Financial Case Analysis Assignment Example | Topics and Well Written Essays - 2000 words

Financial Case Analysis - Assignment Example Japan Venture Partners provides the knowledge and relationships needed for foreign companies to establish local (Japan) subsidiaries. JVP manages negotiations and structuring of equity investments. JVP uses its relationships with local Japanese corporate and financial investors to help North American companies establish a foothold in the Japanese markets. JVP leans more toward investments from a small group of Japanese corporate and financial investors. Japan Venture Partners offer several financing options to its clients. This organization shares the financial risk while its clients maintain control of the subsidiary. Japan Venture Partners encourages forming, managing, and financing subsidiaries in Japan through the use of local equity or debt financing2. In certain situations IPO's (initial public offerings) are possible in the Japanese market. Local financing in Japan is important in establishing long-term relationships in markets as well as local financial results. Another important aspect of JVP's management of subsidiaries is its ability to keep foreign companies in compliance with local securities laws and ownership structures that are compliant with local laws. It is worthy to note here that an agreement between JVP and Omnicom would be a joint venture. Financing options would be those best suited to a joint venture agreement. 2.1 Identification Of Different Finance Options and Risk As stated earlier there are two main financing options available to Omnicom if they choose to use JVP's services to enter the Japanese market: issuing new equity and issuing new debt. These financing options are further broken down to internal financing and external financing. Internal financing consists of using funds from the parent company, from sister subsidiaries, and subsidiary borrowing with parent guarantee.3 External Financing consists of borrowing from sources in the parent country, borrowing from sources outside the parent country, and local currency debt. The internal choice should minimize worldwide taxes and political risk. The external choice should minimize the cost of funds (foreign exchange risk)4 2.1.1 Issuing New Equity Issuing new equity would raise funds to support Omnicom's entry into the Japanese market. Omnicom's choices are to issue domestic securities or foreign securities (or both). Both types of security's objectives are to maximize the rate of return and minimize risk. Investors in foreign securities face possible currency and political risk (addressed in section 2.4). The securities must appeal to both domestic and foreign portfolio investors to be successful in funding the joint venture. Equity calculations should be forward looking using historical performance records. By selling equities in the foreign markets the company is able to maintain some liquidity. 2.1.2 Issuing New Debt Omnicom also has the option of issuing debt securities to fund its larger presence in the Japanese market. These loans could come from domestic or international sources. Omnicom would enter into agreements (contracts) with the interest rates, interest payments

Qualitative Analysis Essay Example | Topics and Well Written Essays - 1500 words

Qualitative Analysis - Essay Example Compared to other developed countries Singapore has low tax rates with a very high per capita GDP globally. Singapore has a very innovative and stable economy which is merged with efficient economic planning under the Economic Development Board that helped to establish a free market. Singapore’s main exports include; chemicals, services and electronics which provide the main sources of revenue for the country. Most firms are registered as private Limited companies. The country experiences a very low supply of water with a limited arable land for agriculture. Moreover, Singapore has a port that is strategic enough to give it an edge over the neighboring countries that carries Entrepot trade. Most of its labor comes within the population which is owed to the efficient education policy in the country that produces skilled labor for the industries in the country. The Argentinean economy is dominated by agriculture, which contributes the largest percentage of the GDP. The country h as fair economic policies that aim at increasing the exports from the main productive sectors. The main natural resources that contribute immensely to the country’s economy are minerals such as zinc, lead, copper, tin, oil and natural gas, uranium, iron, manganese and lithium. The main agricultural products produced in the country include; grains and livestock products. The country does not have a free economy like that of Singapore hence its economy is not that well established. The industries operating in Argentina include: oil refinery, food processing, machinery and equipment, petrochemicals and textile industry. Most of the country’s exports are taken to Europe and Brazil which are the country’s main trading partners. The main sector which is Agriculture has recently shown a rapid recovery with an increasing industrial production which replicates that of its immediate neighbor Brazil. The tax revenues are slowly growing with the debt services reducing. Ther e is a probability of volatility in the financial markets due to the conflict that exist between the central bank and the federal government. Comparison of the Political Environment between Singapore and Argentina Singapore has one of the most efficient political and regulatory policies globally. According to the surveys conducted the country ranks 122 out of the 138 countries in terms of creating a conducive political environment for business. This is in connection with press freedom in regard to the World information technology report of 2011 (Huff 745). The uniqueness of Singapore’s political environment comes in the fact that the immigration rules and laws are not that strict compared to Argentina or any other country. There are very strong law enforcement agencies which make cases of political unrests rare and efficient for business operation. The country is controlled by very few political parties with the main political party being People’s Action Party. This st ability in terms of political party policies ensures effective business environment for the development of country. The government of Singapore also ensures free trade agreements and employment laws in industries where a majority of the foreigners are in the job market. The main countries that have set up businesses in the country include China, Europe and the United States. As such, most foreigners use this country as an avenue to establish and expand their businesses through a