...Global Business Global Business 08 Fall 08 Fall Banco Santander’s Globalization Amir Golafshan - Santander expands abroad – The key factors for its success. Banco Santander’s Globalization Amir Golafshan - Santander expands abroad – The key factors for its success. Fall 11 Fall 11 The Santander Corporation is a banking organization, originated in Santander, Cantabria, north of Spain in 1857. The organization is the largest bank currently in the Eurozone and one of the largest banks in the world considering its market capitalization. Forbes Magazine Global has listed Banco Santander at the 13th largest public organizations in the world with $94.74 Billion market capacity. The company has currently 178,869 employees. The Chairman of the company is Emilio Botin and Alfredo Saenz Abad the CEO. The organization offers the following products, retail banking, commercial banking, asset management, investment banking, private banking, private equity and insurance. However mostly concentrating on retail banking. The merge of Banco Santander, Central Hispano, Central and Banco Hispanoamericano originated BSCH (Banco Santander Central Hispano) in 1999 was the key facture of its growth. Then there was the merge of Santander and Banco Central Hispano (BCH), which later came to conflicts where the BCH executives Jose Amusategui and Angel Corcostegui agreed to accept compensation and retire from the organization. They left the control to chairman Emilio Botin. The...
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...Issues Simulation Summery Legal disputes can occur between businesses while conducting business. It is the responsibility of both parties involved to conduct risk management and examine whether or not is worth the risk. In this paper, one will briefly describe legal dispute in international transactions and will comment in the scenario in week two assignment. What are the issues involved in solving legal disputes in international transactions? Before any action can take place, both parties need to take into consideration each other’s laws. Factors such as local and international laws can be difficult. The differences in political and culture platform also have an important role in the success of conducting international business (Melvin (2011). Being able to define the international law as either public or private; plays a role in understanding international law. In regards to CadMex and Gentura, the different laws and culture may pose problems. Gentura is part of the dictatorship country of Candore and may not fulfill the technology transport criteria set by its own country title, Cardorean Regulations for Technology Import Contracts (CRTIC) (University of Phoenix, 2014). What are some practical considerations of taking legal action against a foreign business partner based in another country? One thing to consider is the law of other countries are important when doing business within them. The United States laws only endorsed within the United States and do not...
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...Lecture 8: Legal and Regulatory Risks of International Business Regulatory Risks * Potential difficulty in compelling overseas counterparty to fulfil obligation under contract only one risk. * Even more serious risk: international business activities attracting criminal liability. Money Laundering * Few would defend open laundering of domestic crime * But historically, more relaxed approach taken to property derived from overseas crimes. The attitude has been taken: * “What happens in X, stays in X” * Definition of “criminal property” in UK extends to property derived from act committed abroad which would be a crime if it were committed in UK. * Proceeds of Crime Act 2002, s.340(2)(b) * Very limited “double criminality” rule – essentially it states that the Secretary of State may if she chooses put in a double criminality rule or may not. If it would attract a maximum prison sentence of 1 year or less then in order for the proceeds to be covered by the AML rules – it must also be a crime in the jurisdiction where it was committed. But if it’s more than a year- no double criminality. * US Federal laws definition of predicate offences for purpose of money laundering similarly extends “unlawful conduct” to include list of overseas crimes * 18 U.S.C. §1956 (§ - section) - up to 20 years * Definition applies also to wider “money spending” offence in §1957 – up to 10 years. * ML – with intent to disguise the origin, to facilitate...
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...Q-1) What do you think motivated Disney to set up parks abroad, and what might be the pros and cons from the standpoint of the Walt Disney Company? Ans: The Walt Disney Company also known simply as Disney is the largest media and entertainment conglomerate in the world. Founded on October 16, 1923 by brothers Walt Disney and Roy Disney as the Disney Brothers Cartoon Studio, the company was reincorporated as Walt Disney Productions in 1929.An early and well-known cartoon creation of the company, Mickey Mouse, is the official mascot of The Walt Disney Company. Walt Disney Parks and Resorts is the segment of The Walt Disney Company. Disney is motivated to set up parks in abroad because of some reasons. Those are: To expand sales of their merchandise goods as well as attendance to their theme parks. It can attract more tourists to visit in it. Disney is motivated to also acquire more resources by their expansion, for example, Disney wants to create theme park in Shanghai so that it can facilitate in probably creating a Disney channel for the Chinese people in Chinese language. Disney is motivated to set up parks abroad to minimize the risks of their parks in United States. If the theme parks in United States do poor business then Disney could gain profits from Disney theme parks which are situated in abroad. Pros standpoint of the Disney: To Sales expansion To Resource acquisition To Risk minimization To gain profit Cons standpoint of the Disney: ...
