The IFD module has two elements of assessments:
The group will be required, for a selected foreign country, to evaluate and articulate the key issues which a commercial organisation will have to consider and appraise for a potential international investment . A detailed scenario will be presented in the workshops.The presentation should be no longer than 15 minutes. This will be followed by a question and answer session of approximately 10 minutes during which all team members are expected to respond.
Business Report: 80%
General Report Requirements:You are required to write a report for a business proposal involving a UK based business to establish an overseas operation. Each student will be given a different scenario of a UK based company’s proposal to establish an overseas operation.
a) Whether or not the project should be undertaken
b) A strategy for the on-going management of Forex risk which may arise as a result of such expansion should it go ahead
c) Advice on the organisational behavior & structure and financing arrangements which the company should adopt if it were to undertake such a project
Your report should be fully referenced, and your decisions should be backed up by appropriate calculations, and use real world data where appropriate.
NEXT PLC
UK retailer Next PLC admitted that its sales were "disappointing" as the company faced dampened consumer confidence”. Next PLC’s CEO at a meeting with the business development team has directed the team to accelerate the Board of Directors “BOD” approved strategic plan to grow overseas. Next PLC currently has a very limited overseas trading however 50% (by value) of its supply chain is based in China with rest in the UK.
1.Alternative market entry opportunities
Following the selected territory, the company’s finance director will than carry out a more detailed analysis for the proposal. This will be presented in a report format (individual student work) to the BOD.
You are the Finance Director of Next PLC, a UK based company with limited international operations. The company is primarily a fashion and home ware retailer operating a chain of stores and an online operation across the UK, and also some internationally. More information about the company can be found on http://www.next.com. Over recent years the company has had a mixed performance which has been tested in the current UK macro- economic climate. The Company is seeking to build on its well established UK operations to excess customers on the global stage. It is seeking to enter various overseas territories which it has identified as a priority. You will all be provided with a different investment scenario (example below) to consider, but the general guidelines will be the same.
You are required to write a report of no more than 3,000 words outlining the following:
a) A recommendation as to whether the project should be undertaken? Your recommendation should be fully justified based on a detailed financial appraisal and analysis of the foreign investment opportunity.
b) A detailed consideration and evaluation of specific foreign exchange exposure arising from the investment together with a detailed hedging and management of this potential risk.
c) A strategy for the management of foreign exchange risk which may arise as a result of investment and on-going activities.
d) Evaluation and selection of the appropriate organisational structure and financing arrangements taking into account any risks and opportunities presented by trading in the a new country.
Your report should be fully referenced, and your decisions should be supported by appropriate calculations, and use of real world data where appropriate.
Next PLC (“NEXT”)are considering opening a series of shops in the USA. It is estimated that each shop will cost approximately $5m to set up, and that they would open 100 shops over the course of two years (spread evenly over that time). Each shop opening cost includes fixtures and fittings of $1m, which is allowable for tax on a straight-line basis of 20% per annum. The other $4 million will be spent on a 5-year lease. This means that ALL of the cash is payable up front and no on-going rental cost is payable for the 5 years. However this cost should be spread in the income statement for tax purposes. Market research costing £500,000 has indicated that in the first year, each shop will expect sales of $5m. Each shop sales will grow at 25% in the second year and 10% per annum there after (including the effect of inflation). Gross profit margins are expected to be 40% based on current prices and exchange rates. 50% of goods will be sourced in the US, and the remaining 50% will be supplied from the UK via NEXT head office. Local operating costs of $1million per annum per shop will be incurred. These costs are expected to move in line with local inflation. In addition, monitoring and management costs of £2m per annum to cover all shops will also be incurred in the UK in relation to this venture. Any excess funds from the US stores will be returned to the UK at the end of the year.
1. a student presentation comprising 20% of the marks for the module
2. a 3,000-word (+ or – 10%) individual report comprising 80% of the marks for the module.
2. a 3,000-word (+ or – 10%) individual report comprising 80% of the marks for the module.
The presentation will be done in a groups. The tutor will select a group. Each group is given a selected country in which a UK based public company is proposing to carry out an investment.
Assessment 1
Presentation: 20%
The group will be required, for a selected foreign country, to evaluate and articulate the key issues which a commercial organisation will have to consider and appraise for a potential international investment . A detailed scenario will be presented in the workshops.The presentation should be no longer than 15 minutes. This will be followed by a question and answer session of approximately 10 minutes during which all team members are expected to respond.
