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International Finance: Using Financial Markets to Expand

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Many of the world's leading companies are multinational corporations with operations scattered throughout the world and it makes sense for them to be concerned about the international environment. But why must purely domestic firms be concerned about the international environment?

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Suppose you have invested in a baby blanket manufacturing operation and have located contracted with a production facility in Costa Rica. How might you use international financial markets to expand this operation? If you decided to move your operation elsewhere, then where might that be?

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Here you go. I hope this helps- please let me know if you have any questions.

Many of the world's leading companies are multinational corporations with operations scattered throughout the world and it makes sense for them to be concerned about the international environment? But why must purely domestic firms be concerned about the international environment?
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Multinational corporations are concerned about the international environment because their business is dependent upon exchange rates, labor rates, and market security. As the world becomes increasingly flat, it is key that multinational corporations maximize their effectiveness by ensuring they are operating in countries in which their investment is maximized. Multinational corporations have the ability to shape trade, and be shaped by world events. Purely domestic firms, however, must also be concerned about the international environment. In part, this is because domestic firms are competing with multinational corporations or organizations that may be sourcing services or products internationally. This can result in lower cost of goods, which may be difficult for the domestic company to compete with. At the same time, ...

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This solution discusses why a purely domestic firm must be concerned about the international environment and how a baby blanket manufacturing operation that produces in Costa Rica might you use international financial markets to expand its operation. It also discusses if the operation moved elsewhere, then where might that be?

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See Also This Related BrainMass Solution

International Finance in Strategic Operations Sudanese Market

See attached file.

Prepare a paper on the possibility of entrance into the Sudanese Market. Based on the summary below, please answer the following questions.

Exposition for the individual paper:

Sudan has found deposits of oil and Boron in the extreme southwest of the Bahr Al Ghazal region, near the Central African Republic and Congolese borders. The new Sudanese government has decided to send the exploration rights out to bid. ExxonMobil bid and won the rights to exploit Sudan's newly discovered natural resources. The President of the oil exploration SBU has given you the task to determine the feasibility of operating in Sudan.

A. Using this week's readings, illustrate the shape of Sudan's capital markets by answering the following questions:

1) Describe the financial system.
a. Is Sudan's monetary policy a pegged or crawling system, managed or
independent float, fixed-rate or target-zone arrangement?
b. What are Sudan's Current account, capital account, and balance of
payments with developed countries or regions such as the United States,
Germany, Japan, England, NAFTA countries, or Saudi Arabia? Please pick
any two developed countries and/or regional trade blocks.
c. Who is Sudan's major trading partners, and what is Sudan's Current
Account relationship with them? Is it negative, positive, or neutral?
Describe briefly what a positive, negative, and neutral current account
balance between Sudan and its major trading partners mean. (If there is
more than two, just choose the top two countries.)
d. What is Sudan's relationship to international financial institutions such as
the World Bank, World Trade Organization, International Monetary Fund,
the UN, and/or UNESCO? Is it positive, negative or neutral? Briefly
describe what a positive, negative and neutral relationship would be
between a developing country and any two international institutions.

2) According to Chapter 9 in Shenkar & Luo, pages 237-240, about the Determinants of Foreign Exchange Rates:
a. Which weakness or weaknesses of the Purchasing Power Parity apply to
Sudan?
b. Do these weaknesses undermine Sudan's capital markets?
1. If so, what affect does it have on the capital markets?
2. If not, what characteristic of Sudan's capital markets are able to
withstand the intrinsic weakness of the PPP?
c. Using Interest Rate Parity (IRP) as a guide, determine the stability of the
Sudanese dinar. Compared to its nearest neighbors, how does the
Sudanese dinar rank- more or less stable than its neighbors, or average
among its neighbors?

B. What are the financial implications for ExxonMobil if Sudan's capital markets cannot handle the influx of large amounts of foreign direct investment?

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