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Acme's acquisition- DBC versus JEL

Hello , how are you, The class I am doing now is " Global Financial Management"
If you can help me with this , I would appreciate it very much.

The book is MULTINATIONAL BUSINESS FINANCE, BY David .K. Eiteman, Arthur l. Stonehill, , and Michael H. Moffett.

Here is the problem---

Acme has been in acquisition talks with two different European firms. JEL Industries is headquartered in a country that is part of the European Union while DBC Industries is headquartered in a European country that does not belong to the Union and does not use the Euro as their primary currency.

Based only on the knowledge of whether or not the firm is located in a country within or outside of the European Union, recommend one of the organizations and explain why you selected that organization.

In your response be sure to describe the implications of running a business in a country that is within or outside of the European Union.

Describe the advantages and disadvantages of the choice you made.

Would your decision change if the company you acquired primarily sold its products within all countries in Europe? Why or why not?

Would your decision change if the company you acquired primarily exported its products to Far East nations and the United States? Why or why not?

Solution Preview

I would have chosen JEL industries as it is located in a country which is part of the European Union and using Euro as its currency. Being part of a large trading block like European Union proves to be advantageous in most of the cases as it results in more stabilization of economic and political factors, greater cooperation among member nations and improved and better access to a fairly large market such as Europe in this case. If a country remains aloof from a big union like EU, there might be situations when the member countries try to subdue the aloof nation with their competitive policies and restrictions.

Moreover, being part of a large trading bloc allows a company to take advantage of special treaties, agreements and benefits. From global perspective also, it is more benefical for long term stability of macroeconomic factors. The companies operating in countries which are part of the bloc are given ...

Solution Summary

Acme's acquisition- DBC versus JEL

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