Posted: November 12th, 2022

Group Project Description
• This assignment is divided into two parts:
o PART 1 is assignment #3 (due in week 6) is worth 15% of your overall individual grade. For Part 1 you will deliver a minimum of 8 pages. You are required to answer questions 1-4. The assignment is due by the end of week 6 (submission 1, assignment 3)
o PART 2 is assignment#5 (due in week 12) is worth 20% of your overall individual grade. For Part 2 you will deliver a minimum of 10-pages.
• PART 1 is assignment #3 (due in week 6)
o Read through the assignment and discuss all the questions. The questions are linked.
o I suggest that you create a shared document. All responses must be aligned.
o Decide on a product or raw material that you will import
o Decide on a foreign supplier, note the supplier’s country. The supplier’s country is the host country and Canada is the home country. Your foreign supplier must be real.
o Decide on the amount of financing you will need to purchase products or raw material from your foreign supplier.
o Assign a question to teach group member. Each member will be graded based on question response. Tag your name to the question you have answered.
• At the start of the course students will be assigned two companies, either Canadian or USA corporations. One company you will be required to run and the other you will be required to monitor its stock prices.
• Include at least two references other than in addition to your textbook. Cite references in text and create a reference list at the end each document under the heading References. Follow APA 7 format.
• Please review the Rubric for each part of the assignment on eCentennial to maximize your grade.
• To submit your file, rename it as follows: Group#_Assignment#-INTL-303. Upload the document to the assignment drop box.
• Submit each report through Turnitin with a maximum similarity of 20% (files not submitted through Turnitin will earn a zero grade).
• A late penalty of 10% per day will be levied on late submissions.
• A template is located in the course document menu.
Points to Note
• This project allows you to learn more about international investing and about firms that compete in the global arena.
• You will be assigned a Canadian or USA company to run. The focus is to extend the company’s product line. You are required to identify an international supplier to purchase a product or raw material to meet this goal.
• You will also be assigned a USA or Canadian multinational corporation (MNC), for which you are required to monitor the company’s stock.
• You will be required to do the following:
o Evaluate the financial need of your MNC and choose the most cost-effective way to finance your purchase.
o Examine the existing markets and evaluate the strengths and weakness of your MNC.
o Analyze the risk of entering a foreign market.
o Conduct a research and review the performance of your MNC, the corporation stock being monitored over the last 2 years and monitor the stock for the last 12 months.
o Explain the performance of the corporation and why it performs well or poorly relative to the overall market index.
o Research and explanations should provide some insight into what is driving the valuation of a corporation over time and how the MNC protects its value.
o Conduct corporation research on sites like: www.msn.com, Yahoo Finance, Google Finance, Market Watch, Morningstar, Seeking Alpha, Financial Post, CNBC.com and Bloomberg.
Requirements for the Reports
Multinational Corporations (MNC) are defined as firms that engage in some form of international business. Their managers conduct international financial management which involves international investing and financing decisions that are intended to maximize the value of the MNC. The goal of these managers is to maximize their firm’s value. The MNC objectives are to identify new markets to increase market share, invest excess cash, and ensure the soundness of any host country’s financial market. As the CFO you are asked to analyze the strengths and risk of a potential new market and prepare a report to present to the Board. You will be given 8 questions to answer, and each question will represent a heading in your documents.
PART 1: Answer the first four questions. Each group member should respond to one question and put their name next to the response they provided. One person in the group will put all answers together following APA format (including references), using each question as a heading, and submit only one file.
PART 2: Answer questions 5 through 8 as a group (use the questions as a separate heading). Create a full document (questions 1 through 8) and include the following: an introduction, analysis (thorough answers to the questions with supporting evidence), conclusion, and references. You can decide as a group, how to divide the work for the introduction, conclusion, and references, and who will put the report together for delivery. Remember that only ONE file should be submitted for the group.
Questions
PART 1 REPORT – Answer the following questions:
1. Overview of the Corporation.
(A) Provide an overview of the corporation (your professor will assign you a Multinational Corporation (MNC) to include but not limited to, when and how it was incorporated, by who, the board of directors, specific interest of the corporation, its headquarters, size, regions of operation and strength in the market.
(B) The MNC wants to expand its product line in Canada. Choose a product that you can adopt to extend the MNC’s product line and explain your reasons for choosing the product. (For example, Aldo sells shoes and accessories and could extend their product line to include perfume). You can purchase a product or raw material to produce a product.
(C) Explain the gap (the need for the product, support your argument) in the market.
(D) Explain the potential for growth (why do you think the product will sell well in the Canadian market, support your arguments).
(E) Discuss if the corporation has a competitor (identify your competitors and discuss your competitive advantage).
(F) Provide an overview of the supplier and why you chose the supplier (identify a supplier in a foreign country and discuss why you chose the supplier).
