The Case of GKN PLC. : Discussion of investment in Mexico
Student ID. 500338970
Student ID. 500325225
Student ID. 500343056
Student ID. 500339457
International Financial Management (ASB-4805)
Professor Lynn Hodgkinson
8th November 2013
School of Business (London Centre)
Investment in Mexico
Inherent risk analyses
Advantages and Disadvantages of Three strategies
Licensing local companies
Taking over an existing companies
Setting up a completely new company
Mexico economic positions in recent years
Changes in exchange rates
Mexico corporate governance and corruption rankings and the likely political risk involved. Corporate governance
Political Risk and corruption ranking
Mexico`s current levels of inward foreign direct investment activity
12 Managing economic and translation exposure
Trends in the costs of debt for the previous year and the change in Mexico’ share price indices Costs of debt
Mexico credit rating
This paper presents the finding of possibility of investment in foreign country for GKN PLC, which is the United Kingdom based company. This company conducts business as the manufacturer of automotive and aerospace parts; they intend to pursue a globalisation agenda. The findings are based on selected country, Mexico, which is whether to invest under three strategies, licensing local companies, taking over existing companies or setting up completely new company. This report offers the tools and some useful discussions to determine the proper investment which comprise of PEST analysis to identify inherent risks, advantages and disadvantages of three strategies analysis and discussions of financial and economic circumstances in Mexico.
Investment in globalisation is the trend that many organisation try to expand their business. Besides, selecting the focused country, the most critical issue that the management teams need to consider is the conformation of investment. Nevertheless, there are three key strategies, licensing local companies, taking over existing companies and setting up completely new company which is necessary to be analysis before making decision.
This report presents the critical analysis under circumstance of globalisation agenda of the GKN PLC., which is the company registered under the United Kingdom law and listed in London stock exchange. The destination of investment is Mexico, therefore the discussion of strategies and financial and economic issues are shown in this report. To implicate the best solution for investment from those 3 strategies, the work exhibit advantages and disadvantages of each. Also, this paper applies PEST analysis to indicate inherent risks that might be occur in Mexico. Some related discussions are also offered including, inflation, changes in exchange rates, corporate governance, corruption ranking, levels of inward foreign direct investment activity, possible effects of translation and economic exposure, trends in cost of debt in Mexico, impose tariffs and Mexico’s credit ranking. This report is conducted under the knowledge of international financial management field.
1. Company’s backgrounds
GKN is a British’s company which is listed on London stock exchange and is a constituent of the FTSE 100 Index. They are a global engineering group which design, manufacture and service systems and components of automotive and aerospace for the world’s manufacturers. GKN have four main divisions namely, GKN driveline, GKN powder metallurgy, GKN...
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Table 1.1(2013): OECD Facebook statistics. For explanatory notes, see OECD Facebook (online) Available from: http://www.oecd-ilibrary.org/economics/country-statistical-profile-mexico_20752288-table-mex (Accessed 17 Oct. 2013)
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