Comparison beween Multinational Financial Management and Domestic Financial Management?
Discuss evolution and International Financial Management System?
Write Special features of foreign exchange?
Describe the country risk Analysis in International Business?
Short notes on:
(i) Franchise system
(ii) Short term assets and liabilities
(iii) Foreign direct investment
explain about techniques for hedging transaction exposure, how to used hedge future, option, money market for payable and receivable, comparing techniques for hedging vs not-hedging
explain about techniques for hedging transaction exposure, how to used hedge future, option, money market for payable and receivable, comparing techniques for hedging vs not-hedging
this chapter we are going to explain key, components of the BoP, and explain how the international flow of funds is influenced by economic factors and other factors
here we are trying to explain how firms can benefit from forecasting exchange rate, to describe common technique that used to forecast, how to evaluate forecasting performance
The foreign exchange market or forex market as it is often called is the market in which currencies are traded.
Currency Trading is the world’s largest market consisting of almost trillion in daily volumes
The market continues to rapidly grow. Not only is the forex market the largest market in the world, but it is also the most liquid, differentiating it from the other markets.
There is no central marketplace for the exchange of currency, but instead the trading is conducted over-the-counter.
This decentralization of the market allows traders to choose from a number of different dealers to make trades with and allows for comparison of prices. Typically, the larger a dealer is the better access they have to pricing at the largest banks in the world, and are able to pass that on to their clients.
The spot currency market is open twenty-four hours a day, five days a week, with currencies being traded around the world in all of the major financial centers.
All trades that take place in the foreign exchange market involve the buying of one currency and the selling of another currency simultaneously. This is because the value of one currency is determined by its comparison to another currency.
The first currency of a currency pair is called the “base currency,” while the second currency is called the counter currency. The currency pair shows how much of the counter currency is needed to purchase one unit of the base currency.
Currency pairs can be thought of as a single unit that can be bought or sold. When purchasing a currency pair, the base currency is being bought, while the counter currency is being sold.
Forex Capital Markets (FXCM) is an online currency trading firm that offers a free demo account to traders who are new and interested in the foreign exchange market.
It allows you to experience every step of currency trading including choosing currency pairs, deciding how much risk to take, tracking the time and dates of placed trades, deciding how long to stay in the trade, and when to exit the trade. It also allows the placing of stop and limit orders on trades.
Information about trading and specifically about how to use the online trading platform can be found on the FXCM webpage. In addition, FXCM offers FREE interactive online seminars that are extremely useful to both new and experienced currency traders.
Characteristics of foreign exchange
Its huge trading volume representing the largest asset class in the world leading to high liquidity;
Its geographical dispersion;
Its continuous operation: 24 hours a day except weekends, i.e., trading from 20:15 GMT on Sunday until 22:00 GMT Friday;
The variety of factors that affect exchange rates;
The low margins of relative profit compared with other markets of fixed income;
The use of leverage to enhance profit and loss margins and with respect to account size.
" Managing working capital, financing the business, assessing
control of foreign Exchange and political risks and evaluating foreign
direct Investment."
this chapter we are going to explain key, components of the BoP, and explain how the international flow of funds is influenced by economic factors and other factors
here we are trying to explain how firms can benefit from forecasting exchange rate, to describe common technique that used to forecast, how to evaluate forecasting performance
The foreign exchange market or forex market as it is often called is the market in which currencies are traded.
Currency Trading is the world’s largest market consisting of almost trillion in daily volumes
The market continues to rapidly grow. Not only is the forex market the largest market in the world, but it is also the most liquid, differentiating it from the other markets.
There is no central marketplace for the exchange of currency, but instead the trading is conducted over-the-counter.
This decentralization of the market allows traders to choose from a number of different dealers to make trades with and allows for comparison of prices. Typically, the larger a dealer is the better access they have to pricing at the largest banks in the world, and are able to pass that on to their clients.
The spot currency market is open twenty-four hours a day, five days a week, with currencies being traded around the world in all of the major financial centers.
All trades that take place in the foreign exchange market involve the buying of one currency and the selling of another currency simultaneously. This is because the value of one currency is determined by its comparison to another currency.
The first currency of a currency pair is called the “base currency,” while the second currency is called the counter currency. The currency pair shows how much of the counter currency is needed to purchase one unit of the base currency.
