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Home assignmentsplagiarismsto plagiariseplagiarists
Risk management:
(Company insolvency: why companies fail:Economies, markets, management, competitors, customers, suppliers…)1. Report on a bad performance of ….(a large company) – 5 DecemberImportant points to remember
Chapter: Reporting on performance
Page: 23Write a SHORT Summary: 2. Performance forecast of …(Coca Cola)
3. Presentation (5 slides)
FINANCE AND INVESTMENT
overseas investment inward / outward foreign countries
CHINA
1. high level of liquidity2. interested in the banking sector (skills)3. mergers / acquisitions (M & A market) (raw materials / global brands / skills)
Acquisitions
inbound acquisition – foreigners buy in China
outbound acquisition – Chinese buy foreign companies: iron ore, steel, coal mines move production sites to China to reduce costs
WHY into China?
a) regulatory reformb) breakneck economic growth of Chinac) entry to the WTO
Sectors: chemicals / automotive / banking
Difficulties in outward investment
political opposition
national security
START-UP CAPITAL(NEW COMPANIES SEEK OUTSIDE FINANCE)
risky ventures
innovation-based companies – new products / services
START-UPS(NEW COMPANIES)
Business plan IRR – internal rate of return IRR the annual percentage of return over the lifetime of the investment
Portfolio of investment – spreading risks
IRR calculation(potential investment good or not)
IRR of 60 percent = the principal + 60 per cent of the capital each year of the investment
Financing established companies
lower risk
debt finance – bank loans
1. already have a product / service
2. have made some sales / diminish market risk
3. existing management team lowers people risk
OPTIONS TRADING(RISKS AND REWARDS)
Porsche
success the core business market (selling cars)
financial engineering (sale of derivatives)
Porsche took over VW(2008 / 2009)
luxury car makers – were running out of fuel
Porsche – slow takeover (50%) via cash-settled call options
€6.8 bn from options trade €1 bn from selling cars
€400m from trading options on German companies
Possible scenario:
1. Porsche does not buy the rest of shares (75%)2. Closes its options position3. VW’s free float increases4. The price of shares falls
Risks
market conditions
unexpected economic and financial events
the company’s investors
investments – uncertain road
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