430hanlei19890907 付款.docx
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430hanlei19890907 付款.docx
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430hanlei19890907付款
ManagementofYorkshireElectronicsplc’sFinance
TableofContents
ExecutiveSummary
Introduction
Methods
PPPTheory
DataAnalysis
TheoryAnalysis
TransferPricing
TreasuryCentralisation
Conclusion
Recommendation
Reference
ExecutiveSummary
HereisareportabouttheexpansionofYorkshireElectronicsplcofitsoverseassales,therearemianlytwoways,oneinPolandandoneinIndia,thePurchasingPowerParityTheorywhichisalsoknownasPPPwillplayaleadingroleinthereport.SincetheYorkshireElectronic’sbankhasundertakentounderwritetheinvestmentsinPolandandIndiathecompany’soverseasventures.Sothemainpurposeofthisreportistodiscusstheundergoingstrategiesandlookelsewhereforthefundingoffurtheroverseasexpansionandlowerthecompany’soverseasventures.
Introduction
YorkshireElectronicsislocatedinLeedsUK.Thecompanyservicescompaniesinvolvedinelectronicsmanufacture,aerospace,security,automotiveandmedicalindustries.ThecompanydoesthemajorityofitsbusinessintheUKbutalsohasasignificantlevelofexportsalesviaitswebsite.Butthecompanyhasfounditisveryslowtoexpanditssales.Anditslargerwholesaleoutletsaredemandingtoolargediscounts.SoYorkshireElectronicsislookingforthealternativestrategiesorwaystoexpandofitsoverseassales.Thereportisaassessmentofallthepossiblewaysforthecompanytoexpanditssalesoverseas.
Methods
Thereportisproducedtolookforotherviableoptionsforthecompanyinordertomaximiseitsfutureoverseasbusiness.Thisreportwillshowaassessmentofthecompanyforaboutfiveyears.Butthefactisthatallthestatementareestimated,wecannotgiveaexactdefinitionforitsfuturedevelopment,whatwecandonowisjustforecastingthetrenditgoes,whatismore,fiveyearsisalongperiod,manyfactorssuchasconsumerpriceindex(CPI),interestrate,inflationandexchangeratemightleadtheresulttoacompletedifference.
PPPTheory
ThisreportmainlydiscussedtheexpansioninPolandandIndiaofYorkshireElectronicsplcforaboutfiveyeas,thecurrentexchangeratesandinflationshavebeenprovidedandthetendencyofexchangeratesforthethreecountriesweregiven,sothereportwillusethePurchasingPowerParityTheory(PPP)asthemainmethodtogetthereportthrough,inaddition,alltheissuesinthereportwillbediscussedobjectively.
TheideaofthePurchasingPowerParityTheory(PPP)wasfirstmentionedinaSchoolofSalamancainthe16thcentury.Thenin1918GustavCasseldevelopedandchangeditintothemodernform.KrugmanandObstfeld(2009)saidthattheconceptofthistheoryisbasedonthelawofoneprice,iftherearenotransactioncostsandofficialtradebarriersthetraderscandealthesamegoodswiththesamepriceindifferentmarketswhenthepricesareexpressedinthesamecurrency.Itcanbealsoexplainedastheproportionintheinflationrates—isequaltothepercentagedepreciationorappreciationoftheexchangerateofhomeandabroad.Thetheorybesuitableforthedeterminationoftherelativevalueofdifferentcurrencies,especiallyforalong-runtendency.
SointhiereportwewillusethetheorytoestimatetheviabilityoftheexpansioninthetwocountriesofYorkshireElectronicsplc.
Thefactisthatthecompanyhasraisedtwopossibilitiesforitsexpansion,oneissettingupmanufacturingcompaniesinMalaysiaandAustraliaandpurchasingadditionaldistributioncapacitybybuyingestablisheddistributorsinEuropeanandFarEasterncountries.Thetwostrategiesisverygoodforitsexpansion,YorkshireElectronicsplcislocatedinLeeds,UK,ifitdeliversitsproductstotheoverseascustomersfromitsheadquarters,itwillbealargecostofitsdelivery,sonewcompaniesinnewmarketswillleaditsproductsmadelocallyandwhatismore,thestrategywilllowerthedeliverycostshugely,andanothermethodforitsexpansionispurchasingadditionaldistributioncapacitybybuyingestablisheddistributorsinEuropeanandFarEasterncountries.Thiscanbetreatedassomekindofmerger.Forthecompanyisanewerinthosecountries,itdoesnothavemanyadvantagesthere,soitwillbebetterforthecompanytoexpanditsbusinessbybuyingestablisheddistributors,itisveryeasyandwillsavethepreciousoperatingtime.
Thetwopossibilitieshavebeendiscussedwhichiscurrentlybeingdebated.Ascanbeseenthattheyaretwoviableoptionsinordertomaximiseitsfutureoverseasbusiness,besidesthis,someotheropinionsarealsoavailableforitsexpansion.Someotheropinionssuchasfindingjoiningtraders,agents,transferingthepossessionofthetrademarkandlaunchingadvertisementsoverseasmaybealsoviableforthecompany.Theninthenextpart,theseopinionswillbediscussedindetail.
