university of delaware

In class we reviewed three firms in three different countries. The M/S Milad Nor Company in Afghanistan, Caritex in Bulgaria, and Obod in Montenegro. Each company was faced with different problems and issues. Please briefly summarize the similarities between the firms and their individual issues. How do the problems faced by these firms compare to problems faced by similar firms in more developed countries? a. Building a business is never an easy task add the uncertainty inherent in an emerging market, an undeveloped regulatory environment, and lack of access to reasonably-priced capital and the challenges become almost insurmountable.

In spite of the odds emerging markets are full of examples of entrepreneurs that faced these challenges and gone on to create successful businesses providing benefits to their customers, employees, and sources of capital. Unfortunately, many entrepreneurs fail along the way “Obod” holding electrical appliances industry is situated in the town of Cetinje, in the south of Montenegro, 30 km away from Podgorica, the capitol of Montenegro. The overall financial and operational picture for OBOD is dismal.

OBOD has not reported a real profit for 12 years and most of the revenue producing units do not cover their own expenses much less the expenses of the support units. The Company is out of cash and has very little raw materials available. OBOD is grossly overstaffed and existing employees are unhappy and unmotivated. Further, the primary product markets OBOD sells in are rapidly shrinking due to the ongoing political and economic difficulties in the region.

In addition, international producers have entered the market with newer, more modern, and more efficient products than what OBOD offers. Given the present situation, OBOD is grossly overstaffed. An engineer from the horizontal freezer factory showed me an analysis prepared in 1989 for the number of workers needed for different levels of production. For an output of approximately 120 000 units per year 158 employees were recommended. Last year (1998) the freezer factory produced 27 602 units employing 428 workers. 2.

Your stock market simulation calls for you to invest in securities with a significant presence outside the US – debt, equity, commodities, currencies, derivatives… In researching equities trading on exchanges outside of the US what similarities/differences have you found compared to firms trading on exchanges in the US? b. This one you can talk about how the stock market in china when a securities is trade in the market falling badly, the exchange normally ban the securities from trading for the rest of day, also the operating hour for exchange are typically shorter in China?

Also in china government steps in whenever the market is on trouble. 3. 4. What are the key differences in the goals and motivations of family ownership of the business as opposed to the widely held publicly traded business? A privately held firm has a much simpler shareholder return objective function: maximize current and sustainable income. The privately held firm does not have a share price (it does have a value, but this is not a definitive market-determined value in the way in which we believe markets work).

It therefore simply focuses on generating current income, dividend income, to generate the returns to its ownership. If the privately held ownership is a family, the family may also place a great emphasis on the ability to sustain those earnings over time while maintaining a slower rate of growth which can be managed by the family itself. It is therefore critical that ownership and ownership’s specific financial interests be understood from the very start if we are to understand the strategic and financial goals and objectives of management. . High capital mobility is forcing emerging market nations to choose between free-floating regimes and currency board or dollarization regimes. What are the main outcomes of each of these regimes from the perspective of emerging market nations? 1. On January 4, 1999, eleven member states of the European Union initiated the European Monetary Union (EMU) and established a single currency, the euro, which replaced the individual currencies of participating member states.

Describe three of the main ways that the euro affects the members of the EMU. The euro affects markets in three ways: 1) countries within the euro zone enjoy cheaper transaction costs; 2) currency risks and costs related to exchange rate uncertainty are reduced; and 3) all consumers and businesses both inside and outside the euro zone enjoy price transparency and increased price-based competition. 2. Why did the fixed exchange rate regime of 1945–1973 eventually fail?

The fixed exchange rate regime of 1945-1973 failed because of widely diverging national monetary and fiscal policies, differential rates of inflation, and various unexpected external shocks. The U. S. dollar was the main reserve currency held by central banks was the key to the web of exchange rate values. The United States ran persistent and growing deficits in its balance of payments requiring a heavy outflow of dollars to finance the deficits.

Eventually the heavy overhang of dollars held by foreigners forced the United States to devalue the dollar because the U. S. was no longer able to guarantee conversion of dollars into its diminishing store of gold. 3. With so many new countries joining the European Union in 2004, when will they officially move to the euro—if ever? Im currently working on chapter 4 I let you know two those question before class…

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