...The Global Capital Market Learning objectives • Articulate the benefits of the global capital market. • Understand why the global capital market has grown so rapidly over the last quarter century. • Be familiar with the risks associated with the globalization of capital markets. • Appreciate the risks and benefits associated with the Eurocurrency market, the global bond market, and the global equity markets. • Understand how foreign exchange risk impacts upon the cost of capital. This chapter discusses the form and function of the global capital market. The market is attractive because its size lowers the cost of capital for borrowers, and allows investors to diversify their portfolios, thereby reducing their risk. Advances in information technology, and the deregulation of financial services and the relaxation of regulations on cross-border capital flows have contributed to the growth of the global capital market. The chapter then goes on to explore the Eurocurrency market, the global bond market, and the international equities market. The opening case describes how ICBC, China’s largest bank, raised $21 billion in the international equities market. The closing case examines how China Mobile raised capital in international markets through a stock offering and a bond issue. OUTLINE OF CHAPTER 11: THE GLOBAL CAPITAL MARKET Opening Case: Industrial and Commercial Bank of China Introduction ...
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...Global Business Strategies Week 4 Discussion Questions MGT/448 May 02, 2013 Global Business Strategies Week 4 Discussion Questions What are the elements of capital budgeting? How do you determine these elements in the Global business arena? Provide examples of how you would use capital budgeting analysis to determine the desirability of global projects. There are three different types of capital budgeting processes: centralized, decentralized and integrated. In centralized capital budgeting, top management make all important strategic capital budgeting decisions. Operating managers bid on implementing projects selected by top management. In decentralized capital budgeting operating managers identify and initiate projects that are approved by top management based upon projected financial performance. Integrated capital budgeting has elements of both decentralized and centralized capital budgeting. Capital budgeting process defines the set and size of a firm’s real assets, which in turn generate the cash flows that ultimately determine its profitability, value, and viability. In principle, a firm’s decision to invest in a new project should be made according to whether the project increases the wealth of the firm’s shareholders. The two things to consider when you would use capital budgeting in global projects are the following; What will the Project Cost? This is the first and most basic question a company must answer before pursuing a project. Identifying the cost...
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...the economy, federal regulation and individuals. One way the United States financial market can impact the economy is by the use of use of mutual fund improvements using it as a tool for price changes, which will trigger the effect, by identifying the strong outcome of market prices. The decrease in valuation leads to a 7% increase in acquisition, likelihood, relative to a 6% takeover possibility. In addition, globalization has an impact in the financial markets by reducing companies' cost of capital. Furthermore, globalization also helps improve corporate governance in a way that manager engagements are better aligned with stakeholder interests. This progress in corporate governance further contributes to a reduction in a firm’s cost of capital. Another impact on the organizations are the cost of raising resources in capital markets (its “cost of capital”). On the other hand, there are conditions under which globalization improvements itself has led to a decrease in United States cost of capital. Financial markets had not just impacted the economy, businesses, and individuals of the U.S. but also had an effect in the economy all over the world. The United States Federal Reserve have very important role in the expenditures system of the country. There are twelve Federal Reserve Banks that provide finance services to the federal government and all the depository institutions. Depository institutions maintain accounts, offer numerous payment services, electronically including...
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...Harvard Business School The Emergence of a Global PC Giant: Lenovo’s Acquisition of IBM’s PC Division A Final Paper Submitted to Professor Mihir Desai By John Ackerly Måns Larsson Cambridge, MA December 2005 The Emergence of a Chinese Global PC Giant: Lenovo’s Acquisition of IBM’s PC Division By John Ackerly & Måns Larsson 1/28 Introduction On May 1, 2005, the Lenovo Group acquired IBM’s personal computing division (IBM PC) for $1.25 billion, achieving the goal of its ambitious founder, Liu Chuanzhi, to create a global PC manufacturing powerhouse. By transforming itself from an upstart company focused on its domestic market, Lenovo joined an exclusive club of Chinese companies, such as Huawei and TCL, which compete head-to-head with leading multinational corporations. Without the involvement of western private equity firms – Texas Pacific Group (TPG), Newbridge Capital,1 and General Atlantic Partners (GA) – this transaction may never have been consummated. Each firm brought crucial expertise and credibility that helped mitigate the significant financial, operational and cultural risks inherent in a large scale, cross-border transaction. Many believe that these efforts opened a new chapter in the growth of China’s economy and its integration with the West. As Bill Grabe, GA’s representative on Lenovo’s board, stated: “Lenovo’s acquisition of IBM mark the start of something bigger. In the future, we will see more Chinese global giants emerging through cross-border M&A.”2...
