Assignment
The following are specific course learning outcomes associated with this assignment:
• Explain the influence of leverage and risk on financial planning.
• Develop a corporate strategy based on basic financial reports.
• Use technology and information resources to research issues in advanced financial management.
• Write clearly and concisely about advanced financial management using proper writing mechanics
Introduction:
• We'd like you to design and develop strategy for a large public company using the themes within the two modules we've just completed: risk management and the international module. Essentially, we'd like to put you into the shoes of the CEO and design a few key strategies that would help grow earnings and reduce risk in the company's operations.
• Let's get a bit more specific. Pick a public company (preferably the company used for Assignment #1) and examine what the company is doing now, both in terms of risk management and global strategy. In particular, here's what we recommend you do:
• Pull up the company's annual report (10-K).
• Read the entire section titled "Item 1" (includes items describing the general business) and "Item 1A" (also known as the risks section).
• Then, read the section titled "Management's Discussion and Analysis of Financial Condition and Results of Operations."
• Next, examine the company's international business situation. Sometimes this information is located in a section called "Operating Segments"; other times it is not. You might have to dig around for this info.
• Also, search the document (hitting CTRL+F usually does the trick) and enter keywords that include "derivatives" and "hedging." • What do you see? What is the business doing right now?
Write a minimum 8 page paper in which you do the following:
1. Analyze the company's existing risk management and international strategies.
2. Prescribe new strategies for the business based on what they are and are not doing now in these areas
Professor's expectations
Here's what it typically takes for the body of the paper...
1/2 - 3/4 page for the introduction (company and product background)
Approx 1.5 - 2 pages for describing the current risks and risk minimization strategy/strategies
2.5 - 3 pages for new risk minimization strategy
Approx 1.5 - 2 pages for the current international focus (where, what's happening, gaps, etc.)
2.5 - 3 pages for the new international approach (where, why, how, what to expect, etc.)
1/2 - 3/4 page for the conclusion
Remember, you do not have to talk about all the risks noted in the 10k. You can mention them and choose one to focus on or one that's not noted at all but that you think is vital for the company's continued success.
In the 2015 Annual Report, Company X notes that their greatest risks are in exposure to foreign currency fluctuations, escalating raw material costs, and bargaining power of the unionized workforce. The company noted the steps they take to minimize these risks. Current processes involve A, B, and C.
[briefly talk about each process as it relates to the risk it is supposed to cover]
[at this point you should have about 1.5 to 2 pages of content for the current risk and strategies]
While these strategies appear to have some level of success, as a manager or stockholder in Company X I do not believe that the company is taking enough aggressive or proactive measure to deal with the foreign currency fluctuations in the largest foreign currency transactions. According to the annual report, ###% of the company's revenue takes place in Country 1, Country 2, and Country 3.
[talk a bit about the trends of these currencies in relation to the US dollar, talk also about any country-specific risks (ex.Political, economic, etc.)]
[at this point you should have about 1.5 pages of information to set the stage for your new strategy]
[spend the next 1.5 pages talking about your new strategy...what will you recommend, define it, explain how it works, what risks/costs it carries, why it should help, etc....]
Because of the issues with these three countries and the fluctuation of their currencies, I recommend that the company ..........
Take the same stair-step approach for the international section.
Mention where the company currently has its international footprint and why you think this is not enough for the company...either in that country or as a whole.
For example, things may be going great in Europe....but there's zero to minimal presence on other continents.
Where else should the company be in the world?
Remember to use the doingbusiness.org website to check out the business environment of your destination!
What challenges to you expect?
How will you handle them?
If all goes well, what will be the rewards?
Maybe the current strategy (licensing?) is a disaster--lawsuits to enforce contracts, unpaid/slow-paid royalties, or
other issues that are making things unsuccessful overall.
If the country still holds potential....but via a different or more controlled route (alliance, acquisition, etc.), what will you propose?
What new the challenges do you expect?
How will you handle them?
If all goes well, what will be the rewards?
Keep the image from above on the "pathway" for going International in mind for this area.
Remember, the "new" strategies for risk minimization and international success are worth more than the discussions of what's currently in place.
That's why there's about a page more of space devoted to the "new" content.
Top of Form
If your pathway for a new international strategy incorporates "Exporting" in the yellow column,
I wanted to let you know about two interesting websites---
Export.gov and Economist.com
They can have quite a bit of helpful information about various foreign countries.
While you are not required to use either as a resource in your "going international" paper,
you may find their content beneficial in regards to sustaining your paper's talking points.
I noted the generic site...and some examples if you want to locate a specific country
NOTE: Not all countries are on these websites.
I hope you find them helpful,
Professor Pellitteri
Examples for some popular/common countries.
https://export.gov/argentina/doingbusinessinargentina/index.asp
https://export.gov/france/doingbusinessinfrance/index.asp
https://export.gov/india/doingbusinessinindia/index.asp
Note: This site does not have a section devoted to China.
https://www.economist.com/topics/argentina
https://www.economist.com/topics/canada
https://www.economist.com/topics/china
https://www.economist.com/topics/england
https://www.economist.com/topics/france
https://www.economist.com/topics/germany
https://www.economist.com/topics/india
https://www.economist.com/topics/japan
https://www.economist.com/topics/mexico
etc, etc, etc