Session9 - Notes - Session 9 > Chapter 15: Multinational...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> Chapter 15: Multinational Restructuring Chapter 16: Country Risk Analysis >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> CHAPTER 15 Chapter 15 emphasizes that the strategic plan of an MNC can be modified continuously in response to changing global conditions, and multinational restructuring may be needed to achieve the plan. Some of the more critical issues related to multinational restructuring are discussed, such as international acquisitions, which are one of the most common types of multinational restructuring. International acquisitions are one of the most common types of multinational restructuring. The identification of the target market precedes the identification of the target firm. Entering a developed market offers an MNC the widest choice of firms with publicly disclosed financial and operational. Emerging markets may have promising market prospects, however there pose several difficult problems, including scant financial data, limited access to management, government restrictions on foreign purchases and very few publicly traded firms. Once the acquisition target has been identified, the process of valuing it begins. A variety of valuation techniques are used in international business, including discounted cash flow analysis (NPV), multiples of earnings and cash flows and industry-specific measures. When using multinational capital budgeting techniques to determine whether or not a foreign target is worth acquiring, the cash flow is generally more difficult to forecast than for a domestic project since the target’s prior operating performance and forecast operating performance must be considered in light of country specific factors (such as changes in political and economic conditions of the host country) as well as exchange rate factors. When potential acquirers are from different countries, their respective valuations of a target acquisition will vary, not only because they are likely to estimate cash flow differently, but more importantly because (1) they are using different discount rates, based upon the cost of capital in each of their countries, and because (2) the currencies of their home countries can be expected to behave differently against the currency of the target host country over time. Capital budgeting techniques are also used to evaluate various types of international alliances, including international licensing, franchising and joint ventures, and international divestitures. CHAPTER 16
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 5

Session9 - Notes - Session 9 > Chapter 15: Multinational...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online