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...footprint, outsourcing and cost out by Jean-Marc Lechêne, COO Agenda 1. Personal background 2. New Manufacturing and Global Sourcing setup in place 3. Key priorities and achievements 2 Vestas’ capital markets day 2012 Introducing your speaker Jean-Marc Lechêne • Executive Vice President of Manufacturing and Global Sourcing (COO). • Member of Vestas’ Executive Management team. • Joined Vestas in July 2012. • MBA from INSEAD and Master’s degree from École des Mines de Paris. • 15 years of experience managing multi billion business units with Lafarge and Michelin in China, North America and Europe. • Live in Denmark with my wife. 3 Vestas’ capital markets day 2012 What I bring to the table Past experience Today´s challenges • Major cost reduction and restructuring programs in global companies. • Implementing a lean, flexible and asset light production setup without compromising safety and quality. • General management in process and manufacturing industries. • Eliminating unnecessary costs and complexity out of products and the whole value chain. • Strategist and doer: Delivering change to the bottom line. • Reinforcing the alignment between Sales, R&D, Manufacturing, Sourcing and Service. 4 Vestas’ capital markets day 2012 Key priorities Shipment from factories GW 1. 5 GW shipment run rate in 2013 6.3 2. Product cost out -21% 5.0 3...
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...Q1. What is meant by the globalization of human capital? Is this inevitable as firms increase their global operations? Ans. The globalization of human capital refers to the fact that employees are now spread out across the world by their employers. Companies now have the ability to obtain different pools of human capital across the planet that can have a profound impact on their strategy and design. As more and more companies grow and become global companies, it is inevitable that we will see globalization of human capital. Whether it is low cost, skilled manufacturing workers in China, software and customer service professionals in India, or highly skilled employees in Eastern Europe, Q2 How does this case illustrate the threats and opportunities facing global companies in developing their strategies? Cost and Human Capital is the most important consideration for Global Companies. When President Obama’s inquired about Apple brining the job back to US, it was practically not possible for Apple. The total cost for iPhone was around $179 and Apple sold this for cool $500 making a profit for $379. For Global company price and profit is the most important consideration to stay competitive. They can use the cheap labor in other countries to be price competitive This gave the perception that Apple did not care about its country. It also gives the perception of greed which a global company can face. Q3. Comment on the Apple executive's assertion that the company's only...
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...Global Financial Management FIN630 AIU Abstract This paper will have a comparative advantage of Vernon's product life-cycle theory of FDI. It will discuss green field investments over cross-border acquisitions and political risk of capital budgeting process of foreign investment projects. It will also discuss forward versus backward internalization and currency exchange risk into the capital budgeting process of foreign investment. Global Financial Management Vernon’s Product Life-Cycle Theory Raymond Vernon proposed his Product Life Cycle (PLC) theory in the mid 1960’s, based on product development and international trend observations of the US role at the time. The PLC theory stated that new products would first be developed and introduced in the US. Advanced markets, such as Europe and Japan, had their demand grow which caused the US to export the new product until the demand levels in the foreign country required the production in the advanced markets. Cost factors become significant as the product reached a maturity phase in the life cycle which warrants the production at the most efficient location. That results in advanced markets exporting the product back to the US. The product is produced in plants located in developing countries because these countries hold a relatively low cost production advantage, as competition further increased in the global market place. The product would once again be exported back to the US (Hill, 2009). Firms will commence...
