers for long time in other words customer relationship management is name of customer satisfaction that makes customer to buy again and again from same organization. Customer relationship is built and maintained th rough relationship strategies utilizing latest IT concepts that help in delivering better customer services. Increased used of internet and computers has forced organization to invest in IT based applications to not only facilitate their customers but also to use IT application to help customers serve in better way. (Gummesson, 2002) â€Å"CRM is an IT the outcomes of which optimize profitability, revenue and customer satisfaction by organizing around customer segments, fostering customer-satisfying behaviours and implementing customer-centric processes†. (Peelan. 2003) Fig (1. 1) CRM Growth trends According to Gartner survey significant growth in spending on CRM in past few years CRM software related investments were $7. 8 billion in 2008 with 14. 4 % increase from previous year. This healthy trend is expected to reach $13. 3 billion by year 2012. The investors remained positive despite economic meltdown Problem Statement;- Achieving customer? s loyalty is long term thing and effects of implementing CRM strategy is not tangible. So it is complex task to effectively measure the Effectiveness of CRM strategy and customer loyalty. Complexity exist when evaluating intangible benefits like loyalty of customer, quality of service, enhancement of value, processes effectiveness, innovation of operation, improving the services Effectiveness of processes, innovation of operation, service improvement, competitiveness, trust, and efficiency etc (Peelan,2003) The most widely used and popular methods for investment evaluations are accounting and financial methods which only depends upon cash flow and counting the customer inflow . These are only suitable for limited type of evaluation of business performance. These accounting methods cannot be effectively used in evaluating investment which is expected to gain benefits in intangible and indirect form. (Righby Landigham, 2004) By evaluating effectiveness of crm strategy a business can be improved on the bases of results and necessary changes can be adopted . CRM implementation also enable customer services department to perform effectively according to their expectation. According to Customer Think Corporation, 68 % of customers leave their seller due to bad customer service experience. So the importance of CRM and its performance evaluation cannot be done/This Poor development Of Marketing Performance measurement is due to complexity in measuring and assessing results from implementing marketing strategies. Especially it is difficult to elaborate impacts on customers of specific strategy (Hanssens, 1999) Objectives:(1) To Critically evaluate theory of CRM strategies and its role in achieving customer loyalty (2) To Analyze current CRM strategies adopted by Nandos UK (3) Evaluation of effectiveness of CRM strategies adopted by Nandos UK (4) To Provide recommendation for effectively implementation of CRM effectiveness measurement Rational Business: The proposed research aims to analyse and assess the impact of CRM in the efficient functioning of the businesses, thus delivering exceptional customer services to its existing and potential customers. It is anticipated that the possible outcome of the proposed study will create a positive business environment by enhancing customer satisfaction and creating further customer service improvement activities and achieving customer loyalty. Academic: The area of the proposed research is CRM. It is an information technology industry term for methodologies and software. This term is used as methodology in IT and software technology, all customer relationship is dealt with the help of internet in an organised way by the enterprise. Using the proposed methodology or looking at it critically might be helpful for students doing research in the similar fields in the future. Literature review: This chapter consist of theories, ideas and concept of different authors, which will support the consider topic, because CRM is very important for the attraction of customer towards organisation. If CRM of the company is improve, then more customers will come as compare to the other competitors. By this way the relationship between organisation and customers maintain. We can say that CRM is the important factor of customer relationship. That CRM is the key to strategic competition needed to keep the focus on customer needs and for a face to face with the customers throughout the organization† (Lin and Su, 2003) Different authors define CRM with different way, in which some have similar concept but different words, as well as some have different concept, some of them are in the following: According to Wilson et, al. (2002 ) that CRM is a technical support and rational tool as well as a set of different skills, process, and different technologies, which help the organisation in making planning? for the all channels of attracting customers, and these all channels have very high influence on each other? s as well as high attraction with each others. On the other hand O? Mulley and Mitussis (2002) say that CRM is very beneficial and persuasive. On the other hand Olsen states that mostly companies show loyalty for the satisfaction of the customers as well as making different kind of strategies and improving company/organisation performance. All techniques and skills are used for the satisfaction of organisation, because customers are the basics units of business. The skills, rules and regulations are according to the choice as well as need and want of customers. According to the Lin and Sue (2003) that component if CRM is exceptionally vital for the understanding of relationship of the customer? s questions, complains as well as practice of the business. The factors of the CRM is basically related to the activity of organisation and customers contacts, the contacts may be customers complains or feedback. On the other hand technologies play very important rule in the CRM, because technology used in the system as a facility in CRM for customer satisfaction. The development of CRM is not new for the organisation, but they are developing system from the beginning According to Payne (2006) the CRM of old age was engage same like the modern, but the difference was only technology. But the difference is that the modern strategy is according to the modern customers marketing strategy, because to make easy the approach of customers to the organisation. Wilson et, al. (2002)â€Å"The assumptions of customers in CRM, is not different