Currency pairs can be thought of as a single unit that can be bought or sold. When purchasing a currency pair, the base currency is being bought, while the counter currency is being sold.
Forex Capital Markets (FXCM) is an online currency trading firm that offers a free demo account to traders who are new and interested in the foreign exchange market.
It allows you to experience every step of currency trading including choosing currency pairs, deciding how much risk to take, tracking the time and dates of placed trades, deciding how long to stay in the trade, and when to exit the trade. It also allows the placing of stop and limit orders on trades.
Information about trading and specifically about how to use the online trading platform can be found on the FXCM webpage. In addition, FXCM offers FREE interactive online seminars that are extremely useful to both new and experienced currency traders.
Characteristics of foreign exchange
Its huge trading volume representing the largest asset class in the world leading to high liquidity;
Its geographical dispersion;
Its continuous operation: 24 hours a day except weekends, i.e., trading from 20:15 GMT on Sunday until 22:00 GMT Friday;
The variety of factors that affect exchange rates;
The low margins of relative profit compared with other markets of fixed income;
The use of leverage to enhance profit and loss margins and with respect to account size.
" Managing working capital, financing the business, assessing
control of foreign Exchange and political risks and evaluating foreign
direct Investment."
Educaterer India is an unique combination of passion driven into a hobby which makes an awesome profession. We carve the lives of enthusiastic candidates to a perfect professional who can impress upon the mindsets of the industry, while following the established traditions, can dare to set new standards to follow. We don't want you to be the part of the crowd, rather we like to make you the reason of the crowd.
Today's Effort For A Better Tomorrow
A Theoretical Framework (Modelling) for International Business ManagementYasmin AbdelAziz
The international framework with all the institutions and organisations
that determine country’s economic and support policy in emergent situations.
2. Impact of globalisation on international and national policy and activities. 3. The
national framework, which fairly complicated because there are many active players:
a) National economic policy: understanding it and the environment for trade
activities. b) National economic structure and competiveness of the domestic
companies. c) International management capacities. d) Local or regional environment
and conditions for the companies. e) Focus on the world market conditions and their
development
2.2. Balance Of Payment Capital Account To Finance Ca DeficitHai Vu
International Finance related issues.
The Capital Account of the balance of payments measures all international economic transactions of financial assets. It is divided into two components:
+ The Capital Account
+ The Financial Account.
Capital Accounts consist of:
- Direct Investment – in which the investor exerts some explicit degree of control over the assets.
- Portfolio Investment – in which the investor has no control over the assets nor any participation in the management.
- Other Investment – consists of various short-term and long-term trade credits, cross-border loans, currency deposits, bank deposits and other capital flows related to cross-border trade.
DSR - Debt Service Ratio:
The Debt Service Ratio - DSR is the percentage of a borrower's income that will be used to pay off a loan. It is one of the factors a lender will use to assess your application. Most lenders set the maximum DSR from 30% to 30%, which means that the loan repayments should not take up more than that part of your salary. This ensures that you will be able to pay off your loan comfortably, with little to no risk of defaulting or going bankrupt. The DSR may be calculated based on your monthly, weekly or fortnightly earnings.
The objective of this project is to analyze the financial system and.docxcarlz4
The objective of this project is to analyze the financial system and economic situation of a foreign country in order to be able to make proper investment decisions. Choose a country apart from the U.S. and Turkey (and international students should choose country other than their home countries). Collect all relevant financial and economic information on the country. All groups will have to turn in written reports on their analysis.
Think of yourself as a financial adviser working for an international mutual fund trying to get institutional investors and/or wealthy money managers to invest in foreign countries or the CFO of a multinational firm that needs to make investment abroad. (In other words you need to consider both foreign direct investment opportunities and portfolio investment opportunities.) You need to consider all the advantages and disadvantages to investing in this country. You should remember that your audience is very likely to have no prior knowledge of the economic or political situations in the country, but have a good understanding of the workings of international financial markets. The information you include should be comprehensive in terms of risks included, potential of the capital markets, historical developments, certain legal or administrative hurdles unique to that country. Be sure to pay attention to some of the information below.
Some or all
of these might be present in one country. You do not need to include everything (these are definitely NOT the subtitles for your papers), these are just some major points to consider in researching your countries.
