Running Head: FIRM ACQUISITION FIRM ACQUISITION8 Title Institution Course Name Prof Comments Shane I need to advise you that you violate the college rules, first of all, you did not do assignment according to the provided rubric. I have checked thoroughly that the point no 1,2 and 5 totally not meet the instruction.college gave you 15 days to submit an assignment that was the long deadline but in log deadline you make a college fool. In instruction told you that you will do peer reviews articles but you did not follow you have 2 days to submit college claim on you.i highlighted the wrong parts. Regard jones Introduction As the precincts that bound businesses continue to expand on a daily basis, it has become important for companies everywhere to formulate and implement strategies that allow for expansion in areas outside of their homeland. The success of an acquisition duly depends on the long-term strategy set forth by the company in matters concerning foreign trade and the implications it has on its profits. International expansion can prove to be advantageous as it enables the company to distribute its goods and services on a global scale thus leading to the expansion of their market share. Even though the idea to expand is entirely profitable to the company, one has to take note of the fact that there are a number of risks and disadvantages that are associated with a foreign acquisition. Firm Acquisition in the European Union In the case that I was the head of US-based firm then the idea of acquiring a company that was within or outside the confines of the EU would not be a good idea. Most past acquisition cases have been known to impact the growth of the company with some making it slow down. There are a number of hazards or risks that can affect a company that deals with remote acquisitions. In the first case, there's always a sizeable danger of the organization's esteem being oversold. It is evident that different nations evaluate their companies using different methods which mean that when an organization is sold, then its key players will be offloaded. This leads to the creation of a gap in the customer relationship administration of the company. The same representatives may be tempted to take licensed innovation to other ventures thus lessening the overall esteem of the organization. (Harry G. Barkema, 2014). Companies in the European Union have been faced with the existing major-money based problem called the Euro Zone Problem. The changing of governments in a number of countries has led to political instability and a strong viewpoint on the uncertain future of any financial prospects. If a company is set to be acquired then it is important that all its assets become secured in order for it to efficiently carry on with its operations. The EU has a strict practice of freezing all assets belonging to individuals or companies. If a company is restricted from drawing cash from a bank then its ...

1. Running Head: FIRM ACQUISITION
FIRM ACQUISITION8
Title
Institution
Course Name
Prof Comments
Shane
I need to advise you that you violate the college rules, first of
all, you did not do assignment according to the provided rubric.
I have checked thoroughly that the point no 1,2 and 5 totally not
meet the instruction.college gave you 15 days to submit an
assignment that was the long deadline but in log deadline you
make a college fool. In instruction told you that you will do
peer reviews articles but you did not follow you have 2 days to
submit college claim on you.i highlighted the wrong parts.
Regard jones
Introduction
As the precincts that bound businesses continue to expand on a

2. daily basis, it has become important for companies everywhere
to formulate and implement strategies that allow for expansion
in areas outside of their homeland. The success of an
acquisition duly depends on the long-term strategy set forth by
the company in matters concerning foreign trade and the
implications it has on its profits. International expansion can
prove to be advantageous as it enables the company to distribute
its goods and services on a global scale thus leading to the
expansion of their market share. Even though the idea to expand
is entirely profitable to the company, one has to take note of the
fact that there are a number of risks and disadvantages that are
associated with a foreign acquisition.
Firm Acquisition in the European Union
In the case that I was the head of US-based firm then the idea of
acquiring a company that was within or outside the confines of
the EU would not be a good idea. Most past acquisition cases
have been known to impact the growth of the company with
some making it slow down. There are a number of hazards or
risks that can affect a company that deals with remote
acquisitions. In the first case, there's always a sizeable danger
of the organization's esteem being oversold. It is evident that
different nations evaluate their companies using different
methods which mean that when an organization is sold, then its
key players will be offloaded. This leads to the creation of a gap
in the customer relationship administration of the company. The
same representatives may be tempted to take licensed
innovation to other ventures thus lessening the overall esteem of
the organization. (Harry G. Barkema, 2014). Companies in the
European Union have been faced with the existing major-money
based problem called the Euro Zone Problem. The changing of
governments in a number of countries has led to political
instability and a strong viewpoint on the uncertain future of any
financial prospects. If a company is set to be acquired then it is
important that all its assets become secured in order for it to
efficiently carry on with its operations. The EU has a strict
practice of freezing all assets belonging to individuals or

