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International Financial Management
Finance & Accounting
Pages 10 (2510 words)
[INTERNATIONAL FINANCIAL MANAGEMENT] (Name) (Instructor/Tutor) (Course/Subject) (Institution/ University) (City, State) (Date) Introduction Neptune Plc is considering setting up manufacturing plants for water pumps in both the United States and South Africa, with a sole aim of profit maximization.
Pertaining to planned investments in South Africa by Neptune, this report outlines the possible threats of local firms’ resistance and how Neptune might respond to them. Finally, the report outlines the effects of currency variation of citing production abroad, if Neptune let sales in South Africa to be in Rand. Effects of the Possibility that the United States will take Action to reduce its Current Account Deficit on Neptune The current account deficit refers to a situation where the total imports into a country exceed the total exports (RupyaGyan, 2013). Reduction of the current account deficit means a reduction in the quantity and value of imports and an increase in the quantity and value of exports. The major aim of this move is to encourage and promote exports while protecting local firms of a country. However, it should be noted that a switch in expenditure from foreign to home goods reduces foreign income (Jones, 2003, p, 641). For instance, For instance, industrial countries sought to reduce their current account deficits by reducing oil imports or increasing their exports to other countries. As exports increase, current account deficit reduces (Siddaiah, 2010, p, 71). The possibility that the United States will take action to reduce its current account deficit will pose various effects on Neptune Plc. ...
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