module 9 - case, financial controller did not understand...

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3. What would you recommend that Meaghan do? LaJolla as a multinational engineering services company has various business units worldwide. Each business unit such as Jamaica, Venezuela and Mexico each raised their individual problems and challenges. There might have different recommendation to each individual business unit because each individual unit may have different issues and challenges. Meaghan, CFO of LaJolla Engineering equipment division, will have to accept the current situation for Jamaica. Through risk sharing management, two companies would share any risk exchange rate, and LaJolla could protect much of operational results. In current situation that fall of Jamaica dollar from early 2003, risk sharing agreement is the best option for LaJolla. Meaghan should take an action quickly to solve the issues for Mexico because LaJolla had only initiated the subsidiary’s operation in Mexico, but its translation losses had grown rapidly. The most important problem in Mexico is employer who has a duty of finance. As mentioned in the
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Unformatted text preview: case, financial controller did not understand the problems that LaJolla encountered. Meaghan should employee professional accounting consultant or auditors to support for her review of the Mexico operations. She may understand Mexico business and could make a decision to reduce transition losses by adapting that way. The problems in Venezuela are declining U.S dollar proceeds from its Venezuelan operations and severe late payment from various government agencies. Meaghan needs to persuade the partner to make onetime payment instead of taking more than 180 days to be settled. The reason is the company is suffering declining U.S dollar steadily. LaJolla can reduce transition losses under recent currency market by making them make a payment as soon as possible. Hire financial Expert get some advice possibly to slow and steadily alter the fixed plant and equipment, the longer term asset of the venezeulas subsidiary, to reduce future translation losses....
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This note was uploaded on 10/20/2011 for the course FIN 500 taught by Professor Yi during the Spring '10 term at CSU Dominguez Hills.

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