APA, PROVIDE RESOURCES, 8 pgs & Spreadsheet

For this project, you are taking on the role of a financial advisor to a company considering global expansion. You will use Jones Lang Lasalle, a publicly traded U.S. company and a country into which that company can expand its business (consider a Caribbean country that the company is not already in). Your job is to research the country from an economic standpoint to determine the feasibility of the expansion. This will include investigating the microeconomic and macroeconomic environments, exchange rates, and risk factors. Additionally, you need to propose a funding source and foreign currency financing strategies as well as how to repatriate the expected profits. You will prepare an executive summary for the board of directors, with each of the sections below as supporting details based on your research.

Specifically, the following critical elements must be addressed:

Introduction: This section of the analysis paper is an opportunity to add context about the company and country you selected to make the focus of this paper. You may explain a specific product that is being launched or relaunched in the global market; that information would also be included in this section.

A. Justify your company selection. Describe your selected company: its country of origin (headquarters), its business, and the industry it is in. As a reminder, the company should be publicly-listed and have financial statements listed with the SEC; the company should also be multinational— that is, it does business in foreign currency and hedges its foreign currency risks.

B. Justify the country into which your company will expand. Explain why your selected company wishes to expand to this country. Keep in mind the following: try to select a country where the product is not currently sold; you can select any country as long as you can clearly justify your reasoning. In some cases, it might be hard to find a country that the company does not have any presence (e.g., McDonald’s). In this case, try to find a country without a specific product the company has on the domestic market.

Section 1: Broad Strokes of the Expansion Plan. In this section of the paper, you will explain the impact a variety of factors have on a company when expanding into global markets. Explaining these factors will prepare you to address the risk factors they create.

A. Describe the microeconomic and macroeconomic factors in the domestic market.

B. Describe the microeconomic and macroeconomic factors in the prospective global market.

C. Analyze the exchange rate regime in both domestic and prospective global markets. For example, do they have a fixed exchange rate or floating rate? Is it determined based on basket of currencies, etc.?

D. Explain how changes in economic factors impact exchange rates. One example of an economic factor is inflation. If domestic inflation increases, what would happen to the exchange rates? Use your particular foreign market to demonstrate. Be sure to consider other economic factors besides inflation in your answer.

E. Analyze the financial impact of exchange rate movements on a corporation. For example, if a U.S. multinational corporation is selling its good in a different market and the U.S. dollar strengthens, how would that impact the corporation’s finances? Would there be less or more revenue?

F. Explain the main risks and benefits of the proposed expansion. In other words, how would the company benefit from going into this particular market and what risks could it face from a financial point of view?

Section 2:

  • First, review the annual financial statements (Form 10-K) for your selected company. You can either retrieve the statements from the webpage SEC EDGAR Company Filings or directly from the company’s website, often listed under “Investor Information.”
  • Next, complete the spreadsheet: Foreign Currency Impact, which analyzes the foreign currency impact on your selected company. To complete this part of the milestone, you will need to review at least three years’ worth of annual financial reports.

Section 3: Risk Mitigation Strategies

A. Determine current financial and strategic impacts of international risks to inform risk mitigation strategies. In other words, what kind of risks is your company exposed to (translation, transaction, economic, operating, etc.) and why?

B. Explain how to mitigate foreign exchange rate risk.

C. Identify the tools the company is currently using to mitigate its foreign exchange risk. This should be done using the annual financial statements.

D. Calculate the financial impacts of international foreign exchange risk to inform risk mitigation strategies. This will be done in an Excel spreadsheet. There are instructions in the spreadsheet to guide you step-by-step through the exercise.

E. Propose future mitigation strategies based on the prospective market for your corporation including addressing risks that are not currently being efficiently mitigated for your corporation.

Section 3: Global Expansion Financing

A. Analyze the current capital structure of the parent company. This should be done using the current annual statements.

B. Determine the funding your corporation should secure for this expansion into a global market. For example, you need to determine if the company will finance its expansion by using debt, issuing new stock, or using retained earnings of its expansion. Look at the current capital structure and use it as a guide for the subsidiary structure.

C. Analyze the financing of the new expansion. Consider financial requirements and how foreign currency will be acquired. Since the company will need to have foreign currency (currency of the country it is expanding into) on hand from day one of the company operations, determine how it will obtain the foreign currency. What are the options of local financing—including any regulations on local currency reserves?

Executive Summary

A. Summarize your final recommendations on the expansion.

B. Describe ethical considerations inherent in the expansion proposal.