FN7226 Managing Resources in the International Business Environment Assignment Sample 2023
Question 1
a. Backlash against globalization
The impact of several political events and trade negotiations policies visualizes certain issues in the global trade economy. Trade regimes and multilateral finance schemes create challenges in the international monetary funds. Modification in the monetary policies and increase in the foreign competition implements several challenges to the UK small and medium commercial markets. As opined by Horner et al. (2018), change in the trade efficiency rules the supply and demand of the UK market get affected which stimulates exchange rates of the UK market. Furthermore, the involvement of the political dimensions into the global economy presents difficulties in the global trading system. Cultural globalization increases the level of competition in the UK market as it is going tough for UK business to maintain their sustainable operational performances for a longer period of time. An increase in the total number of firms in the global market eliminates the chances of making an expansion of its business in the upcoming years.
b. Identification of the particular challenge and opportunities of globalization
Financial institutions might face problems in global expansion as tariff and export fees will be increased in the upcoming years. As stated by Wrone et al. (2020), corporate firms are concentrated on expanding operational activities as it chooses foreign markets for making sustainable growth in the business. Countries will indulge with increasing their total earnings by incrementing exporting and importing duties of the company.
An increase in the importing and exporting duties restricts the financial activities of the business. In this regard, companies will reduce total exporting products of their business as it is considered as one of the negative aspects of globalization. The most effective solution that the business can adopt in the future is to concentrate on making operational activities in the foreign market. If the financial institutions concentrate on the operational activities its demands will be increased. Their demand for exporting the products will be reduced. Reduction in the exporting activities of the financial institutions can be able to mitigate the export fees and tariff duties of a particular country.
c. Political impact on the backlash against globalization
Globalization helps in making the financial institutions more communicative to each other as it resulted in certain changes in the planning systems of the economy. Globalization interrupts the political stability of a country as a wide range of local companies enter the foreign market certain challenges in the business. As idealized by Anderson and Obeng (2021), the change in the industrial regulation act is concentrated on increasing tariff rates and exporting rates. An increase in the total exporting rates creates certain challenges in the financial expansion of the business. Change in the industrial agreements and implementation in the planning strategies increase complexity in the overall financial expansion of the business. Modification in the industrial regulation strategies visualizes difficulties in making the expansion of the operational services of the business. Thus, it can be viewed that globalization has a negative impact on the political stability of the economy.
d. Economical impact connected with the backlash against globalization
Globalization facilitates making the exchange rate among different currencies flexible as it is tough to get a fixed amount of profit from foreign business. An increase in the exchange rate on a currency denotes that the organization can be able to earn a higher amount of profit by selling a similar volume of products in the future. As discussed by Razzaque (2017), increasing the cost of living expenses and increasing the labour costs creates financial problems for the financial institutions. Due to globalization, workers are able to travel to different corners of the globe to improve their wage rates. As they cannot be motivated at lower wage rates, an increase in the wage rate of the employees is associated with changing consumer habits. Volatile change in the consumption rates visualizes as a change in the total market structure of the financial institutions.
e. Connection of environmental impact on the backlash against globalization
The supply of the products has been observed as two types more than overall global demands. A single firm can be able to expand its business in different countries as it needs to maintain corporate social responsibilities in its business. Supply chain management of multinational companies is affected as its impact can be observed in the environment as well. As narrated by Dluhosch (2018), excessive greenhouse gas emissions have affected stability in the global environment. Furthermore, loss of biodiversity and global warming are considered two major environmental impacts of globalization. The total level of pollution has been increased in this period which makes a drastic impact on the global monetary policies. An increase in the total level of pollution and change in cultural values makes a sustainable impact on consumerism and work rhythms. However, globalization tends to cause destruction in the ecosystem, depletion of natural resources, loss of biodiversity, and deforestation in the economy.
f. The technological perspective of backlash against globalization
Developing financial institutions are using the latest scientific technologies for making sustainable development in their business. On many occasions, small and medium organizations in the UK market are not able to make the sustainable implementation of the technological factors into the business. Financial activities and technological implementation into the business need to be maintained in such a manner as it can be effective to evaluate technological sustainability within the organization. As narrated by Butzbach et al. (2020), globalization increases the level of competition in the UK market. In this regard, technological implementation is an effective way to survive in the commodity market in the UK. Those firms have a sustainable volume of funding policies, which can be able to increase the operational efficiency of their business.
g. Current global economic development
Current global economic development is concentrated on increasing the total operational activities of the business. As opined by Frieden (2018), the large corporate organization takes control in the market, small and medium financial institutions are controlled by the larger sectors. The motive is to expand the financial activities of the companies as it can help in developing operational stabilities within the organization.
Question 2
a. Discussion on the viability of both projects
The viability of the project can be determined with the help of ascertaining the economic benefits of that project. Based on the cost-effectiveness analysis, the economic benefit of a particular project can be determined with the help of evaluating the economic costs of the business. With the help of monitoring the cost-effectiveness of the business and evaluation of the monetary policies analysis, the viability of the project can be determined. As narrated by Agyekum et al. (2020), change in the operational activities and maintenance of the financial policies can be effective to maintain the operational sustainability of that project. Based on the total; investment amount of two or more two projects, the project viabilities can be estimated. According to the case study, international business has two investment projects in two different currencies. In both of the schemes, the financial policies are complementary to each other as in both of the investments; the investment money is $20 million.
