FINS3616 Lecture Notes - Lecture 1: Seagate Technology, Bp, Texas Instruments
6 Sep 2018
School
Department
Course
Professor
Document Summary
Estimation on the number of mnc by un: 82,000 parent company and 807,000 subsidiaries: reasons to go global, raw materials. Characteristics: capital requirements and start-up costs are minimal, low risk. Immediate profits, opportunity to learn about market conditions (supply and demand, competition, distribution channels, payment conventions, financial institutions, and financial techniques: overseas production. Motives: realise full sales potential, fill orders faster, shoulder more risk for profit. Motives: alternative to setting up local production because it is less risky. Value of a currency is set by the government: floating exchange rate. Value of a currency is set by market forces (supply and demand: managed floating rate. The government keeps the currency value within a certain range by intervening if market supply and demand forces set the value below or above the range: spot and forward. Spot exchange rate: the price at which currencies are traded for immediate delivery.