· Preliminary Information: Location, geography, size, population, currency…etc
· Strength of the economy: GDP, GDP per capita, inflation, exchange rate, trade deficits, budget deficits….etc, any trends in these variables; is this economy improving or deteriorating? Why? Any major economic of financial crises recently?
· Financial markets: Are there strong financial markets in the country? Existence, depth and strength of capital markets; the financial structure in the country: bank-based or capital markets based; any existence or importance of black markets…etc Anything that might be of unique importance to foreign investors in that country.
· Government involvement in financial markets and the economy in general: Major foreign debt; IMF programs; inflation targeting….etc. Are there any state owned enterprises, privatization programs? Any government intervention in foreign exchange markets, money markets…etc Is the central bank or monetary economy independent?
· Any international trade treaties or groups affecting the economy of the country? (e.g. European Union, NAFTA, IMF)
· Some economic history may be necessary to show your audience how developed the financial systems in the country are, what the major economic milestones have been. (e.g for European countries European Union created major changes, for Argentina, Chile, and other South American Countri.
Dupont analysis on Edelweiss financial services ltd.Sandeep Patel
A summer internship program under the guidance of Mr. Amzad khan and Mr. Nitin shrivastav of Edelweiss Capital Bhopal,project report on the Topic DuPont Analysis on Edelweiss Services Ltd. assigned by Project Guide Dr.(Prof.) Priya Dwivedi, calculated the ROE & ROA to measure the financial position of the company.
I have made this presentation to make people aware about the Direct Benefits transfer scheme by Enrolling for Aadhar card which will also used as Identity proof for various purposes.
how to sell pi coins in all Africa Countries.DOT TECH
Yes. You can sell your pi network for other cryptocurrencies like Bitcoin, usdt , Ethereum and other currencies And this is done easily with the help from a pi merchant.
What is a pi merchant ?
Since pi is not launched yet in any exchange. The only way you can sell right now is through merchants.
A verified Pi merchant is someone who buys pi network coins from miners and resell them to investors looking forward to hold massive quantities of pi coins before mainnet launch in 2026.
I will leave the telegram contact of my personal pi merchant to trade with.
@Pi_vendor_247
What price will pi network be listed on exchangesDOT TECH
The rate at which pi will be listed is practically unknown. But due to speculations surrounding it the predicted rate is tends to be from 30$ — 50$.
So if you are interested in selling your pi network coins at a high rate tho. Or you can't wait till the mainnet launch in 2026. You can easily trade your pi coins with a merchant.
A merchant is someone who buys pi coins from miners and resell them to Investors looking forward to hold massive quantities till mainnet launch.
I will leave the telegram contact of my personal pi vendor to trade with.
@Pi_vendor_247
Turin Startup Ecosystem 2024 - Ricerca sulle Startup e il Sistema dell'Innov...Quotidiano Piemontese
Turin Startup Ecosystem 2024
Una ricerca de il Club degli Investitori, in collaborazione con ToTeM Torino Tech Map e con il supporto della ESCP Business School e di Growth Capital
how to sell pi coins effectively (from 50 - 100k pi)DOT TECH
Anywhere in the world, including Africa, America, and Europe, you can sell Pi Network Coins online and receive cash through online payment options.
Pi has not yet been launched on any exchange because we are currently using the confined Mainnet. The planned launch date for Pi is June 28, 2026.
Reselling to investors who want to hold until the mainnet launch in 2026 is currently the sole way to sell.
Consequently, right now. All you need to do is select the right pi network provider.
Who is a pi merchant?
An individual who buys coins from miners on the pi network and resells them to investors hoping to hang onto them until the mainnet is launched is known as a pi merchant.
debuts.
I'll provide you the Telegram username
@Pi_vendor_247
US Economic Outlook - Being Decided - M Capital Group August 2021.pdfpchutichetpong
The U.S. economy is continuing its impressive recovery from the COVID-19 pandemic and not slowing down despite re-occurring bumps. The U.S. savings rate reached its highest ever recorded level at 34% in April 2020 and Americans seem ready to spend. The sectors that had been hurt the most by the pandemic specifically reduced consumer spending, like retail, leisure, hospitality, and travel, are now experiencing massive growth in revenue and job openings.