Differentiation in the total net cash flows received within a given period of time is associated with the change in the operational activities of the business. In the incorporation year of this project, the selling revenue will be $2 million. However, the change in the total money collection on selling revenue in EUR Europe is comparatively low than the total amount received in the USD USA projecting. As narrated by Silva et al. (2019), making sustainable growth in the business activities of an organization helped in reflecting that the financial sustainability of the business has been affected in this period. Collection of the required natural sources within the business can help in improving operational stabilities within the business. According to the case study\, third years’ total earning is better than that of the EUR Europe project. Execution of reasonable operational services can be effective in identifying financial policies of the business.
Allocation of the discount rates
Allocation of the discount rates has been developed with the help of the operational projection of the business. In both of the investments, the discounting rates have been selected as 10% per annum. As narrated by Azeredo et al. (2020), incrementing financial strategies and making sustainable changes to the project activities can help in developing operational activities of the business. Thus, discount rates have been observed as 10% in these two projects in which the operational viabilities of the project have been determined. However, change in the financial policies and making the development of the operational strategies can help in developing financial movement analysis of the business. Potential analysis of the business and target audiences evaluation can be effective in implementing operational strategies of the business. The discount rates for the 1st to 5th year are determined as 0.91, 0.83, 0.75, 0.68, and 0.62 respectively.
b. Investment needed for each project
Change in the selling revenues and modification of the discount rates are interconnected with ascertaining the viability of the particular project. Estimation of the time value of the money and determination of the net present value helped in evaluating the time value of a particular project.
Total five years values have been interpreted in this project as a financial project have been prepared based on operational performance analysis of this project. Hence, the project which has a higher NPV should need to be selected for making sustainable development of the business. As stated by Hawari et al. (2021), higher NPV denotes a higher volume of the total selling activities in the project. Thus, it is recommended to evaluate the operational activities and marketing strategies of a particular project to evaluate certainty within that project. However, discounting factors should need to be followed to evaluate the NPV of a particular project. A total of 20 million investments are required for each project and a project in EUR Europe is more viable than USD USA currency project.
c. Determination of the NPV of both projects
NPV is calculated based on multiplying actual cash flows with discount rates of the organization as a change in the operational activities and improvisation of the business activities can be effective to implement financial development of the business. As opined by Burgi et al. (2017), the project which can be able to repay the initial money invested within the project has been considered as the most viable project among the alternatives. In this regard, it can be viewed that discount rates have a huge impact on the estimation of the discount rates in the business. Change in the marketing strategies and modifying financial activities of the business helped in the adequate projection of the NPV. Based on the comparative analysis of the viability of the projects, it can be able to select the viable projects among those projects. Same discount rates have been used for two investments as the main concentration should need to be developed on the cash flows of the investments.
Estimation of the NPV of the 1st project
| Discount Rates | |
| Year | 10% |
| 0 | 1.00 |
| 1 | 0.91 |
| 2 | 0.83 |
| 3 | 0.75 |
| 4 | 0.68 |
| 5 | 0.62 |
| Particulars | Net cash flow (Million) | |||
| Year 0 | -20 | |||
| Year 1 | 2 | |||
| Year 2 | 4 | |||
| Year 3 | 5 | |||
| Year 4 | 6 | |||
| Year 5 | 8 | |||
| USD USD | ||||
| Cash flows (£ms) | Cash Flows (Million) | CCF (Million) | DCF @10% (Million) | PV (@10%) (Million) |
| Year 0 | -20 | -20.00 | 1.00 | -20 |
| Year 1 | 2.00 | -18.00 | 0.91 | -16.3636364 |
| Year 2 | 4.00 | 6.00 | 0.83 | 4.958677686 |
| Year 3 | 5.00 | 9.00 | 0.75 | 6.761833208 |
| Year 4 | 6.00 | 11.00 | 0.68 | 7.513148009 |
| Year 5 | 8.00 | 14.00 | 0.62 | 8.692898523 |
| NPV (Million) = | 11.56 | |||
| Net present value = (Summation of the total present value of a machine’s whole life) | ||||
Table 1: Estimation of the NPV of the 1st project
(Source: MS Excel)
The 2nd year’s discounted cash flows are $4.95 and $4.13 million respectively as it seems that the investment project in EUR Europe currency has been able to generate an adequate amount of profit from the operational activities. In the third year, the total cash flows from operating activities of project USD USA is comparatively high than the EUR Europe projecting. As narrated by Keeley and Managi (2019), NPV helps in calculating ambiguous measurements about the profitability of the investment. However, change in the operational activities of the organization can be effective to evaluate the financial activities of the company. Estimation of the present cash flows and evaluation of the marketing strategies of the project can be effective in implementing marketing policies of the organization.