3. companies. If a company is restricted from drawing cash from a
bank then its value depreciates. It is therefore prudent to avoid
any acquisition prospects in the EU. One can, however, go for
companies in countries where such problems are non-existent. A
good example is for a company located in the nation of Brazil
which has a sound financial system, a 4.1% GRP rate and a
strong currency (Culp, 2010).
Advantages and Disadvantages of Non-Acquisition of firms in
the European Union
The main advantage with the choice made in not acquiring
companies in the European Union is the cost incurred in the
process. The expenses meted in the enrollment of a company in
the European Union are about 15bn net Euros which translate to
about 0.07% of the GDP. Such an enrollment expense and also
the existence of insufficient policies cause the firm to provide
high prices to consumers which are risky for them (Cengage,
2010). The European Union has over time insisted on the use of
a single currency which has also caused problems for many
companies and the acquisition of a company would lead to high
rates of unemployment and also a low economic growth. Firm
acquisition in a country like Brazil would definitely be a
successful venture as it is a regional economic power. The
company is riddled with natural energy, minerals and it also has
a broad industrial base. The economic growth in the country is
stable and the local market is growing by the day. The selection
of Brazil as an investment opportunity is because of how it
handles taxes, the state of inflation, strong consumer confidence
and also excellent infrastructure.
Trading outside of the European Union also has its
disadvantages as most companies in the EU have the advantages
of harmonizing standards, reduced paperwork and easy
enforcement of how people move from one European Union
country to another. A country like Brazil has been known to
have a political environment that is volatile. Its legal system
has slow and difficult with bureaucracy being the movers and
shakers in the country (Harry G. Barkema, 2014).

4. Advantages and Disadvantages of Acquisition of firms in the
European Union
The advantages brought forth by the integration of companies in
the European Union shouldn't be ignored. Being able to be part
of the Schengen space whereby one is allowed to invest, shop or
work anywhere in the European may have been viewed to be a
phantasmagorical idea to most denizens in Europe but it has
proved to be effective. The enlargement of the European Union
has reaped many benefits for the member states with most
having contentions economic and institutional reforms that
include the deregulation and privatization of energy and utilities
(Harry G. Barkema, 2014). The migratory flows in the European
Union are unrestricted which allows for the citizens to move
freely. The prices of goods are in a standardized state with a
single market being created for the member countries. This
allows for the products to evade the hassle of having to pay
customs taxes to various authorities thus creating more and
more employment opportunities for denizens.
The operation of the EU as a single market and subsequent
formulation of common policies for member states has largely
been viewed to cause a number of discrepancies. Rules that
were formulated in order to protect smaller countries have been
seen to affect larger countries and this goes against the general
order of the EU. Wealthier countries are obliged by the order to
share their wealth with smaller states which have caused ripples
among the members. The European Union has also placed
emphasis on the need for member states to convert to the use of
Euro as a single currency. This has caused a major surge in
unemployment rates and low economic growth. The
implementation of free trade of labor can increase the
immigration level in member states leading to the creation of
pressure on the disbursement of public services. Most
companies in the EU are encouraged to import goods from other
countries as there are no tariffs incurred(Cengage, 2010). This
leads to an increase in the number of imported goods causing an
outflow of money in their economy thus creating a deficit on the

