(Chapter 15) International Strategies ~ The last chapter ~

Review 5 Values 

1. Access to new customers
2. Low cost of production
3. Develop new core competency
4. Leaning current core competency
5. Managing corporate risk

Review Risks

• Corporate risk

          - Liabilities and dangers - get more funding to take risk. What happen if revenue is not increasing?

• Financial risk

         - Exchange rate risk

• Country risk

         All local risks such as:
         - Local government
         - Natural disasters

MEMO:

- The country risk is a portrait of the economic and financial situation of a certain country, also showing the political stability and the historic performance in fulfilling its financial obligations.

- The two relevant risks for the Central Bank to set the level of the interest rate in an open economy are the currency and country risks.

（Chapter 14) Merger and Acquisition strategies

Federal Trade Commission (FTC) Categories

• Vertical merger
• Horizontal merger
• Product extension merger
• Market extension merger
• Conglomerate merger ==  A merger between firms that are involved in totally unrelated business activities. There are two types of conglomerate mergers: pure and mixed. Pure conglomerate mergers involve firms with nothing in common, while mixed conglomerate mergers involve firms that are looking for product extensions or market extensions.
  
  Read more: http://www.investopedia.com/terms/c/conlgomeratemerger.asp#ixzz1vXqgA28E

Why are so many M & As ?

1. To ensure their survival
2. Free cash flow
3. Agency problems
4. Managerial hubris == Managerial hubris is the unrealistic belief held by managers in bidding firms that they can manage the assets of a target firm more efficiently than the target firm's current management. Managerial hubris is one reason why a manager may choose to invest in a merger that on average generates no profits. (By Wiki) 

5. Potential for profit

Implementation

==> Capstone.