Ugba section 3
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The document provides an agenda for a discussion on currency hedging, the strong US dollar, and a corporate social responsibility debate. It includes a case study on STMicro and how fluctuations in the euro-dollar exchange rate impacted its profits. It also outlines topics for debate around social and ethical responsibilities of multinational companies.
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READING HEAD Business International Expansion .docx
READING HEAD: Business International Expansion 0
Business International Expansion 5
\
Risk Identification
Yomarie Miranda
Rasmussen College
03/08/2019
Introduction
International expansion is an important decision that the management of an organization will have to make when it comes to meeting the expansion missions or goals of their organization. Companies going public for the first time, like Gentry Inc are at higher risks when it comes to internationalization as compared to bigger companies. There are various risks that the company shall face in its international expansion strategy, which will be of utmost importance for the directors to discuss. Gentry Inc qualifies to take an initial public offering as dictated by the regulations of the Securities Exchange Commission. The company plans to expand to China, Japan and Germany, to increase its profitability by a margin of 15 to 25 percent. However, the company is likely to face various risks in its endeavors as shown below.
Transaction Risk
The transaction risk I s describes as the risk on the exchange rate that is associated with a time delay between entering into a business agreement and settling the agreement. It is most common in international firms that have to deal with different currencies. The longer the time before settlement of an agreement the higher the risk involved (Ekeha, 2009). Gentry Inc will be based in three different countries if the expansion strategy goes well. The above means they will be dealing with three different currencies. The exchange rate market is very volatile and changes drastically within short periods of time. Transactions made by the company in one currency will have to be converted to the base currency. If the currency pair such as the dollar (USD) and the Japanese Yen fall. It might affect the company causing a loss due to the transaction risk. The best way that Gentry Inc can prevent such losses during business transactions in different countries is through use of hedging mechanisms such as forward contracts and purchasing options.
Sensitivity analysis- In the above case, we shall use the analysis to see what effect a fall in currencies would have on the company. If Gentry Inc is dealing with profits in Germany, it will have let's say, 1,000,000 Euros. That will result to 1,179,127 USD if the transaction is settled immediately. However due to a delay in the settlement the USD devaluates against the Euro, by one dollar, changing back the dollars to Euros, the company will have fewer Euros than before which is a loss caused by transaction risk. Based on the rate of fluctuations the company can be able to calculate its transaction risks.
Translation Risk
When Gentry Inc goes international, it will denominate some of its assets, equ.
Unit2 International Trade Theory Fdi And Foreign Exchange Market
Unit 2 International Negotiations and Transactions - International trade theory, FDI and Foreign Exchange Market
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Investigate the company’s earnings in its latest quarter. Explain how currency fluctuations across the globe have affected earnings. Search each of the latest financial reports to find such information. Make sure you research the information from the perspective of currency fluctuations on revenue, earnings, and global market share.
Yum! Brands, Inc. is a major franchisor and licensor of fast-food restaurants with more than 49,000 units in over 145 countries. They include KFC, Pizza Hut, and Taco Bell brands. On April 28, 2021, Yum! Brands reported a “strong recovery driven by record digital system sales of over $5 billion with accelerated off-premise growth” (Yum! Press Release, 2021, para. 1). The report continues, “worldwide system sales excluding foreign currency translation grew 11%, with 9% same-store sales and 1% unit growth” (para. 1). Since the company acquired two technology-focused companies, they expect to increase exposure of their brands through digital and marketing campaigns. The report is extensive since three major brands are represented through Yum! Brands, Inc. KFC and Taco Bell increased 11%, while Pizza Hut grew at 7%.
“Foreign currency translation favorably impacted divisional operating profit by $16 million” (Yum! Press Release, 2021, para. 4). Since Yum! Brands are present in 145 countries, currency fluctuations across the globe make significant differences in profitability. Clearly, the COVID-19 pandemic leaves the brand to uncertainties surrounding the duration of restaurant operations. Revenue in the Q1 of 2021 were 1.435 billion. While CFRA provides a favorable outlook for Yum! Brands in the coming year, one caveat pertaining to our discussion topic for this week has to do with “a steep and/or protracted global economic recession or sharp decline in consumer spending; and foreign currency headwinds” (CFRA, 2021, p. 1). Most of this has to do with the COVID-19 pandemic.
An outcome from the pandemic is increased efforts for cost reduction measures, including efficiency improvements. Related to exchange rate, Yum! has made a major push in China since 2016, which has a population of 1.3 billion with a rapidly growing economy. “The company plans to increase the number of units in China at a double-digit rate with same-store sales growth of at least 5%” (CFRA, 2021, p. 2). The opportunity in China could present a great deal of growth, particularly with China’s relatively stable currency.
===========================
John Deere was officially incorporated in Moline Ill. In 1868 as Deere and Company (Columbia Electronic Encyclopedia, 2021). The company was started by John Deere that was born in 1804 and started selling plows in 1837, before moving to Moline Ill. (Columbia Electronic Encyclopedia, 2021). In the first quarter of 2021 John Deere grossed nearly 12 billion compared to just ...