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...Chapter 25 Canadian Taxation © CSI GLOBAL EDUCATION INC. (2013) 25•1 25 Canadian Taxation CHAPTER OUTLINE How does the Canadian Taxation System Work? • The Income Tax System in Canada • Types of Income • Calculating Income Tax Payable • Taxation of Investment Income • Tax-Deductible Items Related to Investment Income How are Investment Gains and Losses Calculated? • Disposition of Shares • Disposition of Debt Securities • Capital Losses • Tax Loss Selling What are Tax Deferral Plans? • Registered Pension Plans (RPPs) • Registered Retirement Savings Plans (RRSPs) • Registered Retirement Income Funds (RRIFs) • Deferred Annuities • Tax-Free Savings Accounts (TFSA) • Registered Education Savings Plans (RESPs) • Pooled Registered Pension Plans (PRPPs) What are Tax Planning Strategies? Summary 25•2 © CSI GLOBAL EDUCATION INC. (2013) LEARNING OBJECTIVES By the end of this chapter, you should be able to: 1. Describe the features of the Canadian income tax system, calculate income tax payable, and differentiate the tax treatment of interest, dividends and capital gains (and losses). 2. Calculate capital gains and capital losses and assess strategies for minimizing tax liability. 3. Describe and differentiate the different tax deferral plans and their uses. 4. Identify basic tax planning strategies and discuss their advantages. TAXES AND INVESTMENTS It is often said that there are only two certainties in life: death and taxes. Taxes are a reality of life...
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...it strategy by creating a subsidiary PPL Global “to pursue business opportunities in the unregulated electricity marketplace” (Esty, Ferman3). Senior management recognizing the need to create a more competitive environment within the company began a restructuring process from 1994-2000. In 1999 the company announced it intended to double its generation capacity by 2005 “through acquisition of existing plants and development of new plants” (Esty, Ferman 4). Jim Abel and PPL’s Finance team determined that in order to execute this new strategy PPL needed to maintain access to large amounts of capital at low cost while maintaining the financial soundness of the corporate balance sheet. This culminated in the separation of its unregulated generation businesses from its regulated distribution and transmission businesses in 2000(Esty, Ferman 4). The environment PPL was operating in during this time was not conducive to PPL Global using Corporate Finance to raise the billions of dollars needed to fund the expansion of the company’s generation portfolio. To use Corporate Finance would result in a burden on the company as a whole while putting the PPL at risk of credit downgrades resulting in it becoming increasingly difficult to raise additional needed capital. Thus, the finance team evaluated raising funds at the PPL Global level through project financing and Leasing structures to provide the financial flexibility needed to raise capital while maintaining a sound financial soundness...
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...Abstract The purpose of this paper is talk about a company that is based in the U.S. but conducts business in other countries. It will contain information about the company’s activities in the countries. There will be information about the economics concepts and how the concepts can solve the problems and opportunities. The paper will identify the economic and political policies that affect the company. There will be information on how technology is used. Lastly, there will be a discussion on globalization and how it impacts the company. The International Economy In 1849 two cousins Charles Pfizer and Charles Erhart both from Germany, decided to start a fine-chemicals business, named Charles Pfizer & Company. This company went from making a palatable form of santonin to citric acid and became the top producer in the chemical business. In the 1950’s Pfizer creates an International Division. In effort to make this international expansion work Pfizer makes sure his team is will prepared with the history of the countries, the proper contacts with the government and learning the language. Pfizer went from being a building filled with two cousins dream to an international successful, pharmaceutical, agricultural, and chemical company. ("A pioneering spirit," nd.) For the purpose of this assignment, I will chose leading pharmaceuticals company Pfizer that operates in numerous countries across the world. The company has R&D labs as well as manufacturing...
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...significant transformation during the 2000s. They became part of global supply chains, major global commodity consumers and large capital exporters, and were also deeply involved in regional co-operation initiatives. These factors contributed to global disinflation in manufactured goods prices, abundant global liquidity and strong growth in commodity-exporting economies including Australia. (maybe because of 1997-1998 Asian financial crisis) In the coming decade, Asian economies are likely to continue their ascendancy, albeit at a slower pace, which should eventually decouple Asia from the advanced economies. With increasing domestic cost pressures, Asia may also become a new source of global inflation. Asia’s exports of capital to advanced economies may shrink as the region rebalances and outflows should focus more on portfolio investment and foreign direct investment (FDI). In the coming decade, a potential crisis in a major Asian economy such as China could trigger the next global recession. SUMMARY: History: more than 1000 years before the industrial revolution, the combined share of China and India in the world economy was routinely greater than 50% (but whether they will assert influences on the world economy depends on assumption of sustainability) 1993: the East Asian miracle, HPAEs (world bank 1993), no China India 1997-1998 Asian financial crisis (triggered by the withdrawal of foreign capital from the region, however, excessive borrowing, overheating economies...