Could this growth lead to a “Roaring Twenties”? As quickly as the U.S. economy contracted, experiencing a 9.1% drop in economic output relative to the business cycle in Q2 2020, the largest in recorded history, it has rebounded beyond expectations. This surprising growth seems to be fueled by the U.S. government’s aggressive fiscal and monetary policies, and an increase in consumer spending as mobility restrictions are lifted. Unemployment rates between June 2020 and June 2021 decreased by 5.2%, while the demand for labor is increasing, coupled with increasing wages to incentivize Americans to rejoin the labor force. Schools and businesses are expected to fully reopen soon. In parallel, vaccination rates across the country and the world continue to rise, with full vaccination rates of 50% and 14.8% respectively.
However, it is not completely smooth sailing from here. According to M Capital Group, the main risks that threaten the continued growth of the U.S. economy are inflation, unsettled trade relations, and another wave of Covid-19 mutations that could shut down the world again. Have we learned from the past year of COVID-19 and adapted our economy accordingly?
“In order for the U.S. economy to continue growing, whether there is another wave or not, the U.S. needs to focus on diversifying supply chains, supporting business investment, and maintaining consumer spending,” says Grace Feeley, a research analyst at M Capital Group.
While the economic indicators are positive, the risks are coming closer to manifesting and threatening such growth. The new variants spreading throughout the world, Delta, Lambda, and Gamma, are vaccine-resistant and muddy the predictions made about the economy and health of the country. These variants bring back the feeling of uncertainty that has wreaked havoc not only on the stock market but the mindset of people around the world. MCG provides unique insight on how to mitigate these risks to possibly ensure a bright economic future.
Falcon stands out as a top-tier P2P Invoice Discounting platform in India, bridging esteemed blue-chip companies and eager investors. Our goal is to transform the investment landscape in India by establishing a comprehensive destination for borrowers and investors with diverse profiles and needs, all while minimizing risk. What sets Falcon apart is the elimination of intermediaries such as commercial banks and depository institutions, allowing investors to enjoy higher yields.
Falcon stands out as a top-tier P2P Invoice Discounting platform in India, bridging esteemed blue-chip companies and eager investors. Our goal is to transform the investment landscape in India by establishing a comprehensive destination for borrowers and investors with diverse profiles and needs, all while minimizing risk. What sets Falcon apart is the elimination of intermediaries such as commercial banks and depository institutions, allowing investors to enjoy higher yields.
USDA Loans in California: A Comprehensive Overview.pptxmarketing367770
USDA Loans in California: A Comprehensive Overview
If you're dreaming of owning a home in California's rural or suburban areas, a USDA loan might be the perfect solution. The U.S. Department of Agriculture (USDA) offers these loans to help low-to-moderate-income individuals and families achieve homeownership.
Key Features of USDA Loans:
Zero Down Payment: USDA loans require no down payment, making homeownership more accessible.
Competitive Interest Rates: These loans often come with lower interest rates compared to conventional loans.
Flexible Credit Requirements: USDA loans have more lenient credit score requirements, helping those with less-than-perfect credit.
Guaranteed Loan Program: The USDA guarantees a portion of the loan, reducing risk for lenders and expanding borrowing options.
Eligibility Criteria:
Location: The property must be located in a USDA-designated rural or suburban area. Many areas in California qualify.
Income Limits: Applicants must meet income guidelines, which vary by region and household size.
Primary Residence: The home must be used as the borrower's primary residence.
Application Process:
Find a USDA-Approved Lender: Not all lenders offer USDA loans, so it's essential to choose one approved by the USDA.
Pre-Qualification: Determine your eligibility and the amount you can borrow.
Property Search: Look for properties in eligible rural or suburban areas.
Loan Application: Submit your application, including financial and personal information.
Processing and Approval: The lender and USDA will review your application. If approved, you can proceed to closing.
USDA loans are an excellent option for those looking to buy a home in California's rural and suburban areas. With no down payment and flexible requirements, these loans make homeownership more attainable for many families. Explore your eligibility today and take the first step toward owning your dream home.