Nowadays,thejoiningtraderscanbeseeneverywhere.Theyareagroupofpeopleorcompanieswhosellsthespecificgoodsorprovidesservicesundertheissueofthelisencesfromthespeciallyingpermittrader.YorkshireElectronicsislocatedinleeds,however,thecompanywantstoexpanditsbusinessoverseas,sofindingsomejoiningtradersinthetwocountrieswillloweritsdeliverycostslargely,thejoiningtradershavetheirownbasesorfactoriesthere,moreover,theyknowthesituationsofthemarketbetterthanYorkshireElectronics,oncetheYorkshireElectronicsauthorizesthejoiningtraderstosellthespecificinstruments,theproductswillhavetheirowncompetitiveadvantagesandthedeliverycostswillreduce.Inconclusion,thejoiningtraderswillhelpYorkshireElectronicstoexpanditsoverseasbusiness.
Agentscanbealsocalledjoiningtraderstosomeextent.Theyhavemanythingsincommon.TheYorkshireElectronicscanalsoauthorizethesememberstomanufactureandsellthespecificinstrumentsasjoiningtradersdo.
Anotherwaytoexpanditsbusinessoverseasistransferingthepossessionofthetrademark.Contracttransferandinheritingtransferarethetwomainwaysinthestrategy.YorkshireElectronicscantransferitstrademarktotheoverseasjoiningtradersoragenciesbycontracttransfer.Thejoiningtradersandagenciesmanufactureandsellthespecificinstruments,andYorkshireElectronicsreceivemoneyfromthem.
Lastbutnotleast,almosteveryonewatchTVorsearchtheinternet,soitwillbegreatforthecompanylaunchesnewandattractiveadsonTVortheinternet.Thecompanycanintroduceitsproductsandservicesall-sidedandthiswillhelpthecompanytofindmorepotentialcustomersanddistributors.
Inaddition,manyotherwayswillalsohelpfulforYorkshireElectronicstoexpanditsbusinessoverseas,butwemusthaveacomprehensivecomparisonandanalysisofthemforallthewaysareverycomplex,andnomatterwhichopinionstheYorkshireElectronicswilltakeintoconsideration,theyshouldbeputintopracticewithmanyeffortsontheanalysisoftheirviabilityandtheirfuture.
WehavediscussedthedifferentandpossiblewaysforYorkshireElectronicstomaximiseitsfutureoverseasbusiness.Inaddition,thecompanyhasdiscussedtwooptions.OneinPolandandoneinIndia.Andthedetailedprojectionsforthesecompanieshasbeengiven,sointhenextpartofthisreportwewillanalysethedataandwillgiveacomparisonoftheviabilitiesinthetwocountries.
Dataanalysis
ThecompanyhasdecidedtousethePurchasingPowerParityTheorytoestimatefutureexchangeratesbutisalittleconcernedregardingitsaccuracy.ParticularlyforIndia.Whatismore,thefluctuationofinflationintheUKisforecastedsmallerthanthatinIndia,sointhisreportthespotratesintheUKwillbecalculatedas2.1%eachyearand1%inPoland.
OwingtothecentralbankinIndiaaretakingsomeeffortsto“calmitdown”,andtheIMFhasestimatedthat“itwillfallto6%eventuallyiftheinterestrateincreaseissuccessful”.ButwewillusethePPPtheoryintheproject,sotheinflationinfiveyearsinIndiawillbecalculatedas10%.
Firstofall,wewillmakeabriefsummaryofnetpresentvalueandNetpresentvalue(NPV)ornetpresentworth(NPW)isatotalofcashflows,isrecognizedwidelyasthesumofthepresentvalues(PVs)ofthecashflowsofthesameentity.NPVisthedifferenceamountbetweencashinflowsandcashoutflows.Itisacomparisonofthepresentvalueofmoneytodaywiththepresentvalueofmoneyinthefuture,takinginflationandotheraspectswillbetakenintoconsiderationtoo.
Thenetpresentvalueisaevaluationmethodwhichismentionedinabout19thcentury.KarlMarxreferstoNPVasfictitiouscapital,andthecalculationas"capitalising,"andthismethodiswrittenintotextbooksuntil1950s.
Thenetpresentvalue(NPV)isadisplayofhowmuchvalueaninvestmentorprojectaddstothefirm.Theviablityofaprojectinlightofthenetpresentvaluecanbeseendirectlyfromthetablebelow:
NPV>0
theinvestmentwouldaddvaluetothefirm
theprojectmaybeacceptedandisviable
NPV<0
theinvestmentwouldsubtractvaluefromthefirm
theprojecthasnovalue
NPV=0
theinvestmentwouldneithergainnorlosevalueforthefirm
Weshouldbeindifferentinthedecisionwhethertoacceptorrejecttheproject.Thisprojectaddsnomonetaryvalue.Decisionshouldbebasedonothercriteria,e.g.,strategicpositioningorotherfactorsnotexplicitlyincludedinthecalculation.
Inflationisgenerallyknownasacontinuousupingofpriceofgoodsorservicesinaperiodoftime.Itisareflectionofthereductionofpurchasingpoweranditisasymbolofmoneydepreciation,theeffectsofInflationonaneconomycanbepositiveandnegative,itdepends.
Thetwooptionsofitsexpa
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