Deck 20: Financial Management in the International Business

Question 1

How can the finance function of an international business improve the firm's competitive position in the global marketplace

Answer 1

The finance function can improve an international company's position in the marketplace by adding value to its customer service, thereby appealing to a wider range of international customers.

Question 2

An emerging trend in international business is the concept of microfinance . Identify the top 10 microfinance institutions worldwide. After noting the countries served, compare each company's performance in terms of scale, efficiency, risk, and returns. What insights do your results provide

Answer 2

not answer

Question 3

Why do you think the Gol stock offering was oversubscribed

Answer 3

The airline's listing was oversubscribed , which means that the orders for stock were far higher than the amount of stock being offered. This meant that they had to raise the price in order to lower demand.
This likely happened because, the company at that time held over 22% of the Brazilian market in just 3 years' work, so they would likely do well all over South America, just as the other comparable airlines have while producing high profits and growing quickly.

Question 4

What actions can a firm take to minimize its global tax liability On ethical grounds, can such actions be justified

Question 5

Country risk is an important issue for international investors to consider. As your firm is looking to invest in the Middle East, use the @rating resource to identify and present the country ratings for each of the following Middle Eastern countries: Bahrain, Iran, Jordan, Qatar, and Saudi Arabia. Which country would you recommend Justify your position thoroughly.

Question 6

Do you think Gol would have raised as much money if it had just listed on the São Paulo exchange

Question 7

You are the CFO of a U.S. firm whose wholly owned subsidiary in Mexico manufactures component parts for your U.S. assembly operations. The subsidiary has been financed by bank borrowings in the United States. One of your analysts told you that the Mexican peso is expected to depreciate by 30 percent against the dollar on the foreign exchange markets over the next year. What actions, if any, should you take

Question 8

How might the joint listing of the New York and São Paulo stock exchanges affect Gol's ability to raise additional capital in the future

Question 9

You are the CFO of a Canadian firm that is considering building a $10 million factory in Russia to produce milk. The investment is expected to produce net cash flows of $3 million each year for the next 10 years, after which the investment will have to close down because of technological obsolescence. Scrap values will be zero. The cost of capital will be 6 percent if financing is arranged through the eurobond market. However, you have an option to finance the project by borrowing funds from a Russian bank at 12 percent. Analysts tell you that due to high inflation in Russia, the Russian ruble is expected to depreciate against the Canadian dollar. Analysts also rate the probability of violent revolution occurring in Russia within the next 10 years as high. How would you incorporate these factors into your evaluation of the investment opportunity What would you recommend the firm do

Question 10

What were the benefits to Gol of a listing on the New York Stock Exchange in addition to the São Paulo Bovespa