The European Unemployment Puzzle: implications from population agingGRAPE
We study the link between the evolving age structure of the working population and unemployment. We build a large new Keynesian OLG model with a realistic age structure, labor market frictions, sticky prices, and aggregate shocks. Once calibrated to the European economy, we quantify the extent to which demographic changes over the last three decades have contributed to the decline of the unemployment rate. Our findings yield important implications for the future evolution of unemployment given the anticipated further aging of the working population in Europe. We also quantify the implications for optimal monetary policy: lowering inflation volatility becomes less costly in terms of GDP and unemployment volatility, which hints that optimal monetary policy may be more hawkish in an aging society. Finally, our results also propose a partial reversal of the European-US unemployment puzzle due to the fact that the share of young workers is expected to remain robust in the US.
what is the best method to sell pi coins in 2024DOT TECH
The best way to sell your pi coins safely is trading with an exchange..but since pi is not launched in any exchange, and second option is through a VERIFIED pi merchant.
Who is a pi merchant?
A pi merchant is someone who buys pi coins from miners and pioneers and resell them to Investors looking forward to hold massive amounts before mainnet launch in 2026.
I will leave the telegram contact of my personal pi merchant to trade pi coins with.
@Pi_vendor_247
what is the future of Pi Network currency.DOT TECH
The future of the Pi cryptocurrency is uncertain, and its success will depend on several factors. Pi is a relatively new cryptocurrency that aims to be user-friendly and accessible to a wide audience. Here are a few key considerations for its future:
Message: @Pi_vendor_247 on telegram if u want to sell PI COINS.
1. Mainnet Launch: As of my last knowledge update in January 2022, Pi was still in the testnet phase. Its success will depend on a successful transition to a mainnet, where actual transactions can take place.
2. User Adoption: Pi's success will be closely tied to user adoption. The more users who join the network and actively participate, the stronger the ecosystem can become.
3. Utility and Use Cases: For a cryptocurrency to thrive, it must offer utility and practical use cases. The Pi team has talked about various applications, including peer-to-peer transactions, smart contracts, and more. The development and implementation of these features will be essential.
4. Regulatory Environment: The regulatory environment for cryptocurrencies is evolving globally. How Pi navigates and complies with regulations in various jurisdictions will significantly impact its future.
5. Technology Development: The Pi network must continue to develop and improve its technology, security, and scalability to compete with established cryptocurrencies.
6. Community Engagement: The Pi community plays a critical role in its future. Engaged users can help build trust and grow the network.
7. Monetization and Sustainability: The Pi team's monetization strategy, such as fees, partnerships, or other revenue sources, will affect its long-term sustainability.
It's essential to approach Pi or any new cryptocurrency with caution and conduct due diligence. Cryptocurrency investments involve risks, and potential rewards can be uncertain. The success and future of Pi will depend on the collective efforts of its team, community, and the broader cryptocurrency market dynamics. It's advisable to stay updated on Pi's development and follow any updates from the official Pi Network website or announcements from the team.
1. INSTITUTE OF PROFESSIONAL EDUCATION
AND RESEARCH (IPER), BHOPAL
Submitted to-
Prof. Anil Tandon
Submitted By-
Sandeep patel
MBA- IIIrd Sem.
Section- I
2. INDEX
S.NO. QUESTIONS
1 Compare Multinational Financial Management and Domestic
Financial Management?
2 Discuss evolution and International Financial Management System?
3 Write Special features of foreign exchange?
4 Describe the country risk Analysis in International Business?
5 Write short notes on:
(i) Franchise system
(ii) Short term assets and liabilities
(iii) Foreign direct investment
3. Ans. Multinational Financial Management
A corporation that operates in two or more countries.
Decision making within the corporation may be centralized in
the home country, or may be decentralized across the countries the
corporation does business in.
Domestic Financial Management
Domestic financial management can include financial
operations in a home country for a corporation.
In the sense of handling financial matters for a corporation,
domestic financial management focuses on issues within home
borders.
This can include topics like budgeting, determining sources
of revenues, and regulatory compliance with financial issues. For
corporations, domestic financial management keeps the company
viable in its home nation and creates a firm base for operations. A
company with poor domestic finances may have trouble abroad as a
result of its financial disorganization.
Q.1 Compare
Multinational Financial
Management and
Domestic Financial
Management?
4. Different currency denominations.
Economic and legal ramifications.
Language differences.
Cultural differences.
Role of governments.
Political risk.
To seek new markets.
To seek raw materials.
To seek new technology.
To seek production efficiency.
To avoid political and regulatory hurdles.
To diversify.
What factors distinguish
multinational financial
management from
domestic financial
management?
