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The UK hardwood industry and Global Furniture Corporation - Essay Example

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The UK hardwood industry and Global Furniture Corporation

In the year 2010, the companies in UK had imported 5.7 million cubic meters of sawnwood and had produced only 3.1 million cubic meters of sawnwood (Forestry Commission, 2011). Global Furniture Corporation (GFC) which is a 200 year old company is situated in UK and still remains one of the leading hardwood processing companies of the country. The longevity of the company determines the company’s efficiency and effective resource utilization capacity. There were various contributing factors to the success of the company which are loyalty of the employees, high quality products, efficient supply chain and management. GFC has been able to adapt to the changing marketing trends and technological developments. The flexibility of the company to adapt to the internal and external changes is one of the key reasons for the success of the company. The company imports hardwood from South American and Asian countries and processes the hardwood into finished products like Hardwood flooring, panelling and decorative strip wood. GFC also owns a subsidiary company known as Real Furniture Company (RFC) which processes imported hardwood into readymade furniture meant for domestic purposes. The operations of RFC are carried out in the overseas locations of the company. Answer 1 The practice of financial management concepts varies from company to company. Financial management helps the managers of the company to formulate various financial strategies for effective utilization of funds. Financial management decisions include investment, dividend and financing decisions (Brigham, 1985). GFC has also adopted various accounting and financial practices over the years. Currently, the company follows the new accounting regulations and principles. GFC pays the supplier of the company in the home currency of the company which is British pounds. The sales is converted into British pounds and then deposited into the company’s UK bank account. The fluctuations in the home currency are of paramount importance to the GFC and other companies who import most of the raw materials from abroad. For example if the home currency of GFC appreciates against the suppliers home currency then GFC will gain however, if the home currency of GFC depreciates against the suppliers home currency then GFC will bear losses (Conklin, 2006). This is because under the appreciation of the home currency, GFC has to pay fewer units of its home currency to buy the equivalent amount of inputs in foreign currency. Problem arises when the home currency of GFC depreciates then the company has to pay excessive amount of money against the suppliers home currency units. The cost management issues also depend on the relationship between the suppliers and the company. If the suppliers of the company share a long term and stable relationship with the company then the ability of the company to insulate its cost from the impact of the currency movements will be high or vice versa. This indicates that the company’s ability to reduce losses while the company’s home currency depreciates depends upon the nature of contracting with its suppliers (Conklin, 2006). Therefore, one can say that currently GFC is not following a very practical approach it should adopt a flexible approach which can help the ...Show more
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International finance: Case study analysis report Table of Contents Table of Contents 2 Introduction: The UK hardwood industry and Global Furniture Corporation 3 Answer 1 3 Answer 2 4 Answer 3 6 Answer 4 8 Conclusion 9 References 10 Introduction: The UK hardwood industry and Global Furniture Corporation The United Kingdom (UK) is one of the major importers of tropical hardwood (Forestry Commission, 2007)…
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