Financial Management Strategies of MNCs: Global Capital Sourcing, Currency Exposure, and Cost of Capital

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University	University of Chester (UOC)
Subject	International Finance

Introduction

The word limit for the report is 2,000 words. However, this limit does not include the following:

• References
• Title page
• Tables and figures
• Material in the appendix
• Executive summary

focusing on select aspects of a firm’s financial position in a report can enhance the report’s clarity, depth of analysis, relevance, efficiency, specialisation, customisation, and targeted recommendations, ultimately providing greater value to stakeholders.
So, in this report, your task is to focus on three key aspects of an MNC’s strategy:
1. sourcing capital globally,
2. managing currency exposure, and
3. maintaining a competitive global cost of capital,
and examine how they affect its potential returns and risks. The primary stakeholders for this report are the clients of the financial management consultancy firm who are contemplating investing in the MNC under examination for this written assignment. So, it is important to establish clear
connections between the financial management strategies discussed and their impact on the valuation of the company.

Section 1: Executive Summary

The first item in your report must be an Executive Summary (no more than 400 words which does not count for the assignment’s word count). It provides a concise summary of the key insights and highlights from the detailed financial information presented in the report. An executive report should be succinct and focused, highlighting the most important information and key takeaways while omitting unnecessary/overwhelming details. Although it appears first in your report, it is written after you have completed your full analysis to ensure that it accurately reflects all key aspects of your findings. The primary skills required for this task are critical thinking and information
literacy. This involves the ability to identify, find, assess, and utilise information effectively for a specific purpose. Additionally, it entails effectively communicating information to broader audiences. Identify the most significant trends, patterns in the financial data that illustrate the overall financial performance. Summarise the primary conclusions drawn from your analysis and include your recommendation. This helps convey the practical implications of your work. Your summary should reflect not only the data but also your analytical process—showing how you have synthesised and prioritised information to reach your conclusions.

Section 2: Examination of Financial Management Strategies

Examination of financial management strategies In this section, your task is to analyse the three financial management strategies of the selected MNC:5
1. sourcing capital globally,
2. managing currency exposure, and
3. maintaining a competitive global cost of capital.
This section should consist of 2,000 words. Please note that references, the title page, tables and figures, materials in the appendix (additional supporting information not for the main body of
text), and the executive summary are excluded from the word count. Your analysis should offer a thorough and critical examination of each corporate strategy of the chosen MNC. For each strategy, you must
address the following tasks:

Task 1: Analyse the Theoretical Context of the Multinational Corporation’s Strategies (800 words)

In your examination, your first task is to place the three strategies of your chosen MNC in the appropriate academic and practitioner-relevant context. Specifically, you must theoretically analyse how each of the three strategies could shape and impact the operations and performance of your chosen multinational corporation. This part needs to derive from review and analysis of the relevant academic literature, and all arguments need to be supported with references to the theoretical principles and academic literature.

Your discussion should employ critical analysis to allow you to advocate for and against arguments and corporate practices, while highlighting their advantages and disadvantages and explaining how economic knowledge informs and shapes various business decisions within your MNC. Reflect also on how theory should influence the three strategies discussed in this assignment for your chosen MNC. Additionally, you are encouraged to integrate insights from practitioner literature such as business media, finance and economics press, as well as other reputable business outlets.

Task 2: Identification and Analysis of Multinational Corporation Financial Strategies (1,200 words)

This task has two aspects: Identification and Analysis-Assessment.

• Identify and explain the specific strategies employed by your chosen multinational in the areas of global capital sourcing, currency exposure management, and maintaining a competitive global cost of capital. Your analysis should be supported by carefully selected evidence, including relevant company and investor data such as P/E ratios, share prices, debt ratios, CAPM betas, revenues, operating profits and cash flows, geographic segmentation data, cost of capital details, credit ratings, and any other relevant company information and data. Additionally, consider any relevant available information about the company’s funding and hedging strategies, as well as its cost of capital. Your analysis should demonstrate reasoning skills by prioritising the most critical arguments, data, and facts from the wealth of available company information. Emphasise selectivity over saturation in presenting and analysing information. In this section, describe and explain the strategies in a way that sets the stage for the more detailed analysis that follows.
• Analyse and assess how the strategies employed by your chosen multinational in the areas of global capital sourcing, currency exposure management, and maintaining a competitive global cost of capital have impacted the firm’s financial performance. The analysis of the MNC’s financial strategies requires that you demonstrate clear evidence of critical thinking and independent judgement. This entails providing critical commentary rather than simply describing data and historical trends. When analysing company data and practices, refrain from simply documenting discussions found in company communications or business media, or the observed trends. Instead, investigate the economic factors and the theoretical reasons that may influence these trends and practices. Establish direct links between the theoretical context provided in Task 1 and the analysis of financial strategies, so that you justify the focus on this data. This ensures a cohesive connection between Task 1 and this section’s analysis.