Why do firms expand
into other countries?
5. The 1980s and 90s saw a rapid integration of international capital
and financial markets. The impetus for globalized financial markets
initially came from the governments of major countries that had
begun to deregulate their foreign exchange and capital markets.
For example, in 1980 Japan deregulated its foreign exchange
market, and in 1985 the Tokyo Stock Exchange admitted as
members a limited number of foreign brokerage firms.
Additionally, the London Stock Exchange (LSE) began admitting
foreign firms as full members in February, 1986.
Perhaps the most celebrated deregulation, however, occurred in
London on October 27, 1986, and is known as the “Big Bang.”
On that date, as on “May Day” in 1975 in the United States, the
London Stock Exchange eliminated fixed brokerage commissions.
Additionally, the regulation separating the order-taking function
from the market-making function was eliminated.
In Europe, financial institutions are allowed to perform
both investment-banking and commercial-banking; functions.
Hence, the London affiliates of foreign commercial banks were
eligible for member-ship on the LSE.
These changes were designed to give London the most open and
competitive capital markets in the world. It has worked, and today
the competition in London is especially fierce among the world's
major financial centers.
The United States recently repealed the Glass-Steagall Act, which
restricted commercial banks from 10 investment banking activities
(such as underwriting corporate securities), fur-ther promoting
competition among financial institutions. Even developing
countries such as Chile, Mexico, and Korea began to liberalize
by allowing foreigners to directly invest in their financial markets.
Deregulated financial markets and heightened competition in
financial services provided a natural environment for financial
innovations that resulted in the introduction of various instruments.
Q.2 Discuss evolution
and Q.2 Discuss International
Evolution
Financial and International
Management
System?
Financial System?
6. The sale proceeds are often used to pay down sovereign debt that has
weighed heavily on the economy.
Additionally, privatization is often seen as a cure for bureaucratic
inefficiency and waste; some economists estimate that privatization
improves efficiency and reduces operating costs by as much as 20 per
cent.
There is no one single way to privatize state-owned operations. The
objectives of the country seem to be the prevailing guide. For the
Czech Republic, speed was the overriding factor. To accomplish
privatization en masse, the Czech government essentially gave away
its businesses to the Czech people. For a nominal fee, vouchers were
sold that allowed Czech citizens to bid on businesses as they went on
the auction block.
From 1991 to 1995, more than 1,700 companies were turned over to
private hands. Moreover, three-quarters of the Czech citizens became
stockholders in these newly privatized firms.
In Russia, there has been an ‘irreversible’ shift to private ownership,
according to the World Bank. More than 80 per cent of the country’s
non- 11farm workers are now employed in the private sector. Eleven
million apartment units have been privatized, as have half of the
country’s 240,000 other business firms.
Additionally, via a Czech-style voucher system, 40 million Russians
now own stock in over 15,000 medium- to large-size corporations
that recently became privatized through mass
auctions of state-owned enterprises.
Examples of this
innovative instrument
include,
Currency futures and
options,
Multicurrency bonds,
International mutual
funds,
Country funds, and
Foreign stock index
futures and options.
International financial
management is related to
managing finance of
MNCs.
There are five methods by
which firms conduct
international business
activities–
Licensing,
Franchising,
Joint ventures,
Management contracts
and establishing new
foreign subsidiaries.
8. A foreign exchange rate is the price of one currency expressed in
terms of another currency.
A foreign exchange quotation (or quote) is a statement of willingness
to buy or sell at an announced rate.
Ans. Features of Foreign Exchange Market
The foreign exchange market is the mechanism by which
participants:
1. Transfer purchasing power between countries;
2. Obtain or provide credit for international trade transactions,
3. Minimize exposure to the risks of exchange rate changes.
4. Largest of all financial markets with average daily turnover
of over $2 trillion!
5. 66% of all foreign exchange transactions involve cross border
counterparties.
6. Only 11% of daily spot transactions involve non-financial
customers.
7. London is the largest FX market.
8. US dollar involved in 87% of all transactions.
Foreign Exchange Rates
& Quotations
Q.3 Write Special
features of foreign
exchange?
