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International Finance “Your company, which is headquartered in the United Kingdom, is considering setting up a new manufacturing facility in Ruritania. Ruritania is a politically stable, economically developing Eastern European country. Last year, the annual growth rate was 3.2% and the rate of price inflation has averaged 5.2% per annum over the last year or so. Although Ruritania does not have a long tradition of democracy, the present Government has been democratically elected and new elections are due in Ruritania in approximately nine months’ time. There are two major political parties in Ruritania and recent opinion polls suggest that the present Government enjoys a 7% lead over the other major party. This opinion poll lead has remained reasonably stable for the last eight months. The other major party is also committed to democratic principles and a market based economy although, if elected, it is likely that they would increase both corporate and personal taxation to provide additional funding for their proposed social expenditure. The Crown (the currency of Ruritania) traditionally had a centrally managed exchange rate, but the Ruritanian Government allowed the Crown to float freely about four years ago. This, initially, resulted in a fairly large drop in the value of the Crown, but the Crown has enjoyed reasonable stability against major international currencies during the past eighteen months. There has been persistent press speculation that the present Government will peg the Crown against a major international currency within the next few months. http://www.ukassignment.org/ This would be a preparatory step prior to applying for inclusion in ERM 2. Ruritania is currently negotiating for membership of the European Union and hopes to join in about 2014. The total investment is expected to be, approximately, £ 55 million. The reasons for this proposal are to benefit from the low labour cost currently experienced in Ruritania and to establish a presence in the region, partly in order to deny the markets to your company’s global competitors. Foreign investment of this nature represents a new venture for your company. In the past, all manufacturing has been done in the United Kingdom, as the Board of Directors has considered foreign investment to be more risky than home investment. As the company’s Treasurer, you have been asked to draft a report, outlining the financial issues that you believe are important to this decision. Other members of the company’s management team are reporting on non-financial issues such as marketing and competition, operations management and human resource management and you can disregard these issues, except where they impinge on financial issues.” #p#分页标题#e#
Required: Draft your answer in the form of a management report. Word Limit: 2,500 words, excluding appendices. Authorship: This is an individual assignment. Students are welcome to discuss the assignment amongst themselves, but the report must be individually prepared. Deadline: The assignment must be submitted not later than Monday 11 JAN 10. Students are reminded that it is Business School policy to apply penalties to late-submitted work, except in exceptional circumstances. Advice: Credit will be given for carefully argued reports, which contain appropriate theory and are structured in an analytical and critical format leading to appropriate and clearly expressed conclusions / recommendations. Appropriate charts, diagrams, graphs and calculations of the author’s own invention are particularly welcomed where these add to the clarity of the report and provide evidence of the author’s understanding of the issues and theory involved. Credit will not be given for poorly structured, descriptive reports or for reports that lack appropriate conclusions / recommendations. Note that Ruritania is a fictitious country. There may be references to Ruritania on the Internet - they may well not be relevant to this Assignment.
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