Estimation of the NPV of the 2nd project
| Discount Rates | |
| Year | 10% |
| 0 | 1.00 |
| 1 | 0.91 |
| 2 | 0.83 |
| 3 | 0.75 |
| 4 | 0.68 |
| 5 | 0.62 |
| Particulars | Net cash flow (Million) | |||
| Year 0 | -20 | |||
| Year 1 | 2 | |||
| Year 2 | 3 | |||
| Year 3 | 4 | |||
| Year 4 | 8 | |||
| Year 5 | 8 | |||
| EUR Europe | ||||
| Cash flows (£ms) | Cash Flows (Million) | CCF (Million) | DCF @10% (Million) | PV (@10%) (Million) |
| Year 0 | -20 | -20.00 | 1.00 | -20 |
| Year 1 | 2.00 | -18.00 | 0.91 | -16.3636364 |
| Year 2 | 3.00 | 5.00 | 0.83 | 4.132231405 |
| Year 3 | 4.00 | 7.00 | 0.75 | 5.259203606 |
| Year 4 | 8.00 | 12.00 | 0.68 | 8.196161464 |
| Year 5 | 8.00 | 16.00 | 0.62 | 9.934741169 |
| NPV (Million)= | 11.16 | |||
| Net present value = (Summation of the total present value of a machine’s whole life) | ||||
Table 2: Estimation of the NPV of the 2nd project
(Source: MS Excel)
Based on analyzing the viability of the project, it can be decided that the project viability of the USD USA project is comparatively good than the EUR Europe project. According to the business context goals it is recommended to make an investment in the USD USA project as it has a higher volume of NPV in its operational activities. As believed by Nasucha et al. (2019), making sustainable changes in the operational activities and making developments in the business activities can help in implementing the operational activities of that business. Thereafter, it is recommended to make an investment of $25 million as it can help in making the project effective and profitable in the upcoming years.
d. Discussion on the change in exchange rates
Fluctuation in the exchange rates is dependent on the economic performances of the country, changes in the inflation rates, and capital flows of the economy. The exchange rates of a particular currency are associated with determining the weakness and strengths of the country. Whenever the economic performances of the country increase it denotes that exchange rates of the country increased during that period. As idealized by Galeshchuk and Mukherjee (2017), a reduction in the total economic performances of the organization and a decrease in the total exchange rates denote that operational performances of the organization decreased in this period. An increase in the inflation rates makes a negative impact on the total currency value and pricing strategy of the economy. However, the implementation of the fixed and floating exchange rates makes a sustainable impact on the pricing policies of the economy.
Change in the exchange rates directly affects the operational activities of the business as the overall cost of suppliers and expenses related to supply chain management is affected due to change in the exchange rates. As narrated by Engel and Wu (2018), one of the basic reasons for the fluctuation of exchange rates is trade movement, increase in the importing activities over exporting activities directly interconnected with change in the exchange rates of an economy. However, it can be viewed that an increase in the total volume of exporting activities over importing activities considers that operational activities of the organization increased in this period. International capital movements are considered as one of the possible reasons for too many fluctuations of the exchange rates in the economy. Making long-term investments in foreign securities might have the chance of increasing the total rate of exchanges in the business.
An increase in the demand for foreign securities is associated with fluctuation the exchange rates of the economy. According to the current world economic climate, an increase in the total volume of loans within a country reduces the exchange rates of the economy. As believed by Stasiak (2018), repatriation in the foreign capital increases the chances of making the development of the stock exchange rates of that economy. Purchase of the excessive volume of foreign securities helped in maximizing the total wealth of the economy as it is directly connected with an increasing exchange rate of a particular currency. Concentration on speculative transactions and anticipation of the seasonal movements are directly connected with changing the exchange rates of the currency. However, banking operational activities have a direct connection with the change of the exchange rates. Increase in the transfer funds, bills of exchange, selling demand drafts, and foreign investments associated with increasing exchange rates of the economy.
Possible measures to mitigate fluctuations in exchange rates
Fluctuations in the foreign exchange rates can be restricted with the help of implementing certain measures and operational strategies into the business. The financial institution can be able to sell foreign assets of the business as it can be able to restrict fluctuation in the exchange rate of the economy. As narrated by Mavragani et al. (2020), modification in the interest rates and estimation of the financial changes in the business activities is associated with an increasing total rate of exchanges in the business. Reduction in the total level of inflation helped in maintaining stability in the exchange rates of the economy. Implementation of supply-side policies helped in visualizing long-term perspectives within the business as it helps in evaluating the financial objectives of the business. An increase in the value of total assets helped in presenting a long-term perspective of the business as it facilitated enhancing operational stabilities within the business.
Operational activities of the business need to consider foreign exchange risks within the business as forward exchange rates should need to be used to maximize operationally activities of the business. Application of the forward exchange contract technique helped in making forward exchange contracts as fixed exchange development options within the business. As believed by Khraief et al. (2021), an increase in the financial activities and selection of the currency options strategies is one of the vital aspects in the business as it can help in maintaining stable development within the business. Improvisation of the business activities and making sustainable development can help in making the operational activities of the business effective and progressive. Modification in the pricing strategies of an organization can be effective in maintaining sustainability in the pricing policies of the organization. Hence, maintaining a balance of payment system can help in improving the forward exchange rates of the business.
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