2. MNC Financing. The MNC will need financing to purchase the product or raw material from the new supplier.
(A) Discuss the amount of financing needed, explain how you arrived at the amount and how it will be spent.
(B) Discuss the options for financing as discussed in class/lecture notes (bonds, stock, and bank).
(C) You will choose to finance from the bank. Discuss why the option is most suited for your MNC.
(D) Explain how your bank can protect itself from asymmetric information?
(E) Explain the role of the financial report and how does it help financial institutions and investors when analyzing a financial decision?
3. Stock Investment. The CFO has noticed a constant increase in the stock market and sees this as a good opportunity to purchase stock as an investment. (Your professor will assign the company’s stock you should monitor).
(A) Before purchasing the stock, you must examine the corporation’s financials for the last two years and discuss the performance of the company.
(B) Discuss the reasons for changes in the stock price for the last 12 months. Finance.yahoo.com www.msn.com. Yahoo Finance, Google Finance, MarketWatch, Morningstar, Seeking Alpha, Financial Post, CNBC.com and Bloomberg can Help you to find the most current news about your corporation.
(C) Make your recommendations to the Board, should the MNC purchase the stock you are asked to monitor, yes/no and explain your reasons.
(D) Apart from the stock you are asked to monitor, choose another stock that you would recommend to the CFO to purchased and explain the reason for your choice
4. Foreign Exchange Risk. As a MNC you encounter foreign exchange risk.
(A) Discuss the different options for hedge receivables and payables (as discussed in class). Recommend to your Board the best hedging strategy for the MNC.
(B) As an MNC, when would you use the spot rate? Explain your answer.
(C) If the MNC currency’s is weaker, how will it impact your purchase (from question 2) and profits?
(D) Go to www.oanda.com Click on “Currency Tools”, then “Historical Currency Converters”, and “Currency Trends”. Explain how the home currency has changed over the last three months and how will it impact the MNC’s business.
(E) When the host currency (supplier’s currency) devalues, is it bad for everyone? Discuss using examples.
(F) Discuss the types of foreign exchange exposures and discuss which if any will impact the MNC.
PART 2 REPORT – Answer the following questions: This section will be graded as a group effort or based in individual input. A group review is required.
5. New Market Risk. Entering a new market comes with risk.
(A) What financial risks are present in the host (foreign) country?
(B) What are the political and economic risks of the host country? Outline measures you will put in place to mitigate these risks.
(C) Discuss the product risks and align the appropriate risk with your product/ raw material? Outline measures you will put in place to mitigate these risks.
(D) Discuss the different methods of payment and outline why you chose the letter of credit.
(E) Will the product/ raw material attract import duties? Is there any trade agreement between Canada and your country of choice? Explain your answer.
6. Host Country Central Bank Analysis. Examine the Central Bank of the host country and advise your Board. Does the host country have a strong financial market?
(A) What are the responsibilities of the central bank for regulatory control with focus on the commercial and investment banking systems?
(B) What measures are in place to protect clients in the event a bank fails in the host country?
(C) Explain how fluctuations in the host country’s exchange rate affect the value of that debt held by foreigners.
(D) Visit the Central Bank of Canada (Bank of Canada) website, examine the movement of interest rates for the last 24 months, and discuss how increase and decrease in interest rate can impacts the currency (appreciation or depreciation).
7. Tax Treaty
(A) Define tax treaty and explain the importance of tax treaties.
(B) Is there a tax treaty in place between your supplier’s country and Canada, explain if the treaty will impact your purchase, why or why not?
(C) Explain how Canadians have benefited from tax treaties? Cite examples
(D) Explain how developing countries have benefited from tax treaties
8. Contingencies. What contingencies will you have in place in the event there is a breakdown of the relationship with your supplier or for any reason supplies/products will be delayed or not arrive for you to fulfill your commitment to your clients? You should have contingencies for all potential risks or challenges.
In addition, prepare the following documents to include in the Part 2 Report:
• Cash flow to support your trade finance
• Commercial invoice
• Bill of Lading
• The letter of credit your bank would send to your supplier’s bank
• Purchase invoice

Tips for Developing Your Idea
Your idea should be simplified to the degree that you could possibly implement it someday. Your idea should focus on one country and one foreign currency since many companies are focused on one manner when they are first created. So that you can recognize the issues regarding exchange rate risk that are discussed throughout this text, you should assume that you will need to pay foreign currency when purchasing your product or raw materials. Your idea should be for a small company instead of a large company because many large companies started as small companies.
The following questions will help you define your company’s idea:
• What product/raw material will you purchase?
• Which foreign country do you plan to target?
• What is the level of risk associated with the country?
• How long will it take for the product to reach Canada?
• Can the product enter Canada? Will it attract import duties? Is there a free trade agreement between Canada and your proposed country?
• How will you mitigate against foreign exchange risk?
• What are your contingency plans? (For example, what if there is a breakdown in relationship between yourself and your supplier or your supplier cannot fulfil his/her contractual agreement?

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