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...Economic Growth: Implications for Canada Executive Summary The financial sector has experienced significant change over recent decades, driven by advances in information and communications technology and widespread reductions in international barriers to trade and investment. International integration is advancing rapidly, reflecting in part the development of global production chains and the rapid growth of emerging market economies. As a result of the forces of integration, international competition has become more fierce and firms are under increasing pressure to cut costs and differentiate their products to survive. Canada’s economy has numerous linkages beyond its borders, particularly with the United States. The future improvement of Canadians’ standard of living will depend in large part on foreign investment in Canada and the ability of Canadians to invest abroad. In this regard, a thriving financial sector will be a key component of our success. Canada has a small share of the global capital market. Thus, to be competitive, the Canadian capital market must be efficient and offer a low cost of capital. As much as possible, the policies and institutions that govern the Canadian financial sector should be harmonized to international standards. Made-in-Canada policies risk dampening or distorting international investment flows and should exist only where there is a demonstrable domestic imperative. Economists’ understanding of the role of financial systems as a...
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...TITLE: ROLE OF COST AND MANAGEMENT ACCOUNTANTS IN IFRS REGIME Personal Details |NAME |CMA. ARINDAM BANERJEE | |QUALIFICATION |MCOM AICWA | |RANK |Faculty Member, United Institute of Management, Allahabad | |Email |arind2001@yahoo.com | |Mobile |09794108735 | | | | |Communication Address |C/O Mr. Salil Chakroborty, | | |198 A, Sarat Bose Road, | | |Kolkata – 700029. | | | | ROLE OF COST AND MANAGEMENT ACCOUNTANTS IN IFRS REGIME ...
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...* Contents 1. Executive Summary 3 2. Analysis Model 3 3. Company Overview 3 4. Industry Outlook 3 5. Company Evaluation 4 Free Cash Flow Estimation 4 Cost of Equity, Cost of Debt, WACC Calculation 5 Discounted Cash Flows and Company Evaluation 5 6. Sensitivity Analysis 6 7. Final Recommendations 6 8. Appendix 7 Appendix 1: Historical Free Cash Flow Analysis 7 Appendix 2: Historical Free Cash Flow Analysis 8 Appendix 3: Growth Estimations 9 Appendix 4: 2012 Operating Expense Growth Estimation 10 Appendix 5: Income Taxes 11 Appendix 6 11 Working Capital, Depreciation and Amortization, Capital Expenditure Estimation 11 Appendix 6 Part II: Estimations Summary 12 Appendix 7: Free Cash Flow Estimation Analysis (in mln. €) 13 Appendix 8: WACC Calculation 14 Appendix 9: Equity Evaluation 16 Appendix 10: Sensitivity Analysis 17 9. References 18 Executive Summary This report discusses the possible profitability of investment in shares of the Allianz Group SE. Our analysis, based on discounted cash flows and weighted average cost of capital, suggests that under the assumption of stable economic growth, no drastic escalation of the European sovereign debt crisis and industry shocks due to natural disaster like the hurricane Sandy, the current share price of the company is currently below its estimated value and thus a promising investment opportunity. If the company manages to keep its stable growth in the last quarter of the year...
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...There is an increasing need for highly skilled professionals in the market to help corporation transform their business, optimise operation and drive innovation by leveraging technology. However enterprises are reluctant to expand their internal it department and increase cost. These factors have led to increase cost. These factors have led to the increase reliance of corporation on their outsourcing providers and are expected to drive future growth for outsourced technology services. According to the global tech market outlook for 2012 and 2013, an independent report published by Forrester research Inc. in January 2012 and purchases if IT consulting, system integration services and IT outsourcing by global business and governments are essential to grow by 6.3% in calendar year 2012 when in US dollars. Corporations are increasingly turning to off shore services provider for higher quality, cost competitive technology solution. as a result , off shore service provider have become critical to the operations of many enterprises and they continue to grow in recognition and sophistication . In view of this, the addressable market foe offshore technology services have expanded. 2. HISTORY Infosys Ltd is a global technology services firm that defines, designs and delivers information technology (IT)-enabled business solutions to their clients. The company provides end-to-end business solutions that leverage technology for their clients, including technical consulting, design, development...
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