国际商务管理教材7.pptVIP

Lesson 5 International Investment Management Readings: Chap. 8, Book 1 Case materials in the Class E-Mail Box Int’l Investment Management Main Issues: International Merger Acquisition (M A) International Greenfield Investments Managing Foreign Exchange Risks Cost of Capital for International Investment Feasibility Analysis for International Projects Cases Examples: Matsushita in Hollywood IBM PC Goes to Lenovo Buying a Big Mac Jack’s Hedging Strategy Should you invest in MEC? 5.1 Forms of Foreign Direct Investment 5.1.1 Merger Acquisition (M A) 5.1.2 New Start-up Q：Why will the MNEs choose new startup strategy over M A to make FDI？ (1) Weakness of M A: (1) over-valuation of the acquired target; (2) unsatisfactory location, personnel, or products of the acquired firm; (3) high costs of integration; (4) low success rate. (2) Advantages of new start-up (weakness of M A) 5.2 Managing Foreign Exchange Risks 5.2.1 Foreign Exchange (1) Foreign Exchange Market Participants traders at banks brokers in brokerage firms speculators hedgers （套期交易者） arbitrageurs （套汇商、套利者） government agencies (2) Short-term Exchange Rate e.g. Exchange rate of the U.S. dollar Exchange Rate（Yen /dollar） D（Demand） S（Supply） D’ 130 120 0 400 500 U.S. dollar (millions) (3) Forward Exchange Rate Example: Buying Big Mac In Guangzhou, it’s sold for ￥10; In Boston, it’s sold for $2 Q1. Is RMB overvalued by its official exchange rate? What’s Golden Arch Standard? Q2. Is RMB likely to depreciate in the long-run? Why or why not? Answer: Q1. Undervalued. Its purchasing power (PP) is greater. Golden Arch Standard: Big Mac is a good measure of a currency’s PP. Q2. RMB is likely to appreciate. There is a principle of exchange rate (E.R): PPP (Purchasing Power Parity) 购买力平价 In the long-run, E.R is determined by the relative purchasing power of the curre