from the transactions between company and customers† this basically means that customers have direct relationship with customers, which require the organisation. The trust of customers essential for the success of organisation, therefore they need clear vision about the organisation policies, and offers etc, so for this purpose organisation need to well define about every product as well as develop ethical qualities must be highlighted. The idea of wine shows that CRM is very close to the characterization of CRM (business strategy) which states â€Å"The customer service needs to receive the status of high priority in the organisational environment†. CRM is significant from the usiness point of view, because it will make people mind clear for the business; in simple it will give simple and clear vision to customers about the services, products, and customers strategy. By this way company will keep long term relationship with customers. In term of business strategy CRM we can say that it is section of the market and competitive advantages by increasing the trust and satisfaction of the customers or client is hard to evaluate. It is a co mplex strategy, because of the different behaviours of he people (Roger, 2003). According to O? Malley and Mitussus (2003) in fact the customers are relatively new to the marketing agent that controlling in mass market which directed to strategic considerations relationship. This is essential for the every organisation to understand the strategy of the CRM. According to Winter (2001) that every business strategy must be in relation to what customers tastes. Bellow given three metrics are important for observation of CRM in relation to marketing strategy (Li and Croteau 2003). 1) Customers retention (2) Customer satisfaction (3) Customer profitability These play key role in the CRM, but the adaptation of these are possible only by the help of higher management presented as essential for execution with success of Customer relationship management. If, not take serious in organisation then this will affect the whole organisation, which cause the resistance of customers. According to Cro teau and Li, (2003) that knowledge management also affect the impact of CRM. According to the (McKenna, 1993) stated that a strong CRM strategy should be effectively plan which keep accountability of needs and opinion of the customers, keeping in mind the time and the length of their relationship with oragnization (Ahn, 2003) satisfying customers needs are the key purpose of developing the CRM strategy. The technological system of CRM is very important in collecting information from the customers about the organisation (oragnization) and same is conveying of information to the customers about the sale, new products and movement of the market. (Reicheld, 1993). Oragnization also improve strategy with help of customers complains and feedback. On the basis of customers information oragnization improve the relations with customers (Reicheld 1993). Methodology: This section explains the research ideology, concept and method applied, integrated with a data overview, essential for deriving the final conclusions of the research study. Research Philosophy: There are two principal philosophies in the research process that are dealt with. Either the optimistic approach based on the concept of objectivity and scientific method, where approximation can be generalized and truly emulate the real phenomena. Saunders et al. (2000)stated that, the researcher presume the task of an objective, independent examine and will be supported by methodology which will allow imitation and generalisation of the data. Or In contrast, phenomenologist philosophy argues that the difficulty of phenomenon, which can be applied to the social and the business world, cannot be concentrated to generalisations. Indeed, ideas and situations influenced by individuals and other factors are all unique, and as such need to be analysed for gaining the clearer picture behind them. Thus, as discussed by Wilson (1999), this view can be said to be the basis of interpretative research, where social reality is explored in its natural settings. The two philosophies are not fundamentally mutually exclusive In spite of being peculiar and seen as to be adapted for individual channels of research. The rank taken in research is dependent on the nature of the question to be explored. In order to reflect the most persistent and compelling reality, a distinct study on the flexibility is needed. Besides, as Saunders et al. 2000) argue, management-related research can be in practice a mixture of both philosophies. In this research, phenomenological philosophy will be adopted as it aims to answer research questions that are highlight in a social atmosphere, based on opinions, views and the assessment of industry experts and customers. Research Approach: There are three types of research strategy Inductive v/s deductive, qualitative v/s quantities and cross sectional v/s longit udinal. Mixed approach will be adopted in the research. The Qualitative research tools containing unstructured interview questioners which is design for collecting data material and research to meet the objective in finding answer for research questions. The Quantitative research tool contain of self designed questionnaires that be sanded through using the email or by post to prospective respondent. Research Strategy: The strategy is sensible base that contracts the way of answers the research questions of the study and present it like a plan which include objectives as well as data sources and takes into accounts the limitation that may occur in growth of the research study. So according to my result I will use mixture of research techniques to attain my required objective, for secondary and primary research so I m using the mixture of quantitative and qualitative techniques. Data collection method: A choice of methods of research will be adopted in proposed study. Executive form Nandos UK would be personally contacted and through the internet to request for the related information via emails. Questionnaires would be sent to the managers of different branches and be requested to fill in, which would certainly help in study. My study will be a combination of questionnaire, interviews, direct observation, physical artefact and discussions. Because it is entail for the development of a conceptual and theoretical structure prior to apply any research instrument. Though data collecting qualitatively do not help in a huge way for theory building but it is helpful in concept of the theory with more confidence. As a result it is a combination of both qualitative and quantitative approach. In my study, I will try to use theory as a basis and channel. Each tool, method or technique has its own strengths and weaknesses. As a result it can be said that research methods and strategies are not isolated from each other. So, I can use mixture of research techniques. To achieve my desired objectives I will be using a mix of qualitative and quantitative technique, which involves both secondary and primary research. Data source: keeping research Objective in mind secondary data will be collect throughout internet, journals and publication etc. I will try to collecting secondary data from all resources of non human. I will be using online database, journals and attain books. Sample selection and Sample size: Considering random sampling which consists on the selection of samples to generalise the findings, over a broader population. 