Project Guidelines Assignmen
Selected company: Wal-Mart
Selected country: South Africa
Overview
The project for this course is the creation of a global expansion proposal for a corporation. The project represents an authentic demonstration of competency because considering global expansion is a conversation many growing companies have, involving financial managers and other stakeholders in the corporation. The project is divided into three milestones, which will be submitted at various points throughout the course to scaffold learning and ensure quality submissions. These milestones will be submitted in Modules Three, Five, and
Seven. The product will be submitted in Module Nine.
In this assignment, you will demonstrate your mastery of the following course outcomes:
• INT-620-01: Analyze the impact of microeconomic and macroeconomic fundamentals on international financial markets to examine the economic climate for corporate expansion
• INT-620-02: Examine the influence exchange rate systems and exchange rate movement have on international corporations and international markets in determining financial risks
• INT-620-03: Propose appropriate international capital budgeting strategies for managing multinational corporations' international monetary relationships
• INT-620-04: Recommend financial risk mitigation strategies for a corporation expanding to a global market
Prompt
For this project, you are taking on the role of a financial advisor to a company considering global expansion. You will choose a publicly traded U.S. company and a country into which that company can expand its business. Your job is to research the country from an economic standpoint to determine the feasibility of the expansion. This will include investigating the microeconomic and macroeconomic environments, exchange rates, and risk factors. Additionally, you need to propose a funding source and foreign currency financing strategies as well as how to repatriate the expected profits. You will prepare an executive summary for the board of directors, with each of the sections below as supporting details based on your research.
Specifically, you must address the critical elements listed below. Most of the critical elements align with a particular course outcome (shown in brackets).
• Introduction: This section of the analysis paper is an opportunity to add context about the company and country you selected to make the focus of this paper. You may explain a specific product that is being launched or relaunched in the global market; that information would also be included in this section.
A. Justify your company selection, with sufficient detail.
B. Justify the country into which your company will expand, with sufficient detail.
• Section 1: Broad Strokes of the Expansion Plan. In this section of the paper, you will be explaining the impact a variety of factors have on a company when expanding into global markets. Explaining these factors will prepare you to address the risk factors they create.
A. Describe the microeconomic and macroeconomic factors in the domestic market. [INT-620-01]
B. Describe the microeconomic and macroeconomic factors in the prospective global market. [INT-620-01]
C. Analyze the exchange rate regime in both domestic and prospective global markets. [INT-620-02]
D. Explain how changes in economic factors impact exchange rates. [INT-620-02]
E. Analyze the financial impact of exchange rate movements on a corporation. [INT-620-02]
F. Explain the main risks and benefits of the proposed expansion. [INT-620-01]
• Section 2: Risk Mitigation Strategies
A. Determine current financial and strategic impacts of international risks to inform risk mitigation strategies. [INT-620-04]
B. Explain how to mitigate foreign exchange rate risk. [INT-620-02]
C. Justify the tools the company is currently using to mitigate its foreign exchange risk. [INT-620-04]
D. Analyze the financial impacts of international foreign exchange risk to inform risk mitigation strategies. [INT-620-04]
E. Propose future mitigation strategies based on the prospective market for your corporation including addressing risks that are not currently being efficiently mitigated for your corporation. [INT-620-04]
• Section 3: Global Expansion Funding
A. Analyze the current capital structure of the parent company. [INT-620-03]
B. Determine the funding source your corporation should secure for this expansion into a global market. For example, you need to determine if the company will finance its expansion by using debt, issuing new stock, or using retained earnings of its expansion. Look at the current capital structure and use it as a guide for the subsidiary structure. [INT-620-03]
C. Propose a financing strategy of the new expansion. Consider financial requirements and how foreign currency will be acquired. Since the company will need to have foreign currency (currency of the country it is expanding into) on hand from day one of the company operations, determine how it will obtain the foreign currency. What are the options of local financing and any regulations on local currency reserves? [INT-620-03]
D. Repatriation of Funds: Once the subsidiary starts earning profits, the money needs to be repatriated back to the parent company. Examine the laws and regulations of the global market pertaining to repatriation. Identify any encumbrances on the repatriation of funds such as restrictions, specific fund limits, repatriation intervals, etc. [INT-620-03]
• Executive Summary
A. Summarize your recommendations on the expansion. [INT-620-04]
B. Describe ethical considerations inherent in the expansion proposal. [INT-620-04]
Milestones
Milestone One: Introduction and Broad Strokes of the Expansion Plan
In Module Three, you will submit your first milestone, addressing the introduction of your company and the expansion plan.
Milestone Two: Risk Mitigation Strategies
In Module Five, you will submit your second milestone, addressing the company's current and proposed risk mitigation strategies.
Milestone Three: Global Expansion Financing
In Module Seven, you will submit your third milestone, addressing capital structure, funding, and financing.