Assume that you have been approached by a competitor in Mexico to engage in a joint venture. The competitor would offer the classroom facilities (so that you would not need to rent classroom facilities), while your employees would provide the teaching. You would split the profits with this business. Discuss how your potential return and your risk would change if you pursue the joint venture.
A position wherein one enters into a joint venture to enter into a foreign market such as Mexico will be very positive from the point of view of risk and return.
By opting for a joint venture, the capital commitments are limited which reduces risk and the upfront investment for tangible assets are provided by the joint venture partner.
Since we would be responsible for the intangible assets, there would always remain an option to redeploy the assets in case of any contingency thus adding flexibility.
Thus, through the joint venture mode, it is a much better situation in terms of risk and reward scenario.
Assume that you have been approached by a competitor in Mexico to engage in a joint...
The board of directors of your for-profit hospital has been approached by a nonprofit hospital to consider a joint venture to take over their business resulting in a larger for-profit medical center status. You have been asked to construct a financial risk analysis for this conversion. Using course materials, including your text and the Internet, and principles of financial risk analysis, evaluate the considerations that a nonprofit hospital has in considering the conversion to a for-profit hospital. Consider the following...
You have been approached by Lakeside Company to be their auditor. They have fired the previous audit firm and are now looking for a new firm. Please answer the following questions concerning this potential engagement. What are the issues to consider in making this decision? Based on your answer in a) above; What is the most important consideration for your firm in making this decision? Why? What are the risks that Lakeside, the potential client, faces in engaging your firm...
You have been approached by a potential client who could bring you considerable business. She says, "I'd like to find an alternative vendor for my future orders of 5,000/yr., but their pricing must be competitive." Your CFO has supplied you with the following information. Current product standard costs are as follows: Selling price per unit: $5,000 $1,400/unit direct material $400/unit direct labor $200/unit variable overhead $200/unit fixed overhead (this figure is the result of the budgeted fixed overhead of $2,000,000...
Your business provides CDs for free to customers who pay for the English courses that you offer in Mexico. You consider the idea of mass production of the CDs in the U.S., so that you can sell (export) them to distributors or to retail stores throughout Mexico. You would price the CDs in dollars when exporting them. The CDs are not as effective without the teaching, but can be useful to individuals who want to learn the basics of the...
Please answer the followings Questions in 550-words count in your own words. Please provide a spreadsheet with calculation and loss estimates and capital. The board of directors of your for-profit hospital has been approached by a nonprofit hospital to consider a joint venture to take over their business resulting in a larger for-profit medical center status. You have been asked to construct a financial risk analysis for this conversion. Using course materials, including your text and the Internet, and principles...
You have been approached by a potential client who could bring you considerable business. She says, "I'd like to find an alternative vendor for my future orders of 5,000/yr., but their pricing must be competitive." Your CFO has supplied you with the following information. Current product standard costs are as follows: Selling price per unit: $5,000 $1,400/unit direct material $400/unit direct labor $200/unit variable overhead $200/unit fixed overhead (this figure is the result of the budgeted fixed overhead of $2,000,000...
I am consulting you on this situation, individually, for your expert advice. We have been approached by a large restaurant franchise that is having trouble staying competitive in the casual dining market. This client’s performance had been slipping, employees are becoming disengaged. As part of their strategy to stay competitive, the company has strategically decided to add a line of upscale food and alcoholic beverages to their menu. The CEO of this company has asked for our consultation services. She...
Assume you have just been hired as a business manager of PizzaPalace, a regional pizza restaurant chain. The company’s EBIT was $50 million last year and is not expected to grow. The firm is currently financed with all equity, and it has 10 million shares outstanding. When you took your corporate finance course, your instructor stated that most firms’ owners would be financially better off if the firms used some debt. When you suggested this to your new boss, he...
You are the owner/manager for a small local IT business, employing 5 fulltime staff and 2 part-time staff in total. You have been approached to undertake a large project, involving the installation of 150 new desktops for a new wholesale distribution centre in the local area. As part of the contract you would be expected to provide ongoing hardware and software support in a timely manner. Based on this introduction, B. Develop a stakeholder communications analysis for this project. Your...
Assume you have just been hired as a business manager of PizzaPalace, a regional pizza restaurant chain. The company’s EBIT was $50 million last year and is not expected to grow. The firm is currently financed with all equity, and it has 10 million shares outstanding. When you took your corporate finance course, your instructor stated that most firms’ owners would be financially better off if the firms used some debt. When you suggested this to your new boss, he...