Assessment II
Business Report: 80%
General Report Requirements:You are required to write a report for a business proposal involving a UK based business to establish an overseas operation. Each student will be given a different scenario of a UK based company’s proposal to establish an overseas operation.
Know about Accounting Operations Solutions.
Detailed brief will be given during the teaching sessions, but the general requirements are presented here.
a) Whether or not the project should be undertaken
b) A strategy for the on-going management of Forex risk which may arise as a result of such expansion should it go ahead
c) Advice on the organisational behavior & structure and financing arrangements which the company should adopt if it were to undertake such a project
Your report should be fully referenced, and your decisions should be backed up by appropriate calculations, and use real world data where appropriate.
Assessment details
1.Assessment I ( group presentation)
NEXT PLC
UK retailer Next PLC admitted that its sales were "disappointing" as the company faced dampened consumer confidence”. Next PLC’s CEO at a meeting with the business development team has directed the team to accelerate the Board of Directors “BOD” approved strategic plan to grow overseas. Next PLC currently has a very limited overseas trading however 50% (by value) of its supply chain is based in China with rest in the UK.
The BOD report had identified the following markets as a high priority:
US, Japan, Australia, Germany, France, Canada, Italy & Switzerland.
The CEO has requested the team to prepare a preliminary report which should evaluate and consider the following aspects of doing business in an overseas market:
US, Japan, Australia, Germany, France, Canada, Italy & Switzerland.
The CEO has requested the team to prepare a preliminary report which should evaluate and consider the following aspects of doing business in an overseas market:
1.Alternative market entry opportunities
- Green field
- Acquisition of local operator
- Licensee/ franchise operation
- Foreign currency exposure
- Double taxation
- Ability to repatriate local profits
- Corporate structuring
- Financing
- Recruitment and management of personnel from a distance
- Management and respect of cultural differences
- Alignment of emoluments with local performances
Following the selected territory, the company’s finance director will than carry out a more detailed analysis for the proposal. This will be presented in a report format (individual student work) to the BOD.
2.Assignment II (individual report)
General Instructions
You are the Finance Director of Next PLC, a UK based company with limited international operations. The company is primarily a fashion and home ware retailer operating a chain of stores and an online operation across the UK, and also some internationally. More information about the company can be found on http://www.next.com. Over recent years the company has had a mixed performance which has been tested in the current UK macro- economic climate. The Company is seeking to build on its well established UK operations to excess customers on the global stage. It is seeking to enter various overseas territories which it has identified as a priority. You will all be provided with a different investment scenario (example below) to consider, but the general guidelines will be the same.
Required
You are required to write a report of no more than 3,000 words outlining the following:
a) A recommendation as to whether the project should be undertaken? Your recommendation should be fully justified based on a detailed financial appraisal and analysis of the foreign investment opportunity.
b) A detailed consideration and evaluation of specific foreign exchange exposure arising from the investment together with a detailed hedging and management of this potential risk.
c) A strategy for the management of foreign exchange risk which may arise as a result of investment and on-going activities.
d) Evaluation and selection of the appropriate organisational structure and financing arrangements taking into account any risks and opportunities presented by trading in the a new country.
Your report should be fully referenced, and your decisions should be supported by appropriate calculations, and use of real world data where appropriate.
Scenario 1
Next PLC (“NEXT”)are considering opening a series of shops in the USA. It is estimated that each shop will cost approximately $5m to set up, and that they would open 100 shops over the course of two years (spread evenly over that time). Each shop opening cost includes fixtures and fittings of $1m, which is allowable for tax on a straight-line basis of 20% per annum. The other $4 million will be spent on a 5-year lease. This means that ALL of the cash is payable up front and no on-going rental cost is payable for the 5 years. However this cost should be spread in the income statement for tax purposes. Market research costing £500,000 has indicated that in the first year, each shop will expect sales of $5m. Each shop sales will grow at 25% in the second year and 10% per annum there after (including the effect of inflation). Gross profit margins are expected to be 40% based on current prices and exchange rates. 50% of goods will be sourced in the US, and the remaining 50% will be supplied from the UK via NEXT head office. Local operating costs of $1million per annum per shop will be incurred. These costs are expected to move in line with local inflation. In addition, monitoring and management costs of £2m per annum to cover all shops will also be incurred in the UK in relation to this venture. Any excess funds from the US stores will be returned to the UK at the end of the year.
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