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Home assignments plagiarisms to plagiarise plagiarists. Risk management:. (Company insolvency: why companies fail: Economies, markets, management, competitors, customers, suppliers…) 1. Report on a bad performance of …. ( a large company) – 5 December Important points to remember.
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Risk management: (Company insolvency: why companies fail: Economies, markets, management, competitors, customers, suppliers…) 1. Report on a bad performance of …. (a large company) – 5 December Important points to remember
Chapter: Reporting on performance Page: 23 Write 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 liquidity 2. 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? • regulatory reform • breakneck economic growth of China • 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
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 bnfrom options trade €1 bnfrom 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 position 3. VW’s free float increases 4. The price of shares falls
Risks market conditions unexpected economic and financial events the company’s investors