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...1. Meaning of FA corporation……………..…..…………………………………..3 2. Definition of FDI………………………………..………………………………..3 3. Role of FDI………………………………………………………………………..4 4. Benefits……………………………………………..……………………………..5 5. Costs of FDI on home country…………………………………………………...6 Definition of group’s name and FDI 1.Name of the group: F.A Corporation a.Meanings: This name has a variety of meanings, which are: - We are all Forever Alone, that's the reason why you always should look for us when you need somebody to love because we are Forever and Fully Available - We are also Fascinatingly Adorable, Fantastically Amazing b.Connection to the subject: - The name F.A refers to Financial/Foreign Aid, a very important part of International Economics, involved in International Trade as well as International Movements of Factors (which are, in this case, International Investment and International Technology Transfer), when capital and other resources flow to the less developed countries for help. 2. Definition of FDI: There are two concepts of FDI and two matching ways of measuring it. One is that FDI is a particular form of the flow of capital across international boundaries from home countries to host countries. These flows give rise to a particular form of international assets for the home countries, specifically, the value of holdings in entities, typically corporations, controlled by a home country resident or in which a home country resident holds a certain share of the...
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...Addressing International Legal and Ethical Issues Simulation Summary Rania Kisar Law/421 Feb 22, 2015 John Huschen Resolving legal disputes in international business transactions require understanding of the substantive law, the political system, and the cultural habits of the foreign nation. Contract agreements that include the Choice-of-Law Clause and Forum Selection Clause such as in the simulation of CadMex (University of Phoenix, 2015), will ensure adherence of both parties to dispute resolutions especially when legal requirements may not be compatible. Negotiations, arbitration and mediation dispute resolutions ensures proper image of both firms. Litigations with foreign companies are not only costly and time consuming but will have a much weaker chance of winning, especially if the litigations are conducted through the foreign court systems as agreed upon in the example of the simulation (University of Phoenix, 2015). Two factors that could have worked against CadMex in granting sublicensing agreements to other firms to producing urgently needed medicine for a nation facing an epidemic (University of Phoenix, 2015). The first would have been financial related, and the remedy to that was to negotiate financial compensation. The second would have been to risk the entire contract being revoked by Gentoura, which could have been the case if they were forced to enter into sharing marketing rights of another drug. The local customs of the employees performing the tasks...
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...and Latin America. In 2010, bananas were ranked third on the list of foods eaten routinely in the world. Founded in 1989, Chiquita was the successor of the United Fruit Company. For many years, Chiquita was the largest employer to be located in Latin America. They are known for revolutionizing the banana trade by using refrigerated ships for the first time. Bananas represent a collection of economic, environmental, social, political, and legal hassles. The rewards of doing business abroad are huge, but the risk can be massive. This case study questions the ethics and morals of Chiquita while doing business abroad. For more than a hundred years, the company now known as Chiquita has been paying bribes to Latin American government officials to receive preferential treatment, building an abusive monopoly, encouraging or supporting U.S. coups against smaller nations, exploiting local workers, putting in place dictatorships in Central America’s, and now doing business with terrorists. Doing business in Columbia has proven to be a major hazard since the country is just emerging from a deadly civil war and dealing with the effects of narco-terrorism. From 1997 to 2004, Chiquita made protection payments to the AUC terrorist groups. They were advised in 2003 to stop making protection payments, but continued to make the protection payments to prevent employees from being killed. The company had already lost fifty employees to death at the hands of the terrorist. In the...