Market Activity – 24hrs
9. Increasing Turnover
Daily Foreign Exchange
Market Turnover in billions of
US dollars
(Bank for International
Settlement Triennial Central
Bank Survey 2004)
Important Currencies
10. Country Risk Analysis – Defined –
“Study of business environment in different countries with an
objective of predicting the likelihood of various kinds of risks that
businesses operating in those countries may face. The term ‘business
environment’ is defined by a certain set of predetermined and
observable social, political and economic variables. ”
Time and Purpose
Country Risk Rating is (i) time and (ii) purpose specific.
The time dimension would mean that the concerned Country has
been analyzed at a specific point of time and the rating is based on
the situation prevailing at the particular point of time.
Further, different sets of users would look at different aspects of a
country depending on their respective needs. Eg. –
(i) An investor in stock market portfolio of country A
(ii) A manufacturer exporting his products to country A
(iii) An MNC having its production facilities in country A
Each of the above users would be interested in knowing different
aspects of a country’s social, political and economic performance.
Factors affecting Country Risk may be classified as –
(i) Economic
(ii) Political
(iii) Social
Q.4 Describe the country
risk Analysis in
International Business?
Factors Affecting
Country Risk
11. Certain specific economic parameters are analyzed while evaluating
Country Risks. Here the basic issue is to examine the (i) ability of a
country to honor its external obligations and (ii) the possible strain it
would put on the exchange rate.
It is important to note here that both the above issues would directly
depend on the external sector situation. However, external sector of
any country cannot be examined in isolation. It is equally important
to understand the domestic economy by means of various GDP,
Fiscal Policy and Monetary policy related parameters.
Again depending upon the time horizon that one is looking at it is
important to focus not only on the immediate values of these
parameters but also on long term trends as also on the long term
sustainability of these trends.
The internal economic situation as reflected by the GDP, Fiscal and
Monetary variable becomes more important if one is considering a
long term involvement by way of FDI in the country.
These can be grouped as –
(a) GDP related parameters
(b) Fiscal sector parameters
(c) Monetary policy parameters
(d) External sector parameters
(1) GDP in nominal and real terms
(2) GDP growth rate and its trend over long term
(3) Per Capita GDP
(4) Sectoral distribution of GDP – Contribution of Primary,
Secondary and Tertiary sectors
(5) Saving / GDP ratio
(6) Investment / GDP ratio
(7) Investment / Saving ratio
(8) Investment/GDP growth ratio
(9) Unemployment
EEccoonnoommiicc FFaaccttoorrss
Economic Factors
(a)GDP related
Parameters
related Parameters
12. (1) Deficits – Fiscal, Revenue, Monetized
(2) Deficits as % of GDP
(3) Tax collection as % of GDP
(4) Tax buoyancy
(5) Internal Debt / GDP ratio
(6) Debt maturity profile
(1) Inflation
(2) Interest rate
(3) All other monetary policy tools such as CRR, SLR, Bank rate –
different countries would have different monetary policy tools.
(1) Balance of Trade
(2) Balance of Payments
(3) Composition of Exports and Imports
(4) Trends in import and export growth
(5) Terms of Trade
(6) BOP Deficit /GDP ratio
(7) Forex reserves
(8) Forex Reserves / imports
(9) External Debt – quantum and maturity profile
(10) External Debt / GDP
(11) Debt Servicing / export earnings
(12) Capital flows
(13) Exchange rate stability
A change in political situation of a country is likely to change the
business environment. Some of the important political factors to be
looked into would include –
(a) System of government – democratic, authoritarian, etc.
(b) Major political parties and their ideologies
(b) Fiscal Sector
Parameter
(c)Monetary Policy
Parameter
External Sector
Parameter
Political Factors
13. (c) Party in power, it vision, succession plan, etc.
(d) Leading opposition parties and their ideologies and visions
(e) Maturity of political institutions
(a) Culture and history
(b) Values
(c) Educational levels
(d) Major fault-lines / dividing lines in the society
(e) Attitudes towards foreigners, change, technology, profits, etc
Apart from the above factors one would also look at conjectural
factors such as –
(a) Economic and Financial Institutional Set-up
(b) Law and order situation
(c) Social stability
(d) Performance on Human Development Index
(e) World opinion about the country
(f) Possibilities of war, external and internal aggression, etc.
(g) Vulnerability to natural disasters such as floods, earthquakes,
etc
Social Factors
Other Factors
14. What is a franchise?
A franchise is a right granted to an individual or group to market a
company's goods or services within a certain territory or location.
