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The most popular way for international expansion is for a local firm to acquire foreign companies. One of the most benefits for international expansion is global distribution capability that helps expanding the market share.

There are different implications of running a company that is within or outside of the European Union. If you were the head of a firm based in the United States, please answer the following questions, providing the rationale behind your answers:

  1. Would you seek to acquire a company within the European Union or outside of it? Why?
  2. Describe the advantages and disadvantages of the choice you made.
  3. Describe the advantages and disadvantages inherent in the option you did not choose.
  4. Explain why an MNC may invest funds in a financial market outside its own country.
  5. Explain why some financial institutions prefer to provide credit in financial markets outside their own country.

Running head: BUSINESS OPPORTUNITIES BUSINESS OPPORTUNITIES Student’s Name Institutional Affiliation 1 BUSINESS OPPORTUNITIES 2 Would you seek to acquire a company within the European Union or outside of it? Why? When am given a chance to choose a company within the European Union, I would prefer. European Union is currently facing serious financial problems. The financial problems are known as Euro Zone crisis. This has contributed to many financial problems within the European Union economic block. This problem was instigated through the change of government. A weaker government came to power and could not control financial problems. The change in government led to serious political instability. The government could not make serious financial decisions. This made the Europen Union to have very serious problems in the sector of finance. Some banks were closed for some period of time due to unpredictable financial status. The best example is inCyprus where many banks were stopped from operating. According to the rules of operating a company, the assets of this company must be put in a secure position. Apart from this, the company should be able to function freely. Due to the financial status in the European Union, different assets that were being possesed by several companies were frozen. The best example is the ability of a Company to withdraw funds from bank. A company can sometimes be restricted from withdrawing cash money from banks. In such situation, the ability of acquiring the Company is less. The European Crisis affected major business transactions. This will affect the companies that are around the same area. When given an opportunity to advice an entrepreneur seeking to start a business or invest with a company, I will definitely oppose the idea investing in European Union. There are other neighbouring countries around the World with stable financial status. Countries such as Denmark are financially stable. It is advisable to invest in countries which are financially stable in order to obtain better profits. Some countries like the European Union have serous problems in the fianacial sector and serious investors should not be encouraged to invest there. There are several countries which are financially stable which posse’s BUSINESS OPPORTUNITIES 3 very strong currency. Such countries also have very good growth rate of economy. They have no problems as far as financial sector is involved. In summary, European Union is not the best place to invest. Companies located on those regions will face serious losses. This can make the Company to be closed within a short period of time. I prefer owning a Company in Brazil which is financially stable (Forsyth, 2018). Describe the advantages and disadvantages of the choice you made. There are many financial benefits that are associated with investing in Brazil. Brazil can be refferd to as an economic power. Brazil has numerous resources that are being sold to earn foreign exchange. They also have some minerals, energy and numerous industries. Brazil also have very strong economic sector. Due to the presence of these numerous resources, this country is economically stable. The minerals that are mined from the country are sold both locally and internationally. The local market of Brazil is fast growing due to good supply from goods that are locally mined. Brazil is also very favourable for investment since they have very low taxation rates. Brazil also has low inflation rates. Inflation is a situation where a country sells it goods at very high prices. The prices may rise to a point that consumers are exploited (Wade, 2013). Brazil is one of the Countries that have very stable economy. However, there are some problems facing Brazil as a country. The countries are politically unstable. The investment status of this country is constantly changing. This will make it difficult to invest since prediction of business conditions is nearly impossible. Apart from the country having a stable financial status, the country is also facing a condition known as heavy bureaucracy. The level of education in Brazil is also very confusing since it is poor as compared to other countries. This means that only a few people in the country are possessing better educational skills. The legal system of Brazil can be BUSINESS OPPORTUNITIES described as slow and also very difficult to manage. It will be very difficult to get credible employees from such countries. During a period where company officials are needed, there will be problem during their recruition. This is because a larger number of the population is uneducated. There are some positions that should only be occupied by educated individuals. Educated individuals are able to make the best financial descisions. They are also capable of making some decisions that can make the Company to grow to greater levels. However, the prons are far much many than cons. When seeking for a place to invest, you weigh both the advantages and disadvantages. Brazil still remains a very good place to invest since they have better financial status. Financial stability is one of the factors that should be put into consideration when choosing appropriate place to set up a Company (Bingemer and Thompson, 2018). Describe the advantages and disadvantages inherent of the option that you did not choose. The decision of not choosing European Union as the best place to lactate the Company has both advantages and disadvantages. The advantages of not selecting this region are that it will allow you to carry out your business smoothly. Despite the various problems that countries in the European Union facing, they also have some few advantages. The levels of education in these countries are very high. Large populations are having higher education certificates. During reccruition of Company staff, not will be easier since many educated people are present. Educated individuals are able to make good financial and other decisions that affect the company. The countries are having very low bureaucracy (Lustig, 2017). The idea of not choosing European Countries as my center for investment was also wise. This is because there are various probles that are associated with these countries. The poor financial 4 BUSINESS OPPORTUNITIES 5 statuses in these countries make them unsuitable for investment. The European Union countries have few minerals and other resources that the country can sell to earn foreign exchange. They have few resources that should be divided equally