FN7226 Managing Resources in the International Business Environment Assignment Sample 2023
Introduction
Financial resource is an important and significant resource among different resources for performing business operations in the global market. This assignment consists of two questions one is on climate change and the other is on project management and required resources for maintaining resources for effective projects. Current situation of the global market is that every business organisation wants to expand business in different countries in order to acquire a prime position in the global market. On the other hand, its side impact is seen on climate change in the whole world. Besides, a project manager of the global business industry has two projects for the same benefits, thus both projects have different budgets and investments.
Question 1
Causes of backlash against globalisation reversal
Globalisation is the main focus of every business organisation either manufacturing or retail business industry in order to expand growth and profitability. Thus it is important for any organisation to manufacture more and utilise resources of nature more. Besides, the current trend of globalisation is to use natural resources without considering the side impact of different operations of business organisations. Thus the current practice of globalisation has affected climate too much. As opined by Butzbach and Fuller (2020), the first impact is that carbon emission exceeds too much and the climate is a total change as they react before globalisation. Besides, the pollution level of every developed country, as well as a developing country, has increased more than expected.
The above are the main reasons behind backlash against globalisation and practice and process of globalisation. In this context, the main objective of this backlash is not to affect the process of globalisation. As argued by Khan and Naazer (2021), this step is taken to promote the adoption of carbonless practice and the latest technology that expresses carbon at a low rate and level. As a result, globalisation practice may be affected and different business organisations adopt new practices that may affect nature at minimum level.
Challenge and opportunity that globalisation
Globalisation process is to support any business organisation to expand their service and business at a global level and access them to use resources of any country through that business organisation may be expanding business in different countries. Nevertheless, there are different types of challenges that may be faced by organisations to successfully globalise business practice. As stated by Frieden (2019), the first challenge is observing the “financial and economical environment” and competition of that country where the organisation may expand business. These challenges may affect globalisation practice in future globalisation practice. Besides, the company is required to observe the resource availability of that country to properly operate business practices and steps. Besides, organisations may face financial problems that are required to implement project work for expanding business in different locations of the country.
On the other hand, there are some opportunities for organisations through globalising business practice such as improving business performance and growth. Expanding business is the first step for improving “profitability and growth”. Further companies may be able to access the natural resources and human resources of that country in a huge capacity. As opined by Alter and Zürn (2020), these are the camion opportunities of any globalised organisation. Apart from this the company may acquire large numbers of consumers of that country and improve revenue and profit also in future. Thus any organisation must consider this opportunity before improving business activities in that country. Thus there are some political challenges that may affect globalisation practice of any business, for example, political stability and rule and policy for establishing business and conducting business practice for operating business in different locations of that country.
Implications of current development addressing the global issue of climate change
The current practice of different developed countries is to reduce carbon at zero level through the mission of “net-zero”. Any organisation is required to observe different alternate modes and methods for performing business though they may be able to emit carbon at zero level. There are different methods available for performing business and carbon may be emission at zero level. As opined by Chen, (2018), the first method is that organisations may focus on digitalising business practice and use advanced technology that does not emit carbon in different practices. On the other hand, the organisation may use renewable energy and minimise use of natural resources. Besides, the company must consider steps advised by the government of the country to reduce climate change such as plantation or other steps for improving natural activities in different countries.
There are different types of issues and challenges addressed in the above paragraph of this assignment. Nevertheless, any organisation may perform their globalisation practice without facing those challenges. As opined by Liñán and Paul (2020), first of all, the organisation must adopt digital culture for performing or operating business practices at global level. On the other hand, the respective organisation is required to focus to use “artificial intelligence and advanced gadget” for performing steps of business. Besides, the company must use renewable energy minted of sustainable energy to operate the manufacturing process and fulfil energy needs of any department and organisation. These are primary steps to avoid issues for globalising business.
The company may also take steps for social and nature support operations that are CSR of any business entity. Any government has been developing some CSR such as using appropriate production processes as well as steps for improving the positive impact on the environment. As argued by Berry et al. (2018), organisations may be organizing plantation programmes to plant new trees in an organisational environment and in that location where the business organisation performed business steps. Besides, the company should use low harmful chemicals and minimum utilisation of natural resources in order to improve the positive impact of globalisation of any business entity. Thus the organisation is required to have huge capital to implement digital culture in the organisation and adopt artificial intelligence in the organisation. The organisation needs huge capital to invest in this process. Nevertheless, the company is able to reduce operating costs and improve productivity and efficiency of production and different business practices.
Question 2
International risks for project management
Business project refers to steps of a systematic plan that may be implemented in future business practice for expanding business in different countries as well as improving profitability. Nevertheless, any project has a huge amount of investment to take forecasted steps for improving performance in the global business market. As opined by Nerini et al. (2019), thus it is the responsibility of a business manager to identify future risks while projects may be developed and implemented in an organisation. Thus any business organisation may develop any project to observe positive impact in organisation and improve profitability in future business. Thus the first risks in a project must have a sufficient budget through that forecasted steps may be taken by project manager and members of project. On the other hand, there are different risks that exist in project development to project implementation.
