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Posted: July 31st, 2022
Use the Internet and to research a global manufacturing company of your choice. Review the current plans that your selected company has identified for capital investments in emerging markets. Hint: You can find useful information on a company’s capital investment plans from their website and press releases.
Write a 5 page paper in which you:
Suggest a methodology to supplement the traditional methods for evaluating the capital investments of your selected company in the emerging markets to reduce risk. Provide a rationale for your suggested methodology.
Assess one (1) way in which inflation could potentially impact planned capital investments in emerging markets and examine one (1) approach to perform an accurate evaluation of the investments. Suggest how this knowledge may impact management’s decisions.
Contrast the modifications you would make in evaluating the projects to increase internal capacity in North America with the modifications you would make in evaluating expansion projects in the global market. Suggest one (1) way that this information will impact the decisions made related to expansion.
Examine two (2) benefits of using sensitivity analysis in evaluating the projects for your selected company. Suggest how this approach can provide a competitive advantage for the company.
Use at least three (3) quality academic resources in this assignment. Note: Wikipedia and other Websites do not quality as academic resources.
Your assignment must follow these formatting requirements:
Be typed, double spaced, using Times New Roman font (size 12), with one-inch margins on all sides; citations and references must follow APA or school-specific format. Check with your professor for any additional instructions.
Include a cover page containing the title of the assignment, the student’s name, the professor’s name, the course title, and the date. The cover page and the reference page are not included in the required assignment page lengt
Rejuvenation of Nokia Brand Smartphone
July 29, 2016
Rejuvenation of Nokia Brand Smartphone
Companies or business people usually identify the business opportunities and invest their capital in with the aim of making profits. In other words, to invest there is need for the identification of gaps in the market. A gap in the market may be determined by factors like price, quality and quantity among others. In this paper, the coming back of Nokia brand smartphone is analyzed. Certain account approaches are used in driving the point home. First, the investment capital of the firm is reviewed.
Nokia Company in conjunction with HRM Global Oy has investment capital planning of operating the Nokia brand smartphones. The plan has come two years down the line since the company left the flagship handset business. The Samsung and Apple electronic companies, the giants in the field, showed Nokia firm dust in the market. The ownership of the firm was shifted to Microsoft Corp. in 2014. Nokia was once the leading firm in the market of phones. The total finances to be channeled to the investments sum up to $500 million. This will avail both tablets and phones in the market. The sources of the ventures will be from intellectual property and brand licensing. The smartphone analysts are predicting a tough market for the firm since the giants are still in the field, Samsung has topped the list. Nokia firm will only have the chance of ensuring that product broad guidelines are followed. The HRM Global Oy will be responsible for the design work, making and sales, as discussed by Ewing (2016) in the Bloomberg.
Giving up in the lines of phones two years ago by a firm which had built the name of the brand is worrying. The most probable reason for quitting could have been fluctuation in sales. The best methodology that would help to reduce such kind of risk is sales volatility. Sales fluctuations expose business to a high level of risk. The risk is exposed further when fixed costs are ranged high. The solution for the situation would be smoothing out the sales over a period of time. Once it is achieved, the fluctuation will automatically will go down. The ways of stabilizing the sales will offer a great deal. Therefore, consultations and proper training the ways to make sales stable will be in reach. The risk compensation will be as well method to be given a try. The rationale for adopting the best method for stabilization is based on one major big fact. The existing firms in the market provide smartphones too and it will be no easy game for the Nokia brand to progress in the market that quickly. The personnel concerned must do their homework in time.
Inflation poses adverse effects both on the economy and the entire investment by various firms. With inflation, investors get it harder to for plan for the future. It becomes extremely difficult to make a decision on the quantity or amount of product to be produced since the customers’ ability to purchase is lower than under normal circumstances. According to Lee (2009), the businesses are unable to predict the demand for their products at the escalated prices that must be charged to cater for expenses. The high inflation goes affecting the markets and the financial institutions, but negatively impacts the integration with the global market. The loaning interest rates are also increased. Therefore, companies operating on loans to supplement or increase the production may land into financial problems. The inflation leads to uncertainty concerning the future interest rates, prices, and the exchange rates. The result of the uncertainty which arises from the inflation escalates the risks associated with the investments and the total production of the firms’ activities, and market is affected as well. The companies mainly operating on the stock arrive at misleading financial strength ratios and profitability ratio. Evaluation approaches should therefore be employed to make the right decision in the management. The payback period approach is thus discussed.
