A regional bank has decided to open an office overseas for serving those businesses that are expanding internationally. Choose a country with a large financial center that you believe would be helpful to your customer base.
- Discuss some of the challenges you may face in this new environment.
- What are the cultural, ethnic, social, and educational characteristics?
- Describe the political and legal systems.
- How much does the government intervene in the private sector?
- How will that affect your financial institution?
- What type of economic system does it have?
- What is the history of that economic system?
- How is the country involved in international trade?
- How does the government get involved in trade issues?
- Will that help or hurt your financial institution?
- Will your presence in this country be helpful in your attempts to invest in other developing countries?
- Is this country involved in any regional integration efforts? How so?
- Why did you choose this location for your bank?
- As a manager, what would be your overall assessment about whether you want to pursue opening an office there?
- Are the financial risks worth taking?
- Will it be beneficial to all of the stakeholders?
- If you decide to pursue this, what type of presence do you think would be best suited to your objectives?
- discuss its options and the foreign exchange aspects that affect the financing for the MNC. Include the following:
- Foreign currency risk
- Why they need to hedge foreign exchange
- What sort of foreign exchange instruments you would recommend
- Whether they have to be aware of any government regulations that would affect earnings and cash flow
- Include the need to be aware of inflation and interest rates and how it affects exchange rates.
- Keep in mind that the country that the plant is in does not necessarily have to be where the financing is done.