Financial risk: any project requires a huge amount of finance to perform different actions to start a project or develop a strategy for the project. On the other hand, the NPV of the project must be positive. Either project may have a loss or negative impact on the organisation. Besides, any project has a discount rate that supports the project manager to determine the “present value” of future cash flows for the project and the required investment for the project. As stated by Cramer et al. (2018), the further payback period is a significant financial factor of any project and investment. That indicates that home period and time may be required for receiving from organisation after implementation project in organisation. Financial risks may be low if either project is performed in the host country of the organisation as they already have huge numbers of financial resources and the government also supports them to improve business.
Political risks: political risk consists of action and steps of government after implementation of a project in organisation. As opined by Luo (2021), any project has given different types of impact on organisation and environment. The organisation wants to perform projects in the UK then the organisation will not face more political risks as they already have huge information about policy and rules of government. The political stability of the country also affected project management and implementation of the project. The company is required to acquire greater information about Europe and USA to conduct any project and expand business in that country.
Foreign Exchange Risk: any international project is performed in more than one country and location this organisation is required to observe “exchanged policy and rules” for avoiding exchange risks from the organisation. As stated by Ullah and Deng (2019), 1 pound is equal to 1.19 Euro and 1.35 USD. The organisation is performing business in the UK and now wants to expand business in the USA and Europe. Thus the organisation is required to consider the exchange rate of the pound in USD and EUR. This is also important for an organisation to select one project out of two projects.
Viability of both projects and allocation of discount rate
The company has two projects for expansion and the manager calculates different significant factors of any project to observe and validate the project. The organisation just considered the payback period for validating the project. As opined by Ma and Du (2018), the company also considers a discount rate that indicates financial cost and requires cash for the project. Both projects have IRR of 7% and 6.3% respectively. The first project consists of more IRR whereas the second project consists of low IRR. That indicates the first project is profitable for the organisation. The difference of NPV of both projects is € 2.30 and IRR is 0.70%. Besides, the payback period of both projects is the same.
| Difference between both project | ||
| Net present value | € 2.30 | |
| Internal rate of return | 0.70000000000000100% | |
| Payback period | ||
| 0 | ||
Table 1: NPV
(Source: Rocha et al. 2018)
Future the company is required to coincide with the below calculation and analysis for a validated project. The first thing is the company may select a project from the USA as the exchange rate of UK currency is high and business freedom of the USA is better as compared with the European government. As stated by Rocha et al. (2018), on the other hand, the project manager may get several technical supports to conduct the project. The US has large numbers of consumers and human resources that are required for conducting any business operation in any country. The discount rate that may be allocated to each project is 6%, which is a sufficient discount rate for an effective and successful project. Thus the project manager must consider this discount rate to develop a strategy and budget for investment. The company requires nearly 20 million for different investment actions in the project. Nevertheless, the investment may be reduced up to 6%.
Calculation of investment of each project and NPV of each project
Any project has required “sufficient investment” for performing projects and implementing projects with adjustment. Booth project has required an initial investment of 20 million for conducting projects in each country; nevertheless, the organisation is selecting one best project from both. Today’s globalisation practice is the conduit of two main factors such as investment and profit. As stated by Ivanenko and Hrushko (2018), these factors describe the success of the project as well as assist business organisations to improve business and reach the top in the business industry. The organisation is required to consider global climate rules and policy for project and implementation in organisation.
| Particulars | USA | Europe |
| Net present value | € 17.93 | € 20.23 |
| Internal rate of return | 7% | 6.3% |
| Payback period | 4.375 | 4.375 |
Table 2: NPV
(Source: Shafiee et al. 2020)
Today the whole world has taken action to produce carbon at zero rates thus the organisation is required to consider the CRS of that country for use of different resources of the project. As a result, organisations may perform well in large numbers of businesses. As opined by Shafiee et al. (2020), the company avoids different types of challenges and issues that may be faced by business entities to expand business in Europe and the USA. Through these steps, the company is able to make its project effective and profitable.
NPV is one of the significant financial variables among different financial variables of an organisation. The NPV of the USA project is € 15.79 that is lower as compared to the European project. The European project has an NPV of € 20.23 that may be after completion of project and implementation in organisation. The NPV of the second project is above the value of an investment for the project. The manager must select a European project for business growth purposes thus the company may get more profit in future global business practices.