5. payment balances. All these factors are important in the
determination of whether it is safe for a company to venture
into the purchase of a corporation in the European Union.
Investment Opportunities for MNC in Foreign Markets
A multinational corporation is able to invest in financial
markets outside their home country with reasons revolving
around transactional financial leveraging, taxes, exchange rates
and also political changes. Most political environments desire
the investment and provision of investment incentives by
multinational corporations into their financial markets. The
foreign exchange rates are used by most corporations in
determining whether the transfer of currencies into the financial
markets is favorable for the companies. The level of taxes on
the local, foreign or domestic front can prove to be very
profitable and it might ensure that the transfer of funds from
one point to the other is inexpensive (Culp, 2010). Bilateral
netting considerably minimizes credit exposures between
counterparties through the distilling of any gross payments that
occur during the changing of hands into lesser net expenses be
it through the life of the contract or even after its termination
(Culp, 2010). Multinational corporations in the United States
must understand that there's a growing concern on market
fluctuation on asset returns and also on the flow of cash on
foreign entities. Having a one payment system will ensure that
there is added security in the investment venture and the parent
company's financial activity. All the factors considered in the
investment should be pegged to another sovereign entity and
also benchmarked according to their pros and cons. Any
imperfections in the market flow have to be corrected during the
process of arbitrage in order for the multinational corporations
to feel stable and ensure that the market is efficient. Firms have
to formulate stock portfolios that cover through the various
European nations rather than having one that speaks to a single
nation. The accessing of remote markets will enable
Multinational corporations to spread their assets over an
assorted business gathering that will be accessible on a local

6. level (Cengage, 2010).
Provision of Credit to Foreign Markets by Financial Institutions
Financial institutions choose to offer credit to foreign markets
with attribution to the fact that most developing markets
provide access to any letters of credit, have a high credit rating
and are creditable by nature. The European Commission, The
Department of Treasury, Federal Trade Commission and the
Department of Justice have all been tasked with regulating and
approving any international mergers. Whenever these
supranational and national organizations approve mergers, they
send notifications to organizations and financial institutions
with regards being made on the credibility of the new
organization (Harry G. Barkema, 2014). Firms that are
controlled and managed by their bilateral counterparty are
exposed by the use of credit enhancements that either reduces
the potential loss exposure in the case of a default occurrence or
even the likelihood of one dealing with a counterparty that is
highly risky. Developing markets have a tendency of having
multinational corporations that are credible due to their
financial analytics and practices. Investors also tend to offer
credit to markets outside their own countries due to low-interest
rates and expectations in exchange rates. Some countries stock
up large supplies of funds that are made available whenever one
needs them. This causes low-interest rates in loans and
therefore ensures that the borrower is satisfied. Countries will
low interest rates are often expected to have low rates of
inflations which creates an upward pressure on the value of
their currency in foreign countries (Harry G. Barkema, 2014).
There is no precise explanation to the relation between currency
movements and inflation differentials conversely so some
borrowers can choose to borrow from nominal interest rates
based markets.
Conclusion
The problems faced by the member states in the European Union
are sure cautionary tales on the implications of an active
venture in the union and how they might affect the practices and

7. undertakings of a multinational corporation. Even though most
successful enterprises rely on taking risks and tolerating their
insatiable appetite for success, it is important for them to make
strategic decisions on which ventures are profitable in the long
run. Having an analytical viewpoint on the competitive position
held by the company against the main dimensions involved in
globalization will guide and define the most suitable approach
needed in the formulation and implementation of a globalization
strategy.
References
Cengage. (2010). Investing in International Financial
Marketing. The Internation Financial Environment.
Culp, C. (2010). OTC-Cleared Derivatives: Benefits, Costs, and
Implications of the "Dodd-Frank Wall Street Reform and
Consumer Protection Act". Journal of Applied Finance, 103-
129.
Harry G. Barkema, F. V. (2014). INTERNATIONAL
EXPANSION THROUGH START-UP OR ACQUISITION: A
LEARNING PERSPECTIVE. Academy of Management Journal,
41.