15-20 samples will be used in the proposed research this will help to develops in claims and give technique to improve theories to clarify the population characteristics. In view of both type of purposive sampling focused. Qualitative sampling is considered as best method to apply in current research strategy. This strategy allow to me to choose the persons and data obtainable to meet the objectives. Sample method: According to my research study I will be implement the method of purposive sampling. For my research the non-probability sampling is chosen because it is based on achievement and awareness of certain situation. Sampling follows the qualitative research approach since it merge with objective of responding to study query and don? t Conway the outcomes into statistical generality. It was also helpful in quick manner to achieve a precise target sample. Data analysis: In context of proposed study, data analysis is important because the information collected is both quantitative and qualitative. The data collected will be statistically analysed using manual methods, easy tabulation and statistic like indicator of average or frequency count in the form of table and figure will be presented. Ethical Issues: In ethical issue involve conduct surveys the research activity is vital importance to judge the ethical implication. The reason of importance that proficient societies have urbanized code of ethics to cover-up range of proficient issues surrounding research activities in this situation of proposed study i will be need to ethical approval from Nandos UK. Formal permission will be required prior to arrange data collection and all necessary caution will be taken to make sure respect for participant because independent agent. To avoid plagiarism, I will be very careful while using any other person? s idea opinion or different peoples written or spoken words. Any drawings, graphs, statistics, facts or any pieces of information which is not ordinary information, if I want to use other work I will give credit to that person by quoting his name and giving proper reference to it. Credibility and Validity: The credibility of results arises in a particular manner being a qualitative research. Questioned by scientific research, the process of gathering and analysing the data, as well as the kind of information, needs to reflect consistency and accuracy. To support this research study, the previously discussed methods and approach were considered essential to achieve the research findings. Reliability: In terms of reliability, the author of this study affirms that the results would relatively be the same if administered on different occasions by other researchers as long as the sampling is taken from the same area. In this sense if the study were to take place with an emphasis on Nandos UK? customers. Generalizability: As this study is generalizable to all other organization working in similar sector. However, some limitation to the proposed study is that the study will be carried out only in the Nandos specifically Kings cross branch. Therefore the findings can be applied universally if consider. Data Access: To study the phenomenon of research question and to answer them a mixture of two types of information was required which is primary and secondary. In this way the primary data consist of the statistics of survey-questionnaires implemented on economy class traveller. This strategy was selected to optimize the sampling group information, which helps to form opinions about the organization regarding quality performance including the reviews from the customers about the quality of service and their effectiveness in Customer Relationship Management. Issues such as contentment and devotedness will be needed to evaluate the previous information. The survey questionnaire model will help researchers to maintain a list of concern issues and standardised questions for the sampling group, in order to make comparison and achieve consistent findings. Ultimately the survey questionnaire will be determined on collecting qualitative data on this customer group? s attitude and behaviours. (Sunders et, al. 2000) argues that the tools are used in descriptive studies as this proposed study. The main purpose of this dissertation is to identify the research questions and solutions to the questions. The survey questionnaire mock-up allowed the researcher to have an arranged list of issues and areas to cover as standardised questions for the sample group, in order to compare all the samples and achieve consistent findings. Mainly this survey questionnaire will be focused on collection of qualitative data on this customer group? s attitude and behaviours. Quantitatively, these meanings and findings will be measured so as to reach a consistent consensus of the data and prove the point taken as the research problem of the dissertation. Whereas, the secondary data comprises mainly narrative information. This encompasses the literature research carried on CRM, and its functions to achieve consumer loyalty; it also accompanies magazines, journals, newspapers relevant research studies. Timetable and special resources required In order to accomplish the proposed project in the given time available the following time table is prepared as a critical path depicting each stage of the study in relation to the time frame in weeks Tasks Week One Week Tow Week Three Week Four Week Fifth Week Sixth Week Seventh Week Eight Week Nine Week Ten Week Eleven Twelve Problem classification Literature Review Research Methodology Data compilation Data examination Writing up draft Editing closing Documentation Binding of document Budget: As discussed above in methodology about collection of data and interviewing individuals, will cost a bit of money which is listed below.

Avianca Essay Example | Topics and Well Written Essays - 3000 words

Avianca - Essay Example It now invests in latest technology to serve the customers better both in services and prices. Its Vision for 2010 is to be the Leading Airline of America. Avianca, the airline of Colombo, was the first airline to be founded in the American continent and the second one in the world, and started as Sociedad Colombo-Alemana de Transporte Aà ©reo, SCADTA on 5th December 1919. It performed its first flight between Barranquilla and the nearby town of Puerto Colombia, aboard a Junker F-13, which also carried 57 letters (Avianca.com). It started operating on international routes by mid 1920s and initially covered destinations in Venezuela and the United States. On 14th June 1940 it was renamed as Avianca. Since then airline has contributed to the construction and development of Columbia. Avianca was a stable and dependable airline and had a steady growth until the late 1990s. This paper will discuss the reasons that led to the decline, instability and losses, and how the airline fought itself back to the current position. Over the years, Avianca expanded its route to include South America, Central America, the United States, the Caribbean, Mexico, and parts of Europe. Its fleet included Boeing 757, and Boeing 767, MD-83, Fokker 50. In 1994, a strategic alliance was established between three most important enterprises of the aeronautical sector of Colombia: Avianca, SAM (acronym of Sociedad Aeronà ¡utica de Medellà ­n), and Helicol (acronym of Helicà ³pteros Nacionales de Colombia). This merger offered specialized services in Cargo (Avianca Cargo) and mail (Postal Services), and had the most modern aircraft fleet in Latin America (Wikipedia. n.d.). In December 1998, Avianca opened its hub in Bogota to serve passengers in Columbia and the world. It allowed travelers to access near 6,000 weekly possible connections, and greater number of frequencies, schedules and destinations served. It also had code share agreements with Delta, Air Canada, Iberia,

Hospital pharmacy Assignment Example | Topics and Well Written Essays - 500 words

Hospital pharmacy - Assignment Example The hospital consisted of two categories of patients. The categories are inpatient and outpatient. Most services offered in the hospital are meant for inpatients. The hospital is spacious enough and consists of four floors. The sections of the hospital are well distributed among the floors in a manner that maximizes service provision (Stephens, 2003). I observed that hospital pharmacy never had cosmetic and gift section. Community pharmacy had a close relationship with clients. On the other hand, hospital pharmacy deals with clients professionally and not considering personal relationship. The hospital pharmacy is best suited for inpatients because it has the necessary facilities for the services. Pharmacists are located at strategic points in the hospital. Every section had a pharmacy. The pharmacies are designed to have windows from where the pharmacists serve their clients. They provide medication through the windows. For special cases, there were rooms meant for handling patients I a specialized manner. Drugs are mainly supplied to patients through pharmacists. Other people authorized to supply drugs are nurses (Stephens, 2003). They usually provide medication orally to patients. However, nurses have limited types of drugs that they can supply. For example, nurses are not allowed to supply antibiotics. Nurses are always in contact with patients and, therefore, are allowed to orally administer drugs to patients. That implies that, there are special cupboards for keeping drugs to be used by patients.

The Federal Law in the United Arab Emirates Essay

The Federal Law in the United Arab Emirates - Essay Example These federal rules are made to ensure that all people of the federation abide by the standards set and deemed appropriate for public good and national betterment in all terms by the officiating bodies of the seven Emirates through their officials. This paper will discuss within its context the creation of the UAE federation, the constitution, the federal laws and the creation of federal business laws that already exist within UAE. Key words: federal state, federal law, constitution, business law Federal Law in the United Arab Emirates The United Arab Emirates: Starting Point The UAE is a federation of seven Emirates comprising Abu Dhabi, Ajman, Dubai, Fujairah, Ras Al Khaimah, Sharjah and Umm Al Quwain. It was formed on the 2nd of December 1971 (Latham & Watkins LLP, 2011, p. 1). The UAE federal constitution was adopted and accepted in 1996. It ensures the allocation of powers between the federal government and the government of each Emirate. It is one of the largerst countries in t he Gulf with a land area that extends to 83,000 square kilometers and a population of 2.6 million (Gulf Law, 2011). Ethnicities that comprise the total population of the United Arab Emirates are: Indians with a total census of 1.75 million, Pakistani with 1.25 million counts, Bangladeshi at a rate of 500,000, other inhabitants of Asian origin amount to one million according to the census, European and African comprising 500,000, while the population of Emirati amounts to 890,000. Majority of the people in UAE are Muslims at the rate of 96% compared to the Hindu and Christian sects present in the country. The official language is Arabic though English, Hindi, Urdu, Bengali are also used widely (U. S. Department of State, Bureau of Near Eastern Affairs, 2011). The Government There is still an independent type of governance in each Emirate since the UAE is a loose federation of seven Emirates with its own ruler in each of them. Under the provisional constitution of 1971, each Emirate c ontrols its own activities and reserves considerable powers including control over mineral rights, such as oil and gas, as well as revenues. But over time the federal powers have developed slowly and the constitution has established set of rules under the creation of President as the chief of state and Vice President as second of rule, each having a fixed term of 5 year service. Other members of the government includes: a Council of Ministers, led by a Prime Minister as the head of the government; a supreme council of rulers; and a Federal National Council of 40 members wherein 20 members are appointed by the Emirate rulers and other half of 20 members are elected through an electorate by the rulers of each emirate (U.S. Department of State, Bureau on Near Eastern Affairs, 2011). Within a remarkably short span of time since the creation of the federation, the United Arab Emirates managed to create a stable country with a booming economy based on free trade. Today the economic status of UAE has earned it a reputation as one of the leading economic icons in the Middle East. This is one of the main reasons why lots of people and business builders and investors thrive to work or build businesses within boundaries of the Federation. The reputation of the Emirates as a free trade area was enhanced with rapidly developing free zones and the oil

Benefits and Challenges of Nurse Prescribing

Benefits and Challenges of Nurse Prescribing Specifically with Leg Ulcer Treatment the nurse prescribing practice help in delivering a complete episode of care, enables greater self-sufficiency and speeder access towards medication, time saving and expedient together with the early interference identifications, greater patient involvement (Courtenay, Berry 2007). Furthermore, it provides a means of formalising present prescribing activities and approaches, allow patients to receive better information from the nurses about the prescriptions and medications and thereby permitting a holistic practice (Courtenay 2007). Additionally, it enhances rapport with the leg ulcer patient, reduces length of stay owing to accurate prescribing management, improves knowledge and assessment skills in identifying the complications of leg ulcer along with co-morbid complexities and promotes the response time to addressing patient symptoms and withdrawal (dependency) effects (Gray, 2006). On the other hand, it was observed that the prescribed drug, Allevyn induced allergic reactions in the patient and this can be attributed to the potential implications of prescribing process. However, it cal also happen owing to increased work load and responsibilities upon the nurse, litigation fear, inter and intra professional conflicts, adherence towards medical model of care, lack of knowledge and accountability and absence of skills for prescribing process and dependency (Courtenay et al., 2007). REFERENCES Courtenay, M. 2007, Nurse Prescribing-the benefits and the pitfalls, Journal of Community Nursing, 21, 11. Courtenay, M., Berry, D. 2007, Comparing Nurses and Doctors views of Nurse Prescribing: A Questionnaire Survey, Nurse Prescribing, 5, 5. Gray, R. 2006, Nurse Prescribing: Raising Standards, Nurse Prescribing, 4, 8. Research study carried out by While and Biggs (2004) indicated that nurse prescribers cannot form a substitute for the general practitioners for the products within the limited formulary. Implementing a major role in the nurse prescribing practice requires assessment of numerous conditions including adequate education, preparation and training and designing formulary that convene patient and practitionerà ¢Ã¢â€š ¬Ã¢â€ž ¢s needs (While, Biggs 2004). Report on the evaluation of eight pilot sites revealed that nurse prescribing was completely accompanied by anxiety and heightened apprehensions of accountability (Luker et al., 1997). To date back, National training for Nurse Prescribing was started in England, by the year of 1998 during which around 20, 000 nurses have qualified for the new role. The study carried out by Humphreys and Green (2000) illustrated the potential importance of infrastructure in the focus groups (n=12) obtaining the preparation concerned to nurse prescription at one institution (Humphreys, Green 2000). The implementation of extension standards in to supplementary nursing practice acknowledged the deliberate need for understanding pharmacology as the basis for prescribing process and to identify the nurses who play a major role in selection criteria pertaining to prescriber training (Department of Health, 2002). Towards the other side, in examining the speculative basis for mental health nurse prescribing process, it is very important to discuss the implicit theoretical tensions together with the experiences of registered nurse prescriber. Making a Difference (1999) was the key policy document published upon the extending phenomenon of nurse prescribing with an aim of saving time for the General Practitioners (Department of Health, 1999). However, the implicit support was arrived through National Health Service and it stressed on various ways of working and distorting the demarcating lines between the specialized groups in NHS with an interest on improved access to quality of health care (Brooks, 2001). Thus, it must be understood that benefits and challenges of Nurse Prescribing within the context of mental health include the following (Department of Health, 1999): Add up the knowledge and allow complete use of experience. Allow service transition from hospital to community based. Nurses must reveal that they are diagnostically competent for the process of patient assessment and prescribing. The prescribing process may distract the attention from other aspects of nursing roles. May result in developing dangers (like allergic reactions developed for Allevyn in the present study) and these get added up to nurseà ¢Ã¢â€š ¬Ã¢â€ž ¢s role Conclusion Thus, to effective reduce the incidence of deleterious effects due to Nurse prescribing, a helpful action plan must be devised with the following objectives: To evaluate the prescribing approaches of nurses with relation to health visitors. To effectively understand the professional and contextual factors which enhance and inhibit the process of Nurse Prescribing To understand the views of practitioners and patients with relation to treatment offered by the nurses. Much research was performed with in this field of Nursing and still is needed in future to effectively explore the factors and to determine the steps for carrying out this process. Nevertheless, it is not a solitary effort and it demands the potential involvement of practitioners, patients, Nurses, local health organisations together with the government.

Capital Structure Essay -- Business, Financing

Introduction The relationship between capital structure and firm value has been discussed frequently in the literature by different researcher accordingly, in both theoretical and empirical studies. It has also been discussed that whether the firm has any optimal capital structure that has been adopted by an individual firm, or whether the proportions of debt usage is completely irrelevant to the individual firm value. A firm can choose a mix of three modes of financing i.e. issuing shares, borrowing from the market and use of retained earnings. The ratio of this mix of funds purely depends on the firm and known as optimal capital structure of the firm. This leads to the different capital structure theories. These theories explain their point of view about optimal capital structure how an optimal capital structure can increase the value of the firm and its impact on the cost of capital of the firm. Capital structure refers to the mix of debt and equity used by a firm in financing its assets. The capital structure decision is one of the most important decisions made by financial management. The capital structure decision is at the center of many other decisions in the area of corporate finance. These include dividend policy, project financing, issue of long term securities, financing of mergers and so on. One of the many objectives of a corporate financial manager is to ensure the lower cost of capital and thus maximize the wealth of shareholders. Capital structure is one of the effective tools of management to manage the cost of capital. An optimal capital structure is reached at a point where the cost of the capital is minimum. Pakistan is a developing country with three stock exchanges, the Karachi Stock Exchange (KSE) bei... ...icult in terms of cost and technical difficulties (Shah and Hijazi 2004). The main sources of debt in Pakistan have been commercial banks, which do not encourage long term loans, with almost no reliance on market based debt until mid 1994 when government moved to remove most of the constraints among. Which one action was to amend company law to permit corporate entities to raise debt directly from the market in the form of TFCs (Term Finance Certificates). So corporate bond market has limited history and is in the process of development. This explains why firms on average in Pakistan have more short term financing than long term financing. Booth et al (1999) also pointed in their study on determinants of capital structure in developing countries including Pakistan that the use of short term financing is higher than long term financing in developing countries.