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...Executive Summary Aspen has become a public company withmore risk adverse investors who want to invest in the core business of the firm and not assume any foreign exchange risk. Foreign exchange risk is a core risk to Aspen’s business because they have many customers outside of the United States. We believe that transferring this risk to the customers would limit Aspen’s growth on the foreign markets: Aspen should keep its current marketing strategy, which includes credit installment payments and payments in local currencies for Japan, the UK and Germany. The current risk management program hurts the company because it doesnot consider Aspen’s expenses abroad that balance sales exposures to currency fluctuations. We then recommend that Aspen hedge completely its exposure but after “natural hedging”, which we recommend increasing thanks to the larger financial capacities allowed by its IPO. Using options for aggregated positions (by estimating yearly sales per currency),rather than having multiple forwards contracts, seems reasonable becauseit would enable the company to benefit from good moves in the currency exchange rates, to pay less in transaction costs because of the larger amounts and at the same time use its current human resources (limited hedging skills) by avoiding complex, expensive products. Business and Marketing Strategy Aspen Tech’s business strategy and marketing strategy create financing needs due to the position Aspen puts itself in with its customers. Aspen...
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...Commercial Risk Commercial risk involves the ability of firms to strategize successfully and implement its strategy through effective tactics. The challenge is that any mistakes made abroad can be more costly due to local government regulations. Sudden changes in the trade laws and legal systems in other countries exposes international firms to regulatory risks. For instance changes in a country’s banking system may limit a firm’s access to funding or their ability to repatriate money to their home countries. A major commercial risk is usually lack of knowledge of the international market. If exporters, for example do not have in-depth knowledge on the area where its sales are being made, it is more likely to fail in international business. Commercial risk occurs as the result of inadequate formulation and implementation of strategies, tactics and procedures. These also include timing of the company into a particular market, the competitive intensity existing prevailing in the market, poor strategy execution and the weakness of the partner and also the various kinds of operational problems. It should however be considered that commercial risks are usually unpredictable and it is therefore essential for firms to lay down effective strategies in place to ensure that this risk is reduced. Currency Risk Currency or Financial risk occurs as a result of the daily fluctuations of different currencies against each other. It also includes the valuation of assets and the foreign...
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...discusses the various risks faced by Starbucks and the effect of these risks in its revenues in international markets. Problem Major Problem The major problem of the case was the not so well planned international operations of Starbucks compared to its US operations and the entry strategies it adopted in international markets. Minor Problem The minor problems were: The pricing of the products offered. The high level of prices of the products of Starbucks is generally caused by too expensive cost of production that causes suffering to its customers. The operation problems encountered by the business due to lack of a trained workforce. The inappropriate and unsuitable real state/location for its store. Objectives To solve the problems of this case study. To recommend advices and solutions regarding the problems encountered of this business. Facts *Alternative Course of A*ction To study and think carefully about the decision of entering international markets. To go for a supplier of cheaper items needed in the operation that would enable the business to lower the prices of its products and make it affordable and attract those middle as well as low profile consumers. To hire trained applicants to ensure the smooth flow of daily business activities. To plan and find the appropriate and customer accessible location of the business. Recommendation...
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...International business risks Frequently business owners’ jump when they see prospects overseas without first taking the time to conduct market research and train their workforces for the risks they may face. Risk is the likelihood of a result happening. Risk is often associated with undesirable consequences. When doing business in international market there are many risks and challenges that a firm might face. The foremost risks that are linked with businesses fetching in international finance include foreign exchange risk and political risk. These risks may occasionally make it tough to uphold persistent and unfailing revenue. Overseas exchange risk happens when the rate of investment swings due to changes in a currency's exchange rate. When a home currency appreciates against a foreign currency, revenue or earnings earned in the foreign country will fall after being exchanged back to the domestic currency. Due to the somewhat impulsive nature of the exchange rate, it can be quite problematic to guard against this kind of risk, which can hurt sales and revenues. For example, assume a U.S. company receives a majority of its business in China. If the Chinese Yuan depreciates against the U.S. dollar, any yuan-denominated profits the company receives from its Chinese operations will yield fewer U.S. dollars compared to before the yuan’s depreciation. Political risk occurs when a country's government suddenly changes its guidelines...
