Points Possible: 250
Points Earned: 0
Deliverable Length: 5-7 Pages
The most popular way for international expansion is for a local firm to acquire foreign companies. One of the most benefits for international expansion is global distribution capability that helps expanding the market share.
There are different implications of running a company that is within or outside of the European Union. If you were the head of a firm based in the United States, please answer the following questions, providing the rationale behind your answers:
Would you seek to acquire a company within the European Union or outside of it? Why?
Describe the advantages and disadvantages of the choice you made.
Describe the advantages and disadvantages inherent in the option you did not choose.
Explain why an MNC may invest funds in a financial market outside its own country.
Explain why some financial institutions prefer to provide credit in financial markets outside their own country.
This assignment will be assessed using additional criteria provided here.
Interpret the operation of the international financial system, its current state, and challenges for the future.
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GLOBAL FINANCIAL MANAGEMENT
As boundaries of businesses are expanding it has become imperative for companies to seek expansion outside their homeland. Through international expansion companies can take advantage of global distribution capability that helps expanding the market share.
If I were the head of a firm based in the United States, I would seek not to acquire a company within the European Union or outside of it. Earlier when there was no segregation of countries under common umbrella, the economic fragments were subject to greater competitive pressures and hurdles. The purpose for which European Union was created was driven by the need for a single market entity to face challenges in the highly competitive global business environment consisting of mainly BRICS (Brazil, Russia, India, China and South Africa) and other emerging economies such as Indonesia, Mexico and Turkey. Having single European entity has economic synergy that creates stronger corporate players which results in consumers getting goods at lower prices and increase in pace of innovation. It cannot be denied that any economic crisis would take longer to have an effect on a consolidated entity rather than fragments of entities.
Europe has been in deteriorating condition since 2007 with most concerning for southern members of Eurozone such as Greece, Italy, Portugal, and Spain (Economics Help, 2013). Main problems facing European Union are:
Due to prolonged recession unemployment in EU has reached a high point. At the time of financial crisis of 2008, unemployment rate was at lowest of decade. However post that it has increased to over 25% in Spain. Youth unemployment rate has reached 50%.
Fall in GDP
Europe has still not been able to recover from the deepest recession that hit the economy since 1930s. Because of weak global economy there are structural problems which will impact monetary and fiscal policies. As a ...
Detailed review of problems prevailing in EU and whether it would be appropriate to acquire a company in EU.