It is obvious that each time a business is considering going abroad in its operations, there are likely risks that it is to face. These may be in regards to dealing with the local culture of the new market, the language, business practices and the regulations by the foreign governments (Tolentino 2000). A business has to therefore critically consider these factors before deciding on whether or not to venture on its operations abroad. Legal requirements; this has to be considered to help ensure that the business will oblige to the rules and regulations that support business in the new country (Eitemann, Stonehill & Moffett 1998). Lack of adherence to such rules and regulations normally cause conflicts and business problems in the process of trying to acquire new licenses or permits to commence operations. In most of the developing countries, the procedures or the rules are normally unnecessarily long due to the bureaucracies governing business procedures in those countries (Tolentino 2000). Therefore IBF must expect uphill tasks in obtaining such licenses in both majorities of the Asian and African states. The procedure of venturing into East Europe would not be quite hard since their regulatory procedures are quite easier. IBF should therefore get a way of accessing the legal procedures of the countries they want to exploit in each of the regions identified to avoid the possibility of paying huge fines and penalties for breach of laws. Thorough research on both business and accounting requirements and this will take place by hiring foreign accountant and legal attorney from those countries (Madura 1999). IBF should also consider the language in such a country since language barrier has in the past proved to be the greatest hindrance to business operations. The ease of understanding the official language should therefore be well known in advance. This owes to the fact that language is very important hence the business must consider the possibility and the cost of hiring a translator in case they have to invest in a country where a language they don’t speak is spoken (Eitemann, Stonehill & Moffett 1998). The other factor is the cross cultural issues; these issues are to a large extent likely to affect business operations depending on the products. This will also dictate the manner in which business operations will be effected since it is not always automatic that business operations take the same direction in different operation environments. Cultural differences may influence the way business associates interact and hence influence the attitude (Tolentino 2000). The business intending to expand its operations abroad should also consider the risks both business and financial that they are likely to face in the foreign markets. This is done through thorough market analysis to weigh the risk exposures and the returns. This will inform on the decision of the prospects to undertake such ventures or drop them. Is risks become more than the expected returns then the business is not profitable and is as good as not undertaken. Political factors are also necessary since businesses are only able to thrive in peaceful environments. Countries facing political instabilities are not good for business hence should be avoided by IBF due to the high political risks that they are likely to face. Therefore before a business ventures its operations in another country, they
Date Answer 1 (a) Report i. Financial and non-financial factors to consider include; IBF Plc is a well established company in its local markets in the manufacturing and sales of office supplies. The company has a strong distribution strategy that has been enhanced by the existence of the e business ordering and supplies of the office supplies…
It will also provide information regarding the outlook of the top management for the subsidy, this information mostly will pertain to financial aspect of the companies new subsidy. Although this may be a feasible option, another proposition to be considered is whether this is worth compromising quality and customers of its base country.
This would involve critically analysing the business strategies utilised by competitor companies, and product quality, within these regions. This would enable the company to make informed decisions and implement strategies aimed at handling the competition effectively.
Corporate governance is the collection of procedures, civilization, rules, regulation and institution influencing the method a business is expressed, managed Controlled. Corporate governance is mainly analyzed as equally the arrangement and the relations which decide corporate way and presentation.
Introducing a firm and/or its product to the overseas market is done through overseas expansion in which a firm extends its business and operations out of its domestic work boundary into newer regions of greater opportunities. There are several methods of overseas expansion including exporting, foreign direct investments, and resource allocations etc that provide firms with means to enter the international market.
1. Franchising: an organization can expand overseas by opening its franchises in the foreign land. Franchising can only prove to be a successful strategy for overseas expansion if the organization is well renowned in its homeland and is doing business for a long time.
Assess the various methods that they use by an organisation in order to expand overseas. Several methods that are available today for organizations that they may use to enter a foreign market. These include exporting, importing, licensing, joint ventures and offshore production.
This decision has implications upon the company’s capital structure, its cash flows, and prospects for future financing. Most especially, it impacts upon the investors’ perception of the company. If dividends are too seldom declared or the amount is less than expected, then by dividend cash flow theory the present value will justify a lower stock price.
Forex rate is defined as the units of one currency that can be purchased in terms of another. The general standard for the later is considered the US Dollar (USD). The problem complicates further if the organization deals in various countries with various currencies.
The paper utilizes financial data and computes the WACC, as well as the Net Present Value. The analysis gives a WACC of 10% and an NPV of € 1.359 million, which is indicative of the value of the investment into a joint
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