Question
You are part of the Leadership Group of your US Multinational Company. The Board of Directors are interested in further overseas expansion and has tasked
You are part of the Leadership Group of your US Multinational Company. The Board of Directors are interested in further overseas expansion and has tasked the Chief Executive Officer and the Leadership team to come back to the Board with a recommendation for additional expansion. Leadership must select a country to make a Foreign Direct Investment (FDI) as it has been determined that this will be the most effective way to continue the Companys overseas activities.
Please prepare the following to be presented to the Board:
1.) Provide an overview of the current operations of your Company. Products; technology; size of the business; Organization structure including an Organization Chart.
In recommending international expansion in the form of a FDI to your Board of Directors, please discuss the following:
- Description of the competitive landscape in your industry, particularly as it relates to the overseas operation.
- Discuss Supply Chain. How will you get the raw materials to manufacture your product? How will you get product to your customers?
- Availability of required labor including labor for production; management; and technology/research and development.
- Utilizing a Weighted Average Cost of Capital (WACC) of 10%, please prepare an expected Return on Investment (ROI) for this project after 5 years. In order to calculate the ROI for this project you must include the initial investment in facilities fit-out and equipment; and other initial investments required (any licenses, etc.). You will need to prepare a 5 Year Pro Forma Profit and Loss Statement in order to calculate your ROI. Please assume that you will lease the facility, not build. Notate all assumptions used to create the 5 Year Profit and Loss Statement Sales growth; components of Operating Costs; Depreciation of Fixed Assets including useful life; tax rates; etc. See Exhibit 17.3 in the textbook for an example of a Return on Investment calculation
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