Our company is a multinational enterprise (MNE) operating in a challenging global environment. Doing business over a wide geographical reach has benefits, but it exposes MNEs like us to risks associated with raising capital that constantly threaten to increase costs, lessen profits, and make the work of maximising shareholder value difficult…
These risks arise due to the unavoidable effects that some political and natural events have on currency exchange and interest rates. When one of the countries where we operate slides into an economic crisis, for example, government might impose exchange or currency controls, affecting our cash flow, profits, and funds transfer mechanisms and creating potentially adverse effects on our finances and stock price.
These risks arise both from the likelihood that something good will not happen or that something bad will happen (Read and Kaufman, 1997, p. 112). Financial risks are those that threaten the efficiency of the worldwide movement of money and profits amongst our affiliated companies through internal transfer mechanisms (Shapiro, 2003, p. 26). We are exposed to this risk that have several types, amongst which the most relevant given the events just outlined are currency, credit, inflation, and market risks. Although most of the critical events are non-political in nature, their effects on the respective national economies may cause political risks that we must address.
Our cost of capital and debt is affected by fluctuations in exchange and interest rates, inflation, and stock market volatility. ...
112). Financial risks are those that threaten the efficiency of the worldwide movement of money and profits amongst our affiliated companies through internal transfer mechanisms (Shapiro, 2003, p. 26). We are exposed to this risk that have several types, amongst which the most relevant given the events just outlined are currency, credit, inflation, and market risks. Although most of the critical events are non-political in nature, their effects on the respective national economies may cause political risks that we must address.
Our cost of capital and debt is affected by fluctuations in exchange and interest rates, inflation, and stock market volatility. We also need to manage transaction exposures, the possibility of incurring gains or losses on sales, purchases, and investment decisions entered into and denominated in foreign currencies (Eiteman et al., 2004, p. 155-176).
International Finance Strategies
Risks are uncertainties and sources of anxiety we need to deal with. Most business and financial risks are caused by outside events and changes in economic variables (GDP growth, commodity prices, interest rates, foreign exchange rates, and stock prices) over which we have virtually no control (Froot et al., 1994). Our inability to control these events, however, does not mean we cannot manage their effects.
We manage the consequences of financial risks by adjusting our operational, financial, and investment strategies. Some risks we can take and others we cannot.
We monitor and evaluate those risks we can take, like expanding in a growing though quirky Brazilian market and the volatility of worldwide stock markets. Some of our strategies in the ...
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(Multinational Business Finance Essay Example | Topics and Well Written Essays - 2000 Words)
“Multinational Business Finance Essay Example | Topics and Well Written Essays - 2000 Words”, n.d. https://studentshare.net/miscellaneous/278537-multinational-business-finance.
Multinational Business: Foreign Direct Investment (FDI) Introduction Globalization refers to the integration of world economies through the reduction of barriers to the movement of trade, capital, technology, and people. International business or cross cultural business has been increased a lot in recent times as a result of globalization, liberalization and privatization policies implemented in many countries.
This has made its clients develop a strong customer confidence on the firm solely because of its timely delivery of products (Madura 1999). The companies of such calibers are also not so much meaning that the market for office supplies is still green even in the foreign markets.
Also a variable of importance is the fact that iBuy does not own the inventory it sells. The company adds value to the customers by offering a wider array of product selection better than typical office supply stores. There are over 15,000 item sold by the firm (Youngblood, 2011).
Introduction The term, globalisation is very broad that cover a wide aspects of human activities as it has influence the major human activities and their thought process. Globalisation has played an instrumental role in the establishment of the prevailing post modern world.
As a seller, I know that the visitors are ready to pay more since they may not have much idea about the exact prices of the products in my town. Same product may have different prices in different towns and therefore even if I charge higher prices, the visitors may not bother much.
He has provided vital assistance along all the way. His help is really immeasurable.
Department of Department of Accounting/ Financial Management, ABC University, is another resource to gaining this study. It has provided valuable modulation, books, Journals, Researches and too many efforts for this study.
The entire process of assessing a proposed long-term investment and coming to a conclusion whether it is worth investing or not is termed as "Capital Budgeting." The ultimate goal of any individual or a MNC is nothing but maximization of profits or rate of returns - in other words market value of one's investments.
It is this factor that is referred to as the present value interest factor (PVIF). When discounted at a given discount rate (r) over a given number of periods (p) it is then denoted as PVIFr%np. np means 'no. of periods'.
2. 'Io' is the initial cash outlay.
The paper will also discuss the response of the company to these challenges and how Unilever has been able to overcome the issues in hand. Unilever has grown over the years and has built a brand image for itself and is now
Important to remember when an MNE evaluates competitive projects traditional discounted cash flow analysis is typically unable to capture the strategic options that an individual investment options may offer. This lack has led to the development of real option analysis.