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This lecture 02: learn to use International Fisher effect (IFE), and PPP, Law of one Price, Big Mac index to estimate long term currency (FX) trends
READING HEAD Business International Expansion .docx
READING HEAD: Business International Expansion 0
Business International Expansion 5
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Risk Identification
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Introduction
International expansion is an important decision that the management of an organization will have to make when it comes to meeting the expansion missions or goals of their organization. Companies going public for the first time, like Gentry Inc are at higher risks when it comes to internationalization as compared to bigger companies. There are various risks that the company shall face in its international expansion strategy, which will be of utmost importance for the directors to discuss. Gentry Inc qualifies to take an initial public offering as dictated by the regulations of the Securities Exchange Commission. The company plans to expand to China, Japan and Germany, to increase its profitability by a margin of 15 to 25 percent. However, the company is likely to face various risks in its endeavors as shown below.
Transaction Risk
The transaction risk I s describes as the risk on the exchange rate that is associated with a time delay between entering into a business agreement and settling the agreement. It is most common in international firms that have to deal with different currencies. The longer the time before settlement of an agreement the higher the risk involved (Ekeha, 2009). Gentry Inc will be based in three different countries if the expansion strategy goes well. The above means they will be dealing with three different currencies. The exchange rate market is very volatile and changes drastically within short periods of time. Transactions made by the company in one currency will have to be converted to the base currency. If the currency pair such as the dollar (USD) and the Japanese Yen fall. It might affect the company causing a loss due to the transaction risk. The best way that Gentry Inc can prevent such losses during business transactions in different countries is through use of hedging mechanisms such as forward contracts and purchasing options.
Sensitivity analysis- In the above case, we shall use the analysis to see what effect a fall in currencies would have on the company. If Gentry Inc is dealing with profits in Germany, it will have let's say, 1,000,000 Euros. That will result to 1,179,127 USD if the transaction is settled immediately. However due to a delay in the settlement the USD devaluates against the Euro, by one dollar, changing back the dollars to Euros, the company will have fewer Euros than before which is a loss caused by transaction risk. Based on the rate of fluctuations the company can be able to calculate its transaction risks.
Translation Risk
When Gentry Inc goes international, it will denominate some of its assets, equ.
Unit2 International Trade Theory Fdi And Foreign Exchange Market
Unit 2 International Negotiations and Transactions - International trade theory, FDI and Foreign Exchange Market
IMG-8170.jpgIMG-8171.jpgIMG-8172.jpgIMG-8173.jpg
IMG-8170.jpg
IMG-8171.jpg
IMG-8172.jpg
IMG-8173.jpg
IMG-8174.jpg
IMG-8175.jpg
Investigate the company’s earnings in its latest quarter. Explain how currency fluctuations across the globe have affected earnings. Search each of the latest financial reports to find such information. Make sure you research the information from the perspective of currency fluctuations on revenue, earnings, and global market share.
Yum! Brands, Inc. is a major franchisor and licensor of fast-food restaurants with more than 49,000 units in over 145 countries. They include KFC, Pizza Hut, and Taco Bell brands. On April 28, 2021, Yum! Brands reported a “strong recovery driven by record digital system sales of over $5 billion with accelerated off-premise growth” (Yum! Press Release, 2021, para. 1). The report continues, “worldwide system sales excluding foreign currency translation grew 11%, with 9% same-store sales and 1% unit growth” (para. 1). Since the company acquired two technology-focused companies, they expect to increase exposure of their brands through digital and marketing campaigns. The report is extensive since three major brands are represented through Yum! Brands, Inc. KFC and Taco Bell increased 11%, while Pizza Hut grew at 7%.
“Foreign currency translation favorably impacted divisional operating profit by $16 million” (Yum! Press Release, 2021, para. 4). Since Yum! Brands are present in 145 countries, currency fluctuations across the globe make significant differences in profitability. Clearly, the COVID-19 pandemic leaves the brand to uncertainties surrounding the duration of restaurant operations. Revenue in the Q1 of 2021 were 1.435 billion. While CFRA provides a favorable outlook for Yum! Brands in the coming year, one caveat pertaining to our discussion topic for this week has to do with “a steep and/or protracted global economic recession or sharp decline in consumer spending; and foreign currency headwinds” (CFRA, 2021, p. 1). Most of this has to do with the COVID-19 pandemic.
An outcome from the pandemic is increased efforts for cost reduction measures, including efficiency improvements. Related to exchange rate, Yum! has made a major push in China since 2016, which has a population of 1.3 billion with a rapidly growing economy. “The company plans to increase the number of units in China at a double-digit rate with same-store sales growth of at least 5%” (CFRA, 2021, p. 2). The opportunity in China could present a great deal of growth, particularly with China’s relatively stable currency.
===========================
John Deere was officially incorporated in Moline Ill. In 1868 as Deere and Company (Columbia Electronic Encyclopedia, 2021). The company was started by John Deere that was born in 1804 and started selling plows in 1837, before moving to Moline Ill. (Columbia Electronic Encyclopedia, 2021). In the first quarter of 2021 John Deere grossed nearly 12 billion compared to just ...
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Ugba section 3
- 1. Justin Tumlinson Haas School of Business University of California, Berkeley Undergraduate International Business Discussion 201: Monday 27July09 Discussion 202: Wednesday 29July09 Office Hour: 1:30-2:30P Monday, F533 Currency Hedging, Curse of the Strong Dollar & CSR Debate
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