among those countries. There are high possibilities that the Company can be closed due to financial crisis. We are being told that some banks were even closed. This means that some business transactions were not taking place. The Company will not be able to withdraw cash money from the banks due to these financial problems. The problems will not allow a company to operate well. To summarize on this, the decision that I made was the beat. This is because I decided to go with the country that was financially stable. The stability of a country on terms of financial status is normally the most important factor to put into consideration before investing with any Conuntry. The possibility of the Company being closed due to bankrupt cases will also be reduced. In a case where someone chooses to invest with European Union countries during this Euro Zone crisis, the company will be experiencing few customers. Financial status of any country will affect each and every member of the country. Citizens from these countries will not be able to afford these services during this period (Dawkins, 2018). Explain why some MNCmay invest funds in financial market outside its own country. Under mist circumstance do such a situation occurs. An MNC always invest in other countries in order to get good investment opportunity. It is normally norms that foreign countries contain that are attractive ing than their countries. There are some other many reasons thatto type within their country. They might be facing serious financial status in their home town. The financial situation will not be very attractive to many individuals BUSINESS OPPORTUNITIES 6 Due to the fact that the economy of the MNC is none suitable for business, they can only mange to start earng. Due to low financial status back at home, it becomes a real problem for anyone to invest back at home. There is also high possibilities that the currency on the country that the MNC is very low. The low currency has led to many financial downfalls. It is because of this reason that many investors seek to open their businesses abroad. When choosing main areas of investement, the MNC normally consider investing in countries with stronger currency. Such countries are a direct suggestion of better profit from the businesses. The main factor that attracts MNC is the ability to get more profits. They prefer to invest in other countries away from home so long as they ran very good profit. They fear getting losses due to poor financial status in their country. They have very weak currency as compared to currency of other countries. The strength of a country's currency will normally indicate the financial stability of a country. Countries with higher currency value normally have poor economies (Howard, 2017). Explain why some financial institutions prefer to provide credit in financial markets outside their own country. In the recent world of budinees, many changed have occurred. According to a study that was conducted, it was noticed that many financial institutions like giving credits to other financial markets that are outside their country. They certainly had their reasons. The first advantage is that there is a high possibility that they will better profits than in their own country. This is because the currency of that particular country is stronger than the economy of their own country. There is normally very tight competition from firms that are existing in the same cuntry. The government in your own country will also be a major determinant to the possibility of better BUSINESS OPPORTUNITIES 7 financial markets in your own country. The government may make many regulations that will ensure that the amount of profits earned becomes very low. The government will sometimes give very small discounts to business people. This will make the amount of profit to decrease. The government may even increase the amount of taxes charged from goods that are being sold within the country. This will reduce the morales of individual businessmen. Most of them will prefer investing in other countries. In cases where financial institutions need to earn a lot of profit from their business, they have to lend money to other using some other means. The best way they can lend money is through the use of international branches. This will ensure that the interest rates that they receive from these business transactions are very high. The high interest rate will boost the morale of individual business men and make them want to still invest. The act of giving out money or lending money to other financial institutions normally has its advantages. The amount of interest thatbis normally achieved from these types of transactions is normally very high. Most investors normally concentrates on the amount of profit earned before engaging in any business transactions. The rate of income due to profits will shoot up at a high rate when an institution is lending money to other institutions that are located in other countries. The amount of money that is involved when supplying funds into your local market is very high. This is because it will involve the tax and revenue from your government. Very many investors seek to invest near banks which have very good liqiudity. Such banks can save you in cases of financial crisis. They are normally financially stable and can borrow you money in case you go out of cash. Many financial institutions are looking for markets where the charges for supplying funds are reduced. BUSINESS OPPORTUNITIES The issue of globalization of financial markets has made financial institutions to rise to greater hights by enabling them to carry out some special activities. Credits can be provided so long as the intrest rate of the country is higher. Apart from that, the level of security that those funds posses must also be very high. It is advisable to lend money to financial institutions that are outside your country. Those seeking for better financial gains always lend money to financial institutions in other foreign countries (Liaqat, 2018). 8 BUSINESS OPPORTUNITIES 9 References Bingemer, C., & Thompson, F. (2018). Retrieved from https://uk.practicallaw.thomsonreuters.com/7-5708027?transitionType=Default&contextData=(sc.Default)&firstPage=true&comp=pluk&bhcp=1 Dawkins, D. (2018). EUROZONE THREAT: Europe at risk of financial chaos from 'populism and protectionism'. Retrieved from https://www.express.co.uk/finance/city/937215/eurozonenews-christine-lagarde-imf Forsyth, J. (2018). Could a eurozone crisis benefit Brexit? | The Spectator. Retrieved from https://www.spectator.co.uk/2018/06/could-a-eurozone-crisis-benefit-brexit/ Howard, W. (2017). Retrieved from https://www.linkedin.com/pulse/multinational-corporationexpansion-european-union-william-howard Liaqat, I. (2018). Chapter 3 International Financial Markets Sollution. Retrieved from http://www.academia.edu/23868618/Chapter_3_International_Financial_Markets_Sollution Lustig, N. (2017). Pros and Cons of Doing Business in Brazil. Retrieved from http://magmapartners.com/pros-cons-business-brazil/ Wade, J. (2013). The Risks and Opportunities of Doing Business in Brazil | Risk Management Monitor. Retrieved from http://www.riskmanagementmonitor.com/the-risks-and-opportunitiesof-doing-business-in-brazil/ BUSINESS OPPORTUNITIES 10

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kathysmth
School: Carnegie Mellon University

Hello, here is the copy of the ...

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