INTL-303 International Financial Institutions and Trade Finance
ASSIGNMENT 3 – GROUP REPORT PART 1 and PART 2 (Worth 35% of total grade)
Group Project Description
This assignment is divided into two parts:
· PART 1 is assignment #3 (due in week 6) is worth 15% of your overall individual grade. For Part 1 you will deliver a minimum of 8 pages. You are required to answer questions 1-4. The assignment is due by the end of week 6 (submission 1, assignment 3)
· PART 2 is assignment#5 (due in week 12) is worth 20% of your overall individual grade. For Part 2 you will deliver a minimum of 10-pages.
PART 1 is assignment #3 (due in week 6)
· Read through the assignment and discuss all the questions. The questions are linked.
· I suggest that you create a shared document. All responses must be aligned.
· Decide on a product or raw material that you will import
· Decide on a foreign supplier, note the supplier’s country. The supplier’s country is the host country and Canada is the home country. Your foreign supplier must be real.
· Decide on the amount of financing you will need to purchase products or raw material from your foreign supplier.
· Assign a question to teach group member. Each member will be graded based on question response. Tag your name to the question you have answered.
At the start of the course students will be assigned two companies, either Canadian or USA corporations. One company you will be required to run and the other you will be required to monitor its stock prices.
Include at least two references other than in addition to your textbook. Cite references in text and create a reference list at the end each document under the heading References. Follow APA 7 format.
Please review the Rubric for each part of the assignment on eCentennial to maximize your grade.
To submit your file, rename it as follows: Group#_Assignment#-INTL-303. Upload the document to the assignment drop box.
Submit each report through Turnitin with a maximum similarity of 20% (files not submitted through Turnitin will earn a zero grade).
A late penalty of 10% per day will be levied on late submissions.
A template is located in the course document menu.
Points to Note
This project allows you to learn more about international investing and about firms that compete in the global arena.
You will be assigned a Canadian or USA company to run. The focus is to extend the company’s product line. You are required to identify an international supplier to purchase a product or raw material to meet this goal.
You will also be assigned a USA or Canadian multinational corporation (MNC), for which you are required to monitor the company’s stock.
You will be required to do the following:
· Evaluate the financial need of your MNC and choose the most cost-effective way to finance your purchase.
· Examine the existing markets and evaluate the strengths and weakness of your MNC.
· Analyze the risk of entering a foreign market.
· Conduct a research and review the performance of your MNC, the corporation stock being monitored over the last 2 years and monitor the stock for the last 12 months.
· Explain the performance of the corporation and why it performs well or poorly relative to the overall market index.
· Research and explanations should provide some insight into what is driving the valuation of a corporation over time and how the MNC protects its value.
· Conduct corporation research on sites like: www.msn.com, Yahoo Finance, Google Finance, Market Watch, Morningstar, Seeking Alpha, Financial Post, CNBC.com and Bloomberg.
Requirements for the Reports
Multinational Corporations (MNC) are defined as firms that engage in some form of international business. Their managers conduct international financial management which involves international investing and financing decisions that are intended to maximize the value of the MNC. The goal of these managers is to maximize their firm’s value. The MNC objectives are to identify new markets to increase market share, invest excess cash, and ensure the soundness of any host country’s financial market. As the CFO you are asked to analyze the strengths and risk of a potential new market and prepare a report to present to the Board. You will be given 8 questions to answer, and each question will represent a heading in your documents.
PART 1: Answer the first four questions. Each group member should respond to one question and put their name next to the response they provided. One person in the group will put all answers together following APA format (including references), using each question as a heading, and submit only one file.
PART 2: Answer questions 5 through 8 as a group (use the questions as a separate heading). Create a full document (questions 1 through 8) and include the following: an introduction, analysis (thorough answers to the questions with supporting evidence), conclusion, and references. You can decide as a group, how to divide the work for the introduction, conclusion, and references, and who will put the report together for delivery. Remember that only ONE file should be submitted for the group.
1. Overview of the Corporation.
(A) Provide an overview of the corporation (your professor will assign you a Multinational Corporation (MNC) to include but not limited to, when and how it was incorporated, by who, the board of directors, specific interest of the corporation, its headquarters, size, regions of operation and strength in the market.
(B) The MNC wants to expand its product line in Canada. Choose a product that you can adopt to extend the MNC’s product line and explain your reasons for choosing the product. (For example, Aldo sells shoes and accessories and could extend their product line to include perfume). You can purchase a product or raw material to produce a product.
(C) Explain the gap (the need for the product, support your argument) in the market.
(D) Explain the potential for growth (why do you think the product will sell well in the Canadian market, support your arguments).
(E) Discuss if the corporation has a competitor (identify your competitors and discuss your competitive advantage).
(F) Provide an overview of the supplier and why you chose the supplier (identify a supplier in a foreign country and discuss why you chose the supplier).
2. MNC Financing. The MNC will need financing to purchase the product or raw material from the new supplier.
(A) Discuss the amount of financing needed, explain how you arrived at the amount and how it will be spent.
(B) Discuss the options for financing as discussed in class/lecture notes (bonds, stock, and bank).
(C) You will choose to finance from the bank. Discuss why the option is most suited for your MNC.
(D) Explain how your bank can protect itself from asymmetric information?
(E) Explain the role of the financial report and how does it help financial institutions and investors when analyzing a financial decision?
3. Stock Investment. The CFO has noticed a constant increase in the stock market and sees this as a good opportunity to purchase stock as an investment. (Your professor will assign the company’s stock you should monitor).
(A) Before purchasing the stock, you must examine the corporation’s financials for the last two years and discuss the performance of the company.
(B) Discuss the reasons for changes in the stock price for the last 12 months. Finance.yahoo.com www.msn.com. Yahoo Finance, Google Finance, MarketWatch, Morningstar, Seeking Alpha, Financial Post, CNBC.com and Bloomberg can assist you to find the most current news about your corporation.
(C) Make your recommendations to the Board, should the MNC purchase the stock you are asked to monitor, yes/no and explain your reasons.
(D) Apart from the stock you are asked to monitor, choose another stock that you would recommend to the CFO to purchased and explain the reason for your choice
4. Foreign Exchange Risk. As a MNC you encounter foreign exchange risk.
(A) Discuss the different options for hedge receivables and payables (as discussed in class). Recommend to your Board the best hedging strategy for the MNC.
(B) As an MNC, when would you use the spot rate? Explain your answer.
(C) If the MNC currency’s is weaker, how will it impact your purchase (from question 2) and profits?
(D) Go to www.oanda.com Click on “Currency Tools”, then “Historical Currency Conv