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International Financial Management - Essay Example
Finance & Accounting
Pages 10 (2510 words)
International Financial Management Table of Contents 2. Literature review 4 2.1 Transportations Costs 4 2.2 Market imperfections 5 2.3 Strategic behaviour 6 2.4 Product life cycle 6 2.5 Location specific advantage 7 3. FDI trend 7 4. Potential problems 10 5…
Companies engage in foreign direct investment due to various reasons, but mainly to generate profit and secondly to hedge risk. Sometimes the companies would have huge cash surplus and fear that due to unfavourable movement in the exchange rate the dollar value of the cash surplus would decrease (Bajaj, 2001). The companies would park their extra cash in various foreign countries in the form of foreign direct investment. Generally the FDI are long term in nature but a company looking for quick gain can resort to short term borrowing. The research endeavours to create an international financial management report on FDI for Infosys. Infosys, a software giant in India is contemplating to conduct a FDI in another international country. The target firm chosen is Apple and the target market chosen is USA. The choice of the target market and the choice of the target company bear special significance (Bonaccorsi and Daraio, 2009). Apple has a myriad of products and service starting from electronic gadgets to the creation of operating systems. Apple has experienced one of the highest rises in the price of shares and apart from that the company is in an excellent growth trajectory. Infosys wants to cash in from the excellent growth opportunity of Apply by investing directly in it its path breaking technologies. Apart from this USA has a strong track record of FDI. ...