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...strategic advice to 3M’s current CFO D.W. Meline how to manage 3M’s future exposure of the foreign exchange rate risk. In doing so, the overall profile of the company is discussed; the current foreign exchange risk management instruments are described; and conclusions are drawn, followed by recommendations. ABSTRACT This paper is written with a purpose to give a strategic advice to 3M’s current CFO D.W. Meline how to manage 3M’s future exposure of the foreign exchange rate risk. In doing so, the overall profile of the company is discussed; the current foreign exchange risk management instruments are described; and conclusions are drawn, followed by recommendations. International Risk Management: An Analysis of 3M’s Foreign Risk Management International Risk Management: An Analysis of 3M’s Foreign Risk Management Contents Executive Summary 3 Introduction 4 1. Description Historical Exchange Rates 6 2. Foreign Currency Exchange Rate Risk 10 2.1. Current Strategy to Manage Exchange Rate Risk 10 2.1.1. Cash Flow Hedging 10 2.1.2. Net investment hedging 13 2.2. Currency Translation Effects on Business Segments 14 3. Appreciating and Depreciation of Domestic Currency and Foreign Exchange Rate Risk Management 15 3.1. 3M’s Domestic and International Transactions 15 3.2. Appreciation of the Domestic...
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...CHAPTER 1 Introduction EASY (definitional) 1.1 Historically, the primary motive for U.S. multinationals to produce abroad has been to a) lower costs b) respond more quickly to the marketplace c) avoid trade barriers d) gain tax benefits Ans: b Section: evolution of multinational Level: Easy 1.2 The primary objective of the multinational corporation is to a.) maximize shareholder wealth b) maximize world production c) minimize debt d) minimize the cost of doing business globally Ans: a Section: Multinational Financial Management: Theory and Practice Level: Easy 3. ____________ is defined as the purchase of assets or commodities on one market for immediate resale on another in order to profit form a price discrepancy. a) internationalization b) arbitrage c) financing d) total risk Ans: b Section: evolution of multinational Level: Easy 4. The value of good financial management is ___________ in the global markets because of the much greater probability of market imperfections and multiple tax rates. a) minimized b) neutralized c) enhanced d) arbitraged away Ans: c Section: role of the financial executive Level: Easy 5. When a firm operates globally it offers advantages such as a) greater political power at home b) bless taxes on its profits c) greater negotiating power with foreign minority groups d) greater negotiating power with labor unions Ans: d Section: The rise of the MNC ...
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...studies of internationalization of four Swedish firms, Johanson and Vahlne (1977) developed the Uppsala internationalization model. This model is base on two assumptions. First, firms want to increase their profits but also want to keep the risk rate at a low level. Second, most firms are lack of knowledge about overseas markets, it is a big obstacle to the development of international firms; and firms can get necessary knowledge mainly through going abroad. Firms will face four aspects when going abroad: market knowledge, market commitment, commitment decisions and current activities. All of them are divided into stage and change aspects interacting with each other in a circle. Uppsala model defines two perspectives of learning in international activities: general knowledge and market-specific knowledge. General knowledge focuses on marketing method or types of customers while marketing-specific knowledge concerns with business climate, cultural pattern, structure of market system. (Johanson and Vahlne, 1977). IKEA uses Uppsala model to expand its internationalization strategy from 1974, especially in Japanese market and Chinese market. According to Uppsala internationalization model, “companies appeared to begin their operations abroad in fairly nearby markets and only gradually penetrated more far-flung markets” (Global Marketing, Hollensen, page 63). IKEA started to expand internationally from the nearest countries, such as Norway in 1958, Denmark in 1969, Switzerland...
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...CHAPTER 1 Introduction EASY (definitional) 1.1 Historically, the primary motive for U.S. multinationals to produce abroad has been to a) Lower costs b) Respond more quickly to the marketplace c) Avoid trade barriers d) Gain tax benefits Ans: b Section: Evolution of Multinational Level: Easy 1.2 The primary objective of the multinational corporation is to a) Maximize shareholder wealth b) Maximize world production c) Minimize debt d) Minimize the cost of doing business globally Ans: a Section: Multinational Financial Management: Theory and Practice Level: Easy 1.3 ____________ is defined as the purchase of assets or commodities on one market for immediate resale on another in order to profit form a price discrepancy. a) Internationalization b) Arbitrage c) Financing d) Total risk Ans: b Section: Evolution of Multinational Level: Easy 1.4 The value of good financial management is ___________ in the global markets because of the much greater probability of market imperfections and multiple tax rates. a) Minimized b) Neutralized c) Enhanced d) Arbitraged away Ans: c Section: Role of the financial executive Level: Easy 1.5 When a firm operates globally it offers advantages such as a) Greater political power at home b) Bless taxes on its profits c) Greater negotiating power with foreign minority groups d) Greater negotiating power with labor unions Ans: d Section: Rise of the MNC Level: Easy 1.6 The prime transmitter of global competitive forces...
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