Your analysis should strive for originality by integrating insights from various sources such as academic literature, practitioner insights, company data, economic indicators, and business press. Avoid quoting lengthy passages from other sources, as this indicates poor academic practice. Rather than echoing others’ conclusions, aim for originality in approach and synthesis. Analytical examination of data entails:

1. Thoroughly identifying existing knowledge derived from the data, and
2. Constructing, explaining, and justifying conclusions based on the data, ensuring opinions on data trends are substantiated with evidence and comprehensive explanations.

Finally, you need to assess the implications of these three strategies for the value of the chosen multinational corporation. To draw conclusions and advise the consultancy firm’s clients effectively, you need to comment on the way the chosen MNC’s financial management strategies impact its performance and risks. This entails:

1. Analysing the data to demonstrate a strong understanding of business implications and theoretical foundations, and
2. Critically synthesising, evaluating, and contrasting information from data analysis to illustrate the business implications effectively.

Compare and contrast strategies and data with those of peer companies, industry- and market-wide data to illustrate the implications and support your arguments. Reflect on how macro trends influence the firms’ strategies. Ensure integration of information from various sources, including academic literature, company data, economic indicators, company information, and business press. Incorporating examples from business and finance press in analysis and assessment can further bolster your arguments. Rather than simply restating previous findings and conclusions, integrate them into your discussion to present original work that goes beyond reiteration of existing information.

Effective Data Visualisations

Effective data visualisations (tables, diagrams, figures, etc.) can enhance the impact of the report, help make it more engaging, and improve readability and analysis by making it more concise. However, they are more impactful when they are your own, and not visualisations sourced from other material. You need to use a presentation style that effectively describes your analysis and allows drawing out recommendations for business implications. The primary skills required for this task are critical thinking, communication, and problem-solving skills. The ability to critically evaluate data and identify patterns, trends, and outliers is important for creating insightful visualisations that convey meaningful insights. Additionally, effective data visualisation involves solving complex problems and making decisions about how to represent data effectively.

Evaluation Criteria

Structure (10%)

• Presents information in a well-organized and coherent way.
• Connects all topics and touchpoints in a logical manner.
• Reader/audience can easily follow the flow of reasoning.
• Excellent structure. Presents argument clearly, concisely, and effectively.
• Maintains a professional tone that is appropriate for the topic and scope of the project, presenting arguments in a coherent way which aligns with the expectations of academic writing.

Content (40%)

• Demonstrates an exceptional grasp of the subject matter.
• Provides relevant, insightful, original, and quality information, going beyond the obvious or predictable.
• Critically identifies key issues and supports arguments with factually compelling evidence.
• References authoritative and verifiable sources. Consistently attributes references to peer-reviewed journals, expert professional materials, or other credible sources.
• Uses consistent formatting regarding attributions.
• Discriminately selects and employs information and data going beyond routine and pedestrian contexts or levels of complexity.
• Precisely describes the topic using literature to interpret it, and company data to demonstrate understanding and implications.
• Offers compelling analytics and effectively synthesises information and data.
• Utilises examples and data visualisations adeptly when appropriate.

Analytical / Critical Thinking Skills (50%)

• Describes the research topic, concept, or idea succinctly and thoroughly, showcasing deep understanding.
• Proficiently applies theories, practices, and principles to analyse research topic, concept, business data, and implications.
• Clearly and intelligently establishes key points for examination.
• Constructs a well-organized and relevant presentation of information, utilising appropriate hierarchy and outline of information.
• Compares and justifies similarities in the literature analysis and data trends, while contrasting differences or divergences.
• Develops and meticulously justifies potential conclusions. These solutions and conclusions are compelling, exhaustive, and comprehensive, supported by verifiable information from multiple sources including real-world examples, company data, and empirical evidence from journal articles.
• Integrates information from the company’s annual reports effectively into the discussion, demonstrating an excellent understanding of company practices.
• Work is outstanding, demonstrating depth of understanding, elements of originality, and coherent synthesis of ideas.
• Data visualisations are insightful, relevant, describe accurately the analysis, and allow for meaningful conclusions