A payback period is one of the accounting evaluation approaches commonly use. It used for the purpose of evaluating the capital expenditure. In this approach, the saving or the annual cash proceeds generated from the investment are equated to the original or initial cash outlay that is required by the investment to attain certain multiple o the cash proceeds which is equal to the initial investment. The measurements are usually taken in terms of months or years. In case the cash proceeds produced from an HR program is a constant value on a yearly basis, then the payback period is arrived at by dividing the original investment by the value of the annual savings. The payback is has an advantage of simple calculation but is limited in that it cannot predict the value of the money at that future date. The payback may influence the decision of the management in that the management will determine the saving that can be generated within a given period of time. The value can be changed to the desired value through altering the investment (Hall et al., 2003). The Nokia brand should calculate the payback period in determine the define period of time that it would attain back it investment. The advancement in today’s accounting has the ability to analyze the uncertainties.
In Plangger (2016) states that expansion of the global market involves making a strategic choice followed by the strategic thinking. Through strategic thinking, the potential and resources are identified and assessed. The businesses managerial skills play a big role in the process. The essential modifications that may be applied in reaching global market are producing products of superior quality followed with the advertisement to the target group market. For instance, the case of Nokia brand, the company is already and the firm built the name some years back. The task to be achieved is to convince the clients that the Nokia brand is worth and is of a good quality. The customers may fall for it and develop loyalty. On the other hand, expanding the internal capacity of a region requires a different modification as those of global market. The first key thing is to avail the basic the amenities in the area. For the case of North America, things like tourisms should be increased so that during summer season, more will be accommodated internally. Therefore, the projects for expanding the global market and regions are possible and achievable projects.
Zerbe and Bellas (2006), sensitivity analysis is the most simple and frequently employed method in the analysis of the uncertainty. Essentially, it is a measure of how a result is sensitive to changes in each variable. Sensitivity analysis may be approached in two different ways: the variable by variable approach and the scenario approach. There are two main benefits of this method. First, highlights the estimates to which the decision advice is most sensitive. The mangers have the obligation to revisit such estimates and take the time to ensure they are as accurate as possible. Secondly, it provides more information which suffices the decision making such as the acceptance or denial of the advice of the original net present value (NPV) analysis.
A company like the revival of the Nokia brand should analyze the future uncertainty through this method before testing the level of the water by both feet. The evaluation of the uncertainty of the future will at least provide a mirror like to view the future while the firm is in the present time. The results obtained are good and important for decision making. The informed decision making would place the company in a better position as compared to others which have ignored such analysis. Those kinds of competitive companies would make blind information without accounting for the uncertainty in the future. The Nokia brand smartphone entering the market should take all these kind of calculation for them to start a foundation for competing with the already developed firms in the areas of smartphones.
In conclusion, the Nokia brand company may thrive again in the market to great level. It only need to what it takes to reach those high levels. Some of the areas to be taken into account are expanding global market, conducting sensitivity analysis and other risk analysis. The company must invest the capital in a wise. Finally, it must find the ways to survive in a tough market.
Ewing, A., (2016). Bloomberg: Nokia to return as smartphone brand in bet on staying power. Retrieved from http://www.bloomberg.com/news/articles/2016-05-18/nokia-name-to-return-to-smartphones-in-bet-on-brand-s-power
Gallagher, T. J., & Andrew, J. D. (2000). Financial management: principles and practice. Prentice Hall.
Hall, A. T., Frink, D. D., Ferris, G. R., Hochwarter, W. A., Kacmar, C. J., & Bowen, M. G. (2003). Accountability in human resources management. New directions in human resource management, 29-63.
In Plangger, K. (2016). Thriving in a New World Economy: Proceedings of the 2012 World Marketing Congress/Cultural Perspectives in Marketing Conference.
Lee, A. C., Lee, J. C., & Lee, C. F. (2009). Financial analysis, planning & forecasting: Theory and application. Singapore: World Scientific.
Zerbe, R. O., & Bellas, A. S. (2006). A Primer for Benefit-Cost Analysis. Cheltenham: Edward Elgar Pub.
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