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International business finance - Case Study Example

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In the business environment, firms/companies strive to generate more profits in order to achieve their vital objectives such as profit generation and shareholders’ wealth maximisation. For such to be reality, the top level of management of the respective company should…
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International business finance
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"International business finance"

Download file to see previous pages The report comprehensively analyses the strategies at hand for the XP PLC multinational company and consequently recommends the best strategy/option to be adopted on the basis of financial facts.
The XP plc Company’s strengths include diversified business operations in a number of countries. The company has a holding company situated in France. However, it has a number of subsidiaries operating in foreign countries such as in Germany, Australia, Monaco, and Poland. Additionally, the firm has stable sales revenue of over 60 million Euros. This is a clear indication that the company made superior products that are tailored for its customers, hence gaining customer loyalty. The customer loyalty comes about due to the satisfaction of the customers’ preferences and choices. For a company to continue operating in a business environment, it must be in a position to yield profits to cater for company expenses, financing activities, investment purposes and maximizing the company’s value. Since the firm is trading at a net profit of 8%, it has a stable future operation in the economy. A business organisation that is incapable of financing its business activities using internal funds such as equity is compelled to borrow from external sources available. Among the external sources of funds is the debt that increases the firm’s financial leverage. Since the proportion of the debt is smaller as compared to the equity, the financial risk is reduced hence a strength to the company that could otherwise be a threat had the debt outweighed the equity capital.
The multinational company suffers from a stiff competition in the service industry. This has caused the company to at least diversify its operation worldwide to increase its products and services delivery. The company uses bureaucratic kind of management making it difficulty in making decisions faster.
XP plc being a multinational company, it has a chance for diversity. The firm has ...Download file to see next pagesRead More
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