Some examples of today's popular franchises are McDonald's,
Subway, Domino's Pizza, and the UPS Store.
There are many different types of franchises. Many people
associate only fast food businesses with franchising. In fact, there
are over 120 different types of franchise businesses available today,
including automotive, cleaning & maintenance, health & fitness,
financial services, and pet-related franchises, just to name a few.
If we are thinking about buying into a franchise system, it is
important that we understand exactly how franchising works, what
fees are involved, etc.
An individual who purchases and runs a franchise is called a
"franchisee." The franchisee purchases a franchise from the
"franchisor." The franchisee must follow certain rules and
guidelines already established by the franchisor, and in most cases
the franchisee must pay an ongoing franchise royalty fee, as well as
an up-front, one-time franchise fee to the franchisor. Franchising
has become one of the most popular ways of doing business in
today's marketplace. In most states you cannot drive three blocks
without seeing a nationally recognized franchise company.
Franchising began back in the 1850's when Isaac Singer invented
the sewing machine. In order to distribute his machines outside of
Q.5 Write short notes on
(i) Franchise system
(ii) Short term assets and
liabilities
(iii) Foreign Direct
Investment
How Franchising Work
15. his geographical area, and also provide training to customers, Singer
began selling licenses to entrepreneurs in different parts of the
country. In 1955 Ray Kroc took over a small chain of food franchises
and built it into today's most successful fast food franchise in the
world, now known as McDonald's. McDonald's currently has the
most franchise units worldwide of any franchise system.
Today, franchising is helping thousands of individuals be their own
boss and own and operate their own business. Franchising allows
entrepreneurs to be in business for themselves, but not by themselves.
There is usually a much higher likelihood of success when an
individual opens a franchise as opposed to a mom and pop business,
since a proven business formula is in place. The products, services,
and business operations have already been established.
There are many advantages to buying a franchise. Some of these
advantages are:
Corporate image - The corporate image and brand awareness
of the company is already established. Consumers are always more
comfortable purchasing items from a familiar name or company they
trust.
Training - The franchisor usually provides extensive training
and support to the franchise owner.
Savings in time - Since the franchise company already has
the business model in place you can focus on running a successful
business.
Q.History 5 Write of short Franchising
notes on
(i) Franchise system
(ii) Short term assets and
liabilities
(iii) Foreign Direct
Investment
How Franchising Work
Advantages of Buying a
Franchise
History of Franchising
16. A balance sheet account that represents the value of all assets that are
reasonably expected to be converted into cash within one year in the
normal course of business.
1. Cash available with company
2. Bank balance of the company
3. Debtors of the company after deducting provision for bad
debts.
4. Bills receivables or accounts receivables
5. Short term investments of the company
6. Prepaid expenses paid by the company
7. Stock of goods available with the company (which are
expected to be sold within a year).
A company's debts or obligations that are due within one year.
Current liabilities appear on the company's balance sheet.
1. Trade and other payables
2. Short-term borrowings
3. Current tax liabilities
4. Provisions
Current assets
Current liabilities
17. Foreign direct investment (FDI) is a direct investment into
production or business in a country by an individual or company
of another country, either by buying a company in the target
country or by expanding operations of an existing business in that
country.
Foreign direct investment is in contrast to portfolio
investment which is a passive investment in the securities of
another country such as stocks and bonds.
Broadly, foreign direct investment includes "mergers and
acquisitions, building new facilities, reinvesting profits earned
from overseas operations and intra company loans".
In a narrow sense, foreign direct investment refers just to building
new facilities.
Horizontal FDI arises when a firm duplicates its home country-based
activities at the same value chain stage in a host country
through FDI.
Platform FDI Foreign direct investment from a source country
into a destination country for the purpose of exporting to a third
country.
Vertical FDI takes place when a firm through FDI moves
upstream or downstream in different value chains i.e., when firms
perform value-adding activities stage by stage in a vertical fashion
in a host country.
Foreign Direct
Investment
Definitions
Types
18. 1. By incorporating a wholly owned subsidiary or company anywhere
2. By acquiring shares in an associated enterprise
3. Through a merger or an acquisition of an unrelated enterprise
4. Participating in an equity joint venture with another investor or
enterprise.
Methods