430hanlei19890907 付款.docx

430hanlei19890907 付款.docx

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430hanlei19890907付款

ManagementofYorkshireElectronicsplc’sFinance

TableofContents

ExecutiveSummary

Introduction

Methods

PPPTheory

DataAnalysis

TheoryAnalysis

TransferPricing

TreasuryCentralisation

Conclusion

Recommendation

Reference

ExecutiveSummary

HereisareportabouttheexpansionofYorkshireElectronicsplcofitsoverseassales,therearemianlytwoways,oneinPolandandoneinIndia,thePurchasingPowerParityTheorywhichisalsoknownasPPPwillplayaleadingroleinthereport.SincetheYorkshireElectronic’sbankhasundertakentounderwritetheinvestmentsinPolandandIndiathecompany’soverseasventures.Sothemainpurposeofthisreportistodiscusstheundergoingstrategiesandlookelsewhereforthefundingoffurtheroverseasexpansionandlowerthecompany’soverseasventures.

Introduction

YorkshireElectronicsislocatedinLeedsUK.Thecompanyservicescompaniesinvolvedinelectronicsmanufacture,aerospace,security,automotiveandmedicalindustries.ThecompanydoesthemajorityofitsbusinessintheUKbutalsohasasignificantlevelofexportsalesviaitswebsite.Butthecompanyhasfounditