IntroductionBackground of the studyAlternative Investment Market (AIM) is situated in the UK and it is a branch in the London Stock Exchange market. It specializes in enabling the smaller companies in the region to easily float their shares in a system which is highly regulated unlike in the case of the major market. AIM was founded in the year 1995 and since then it has managed to raise approximately 24 billion dollars from at least 2200 listed companies. Flexibility in the sector is provided to the companies ensuring that minimal or no capitalization regulations are requirements are required and as such no limit to the number of shares to be issued by the companies.
In the last decade, many companies transferred their operations from the Main Market and concentrated it on the AIM. This was facilitated by the Market having a preferential tax advantages to its investors and also providing less burden on issues of regulation. According to the data provided in 2005, two of the companies moved away from the Main Market in an attempt to join AIM, while 40 companies joined AIM from the Main Market.
Currently, AIM has been involved in the international exchange due to the minimal regulatory burden that is imposed by the international markets. This is duly in accordance to Sarbanes-Oxley Act despite that less than 25% of the listed companies in AIM qualify to be listed in the overall U. S. Stock exchange market. In the year 2005, the foreign companies admitted to AIM were approximately 270. The FTSE Group has designed indices which are used in the measurement of the AIM performance.
These include: FTSE AIM All-Share Index, FTSE AIM 100 Index, and FTSE AIM UK 50 Index. In the analysis the focus will be focused on the 12 listed companies in AIM which are; Eaga, Real Good food, GTL Res, Wynnstay, Accsys, Eleco, TEG group, Hydro International, Geg, Helius energy, Ceres power holdings and the Clipper wind Power. The financial statements will be analyzed in order to determine whether they comply with Porters bulge hypothesis on the effect of the growth of a company to its overall sales turnover or the reported profits for the companies.
Literature ReviewThe success of the company is measured by the effectiveness to maximize its profit outlay and the achievement of the strategic goals within the shortest period possible. For this success to be attained in the current economy; the company or organization should well acquaint itself with the current trend in the market. This incorporates the information in regard to the agency relationship existing within the organization; potential customers and clients. A business entity should be knowledgeable on the changes imminent in the market’s opportunities and needs, how it can identify the potential customers and means of reaching them, its products’ quality, its advertising and marketing strategy, its productivity, and the management skills available in the organization (Cunill, 2006).
These factors will show the organization’s position in the economy and its overall competitive nature. Accordingly, the organization should be able to deliver the required services and also products at the recommended capacity. The capacity to be delivered by the organization constitutes a vital component in the determination of the company’s growth. For instance the capacity delivered will entirely depend on the technical knowledge, technological advancement in the organization, staff’s skills and knowhow, range of products demanded in the market by the customers among others.
Generally, the growth of the organization has been embedded to the product delivery optimization by the various scholars.