Discussion of calculation of each project and recommendation for select project
The project manager is required to calculate NPV, IRR and payback period of both projects in order to consider different financial and non-financial results of project completion and implementation in the organisation. As opined by Shideler and Watson (2019), the USA project requires 20 million for investment and in response to the project the manager is to use that investment in different instalments for five consecutive years. As a result, the company’s cash inflow in five years is 3.52, 4.4, 5.28, and 7.04. On the other hand, the NPV and IRR are € 17.93 and 7%. On the other side, European projects also have € 20.23 as an NPV and 6.3% as IRR. Nevertheless, both projects have the same payback period of 4.375.
| USA | ||||
| YEAR | Cash outflow (millions ) | cash inflow (millions) | net cash flow(millions ) | payback period |
| 0 | 17.6 | -17.6 | -17.6 | |
| 1 | 0 | 1.76 | 1.76 | -15.84 |
| 2 | 0 | 3.52 | 3.52 | -12.32 |
| 3 | 0 | 4.4 | 4.4 | -7.92 |
| 4 | 0 | 5.28 | 5.28 | -2.64 |
| 5 | 0 | 7.04 | 7.04 | 4.4 |
| Net present value | € 15.79 | |||
| Internal rate of return | 7% | |||
| Payback period | 4.375 |
Table 3: USA project calculation
(Source: Shideler and Watson, 2019)
| NPV | € 17.93 |
| IRR | 7% |
| 4.375 | |
| payback period |
Table 4: USA’s NPV and IRR
(Source: Ullah and Deng, 2019)
The project manager has calculated the above figure in order to identify effective and best projects for the organisation. The organisation may recover fast from both projects nevertheless the organisation is required to consider the NPV of the value of both projects for a selection of the project. As opined by Wei and Johnson (2018), as a result, the European project is more valuable compared to the USA project and initial investment. As a project manager, the organisation requires to select a European project that is overvalued than both investment and other projects.
| Europe | ||||
| YEAR | Cash outflow (millions) | cash inflow (millions) | net cash flow(millions) | payback period |
| 0 | 20 | -20 | -20 | |
| 1 | 0 | 2 | 2 | -18 |
| 2 | 0 | 3 | 3 | -15 |
| 3 | 0 | 4 | 4 | -11 |
| 4 | 0 | 8 | 8 | -3 |
| 5 | 0 | 8 | 8 | 5 |
| Net present value | € 20.23 | |||
| Internal rate of return | 6% | |||
| Payback period | 4.375 |
Table 5: Europe project calculation
(Source: Wei and Johnson, 2018)
| NPV | € 20.23 |
| IRR | 6.3% |
| payback period | 4.375 |
Table 6: Europe’s NPV and IRR
(Source: Cramer et al. 2018)
Current world economic climate and exchange rate
The currency world of economics is a competitive economy that is compared with other countries’ economies. The current global economic growth rate is observed at -4.9% that indicating that the economic condition of global market is not good. The main reason for this negative rate is the Covid-19 and pandemic situation. During pandemic situations, large numbers of business organisations face low revenue and stop business activities due to lockdowns imposed in different countries. As stated by Singhal and Choudhary (2019), the economic condition of any country has played a prime role in improving the exchange rate of that country’s currency. Further, the world economy is mainly controlled through some developed country and their circulation of currency in the market.
Thus the organisation wants to perform business in the USA or maybe a European country. As opined by Shafiee et al. (2020 for this organisation is required to consider world economic conditions and exchange rates of different Thus any organisation is required to consider the economic condition of that country before taking any action to expand business in that country as well as make FDI in that country for entry in that country’s business practice.
Apart from this the economic condition of every country has decreased due to the Covid-19 impact. The exchange rate of all developed countries is affected in a pandemic situation. The exchange rate is unstable and fluctuates as per “world economic conditions”. The exchange rate also affects the business practices of different countries and projects of different businesses. As opined by Jiang and Krishnamurthy (2021), any company makes heavy investment through projects and FDI for expanding business as well as acquiring the marketplace of that country. Besides, the exchange rate may also fluctuate through business policy of that country and FDI in the current year. FDI plays a vital role to control exchange rate and steps for fracture exchange rate. Besides, the political factors of any country may be affected by the exchange rate and economical condition through policy and development steps by the government.
The exchange rate in future may also fluctuate due to again covid-19 pandemic or lockdown process. On The other hand, there is a maximum possibility that the exchange rate may decrease. As stated by Ottonello, (2021), nevertheless the exchange rate may be improved through one step, that is maximum business organisation can perform business operations through digital mode and implement artificial intelligence in business processes. Thus organisations may consider exchange rates to mitigate financial risks through developing an effective project.
Conclusion
Globalisation mainly depends on “financial management and performance” of any business organisation. Thus it is the responsibility of project managers that consider financial performance to take steps to develop strategy and decisions for project development. On the other hand, the project must be developed by considering that the project will not affect the environment negatively. Besides, any business organisation also considers the economic condition and political condition of that country before establishing a new business and entity. The exchange for projects also plays a vital role and assists the business industry to select projects based on the rules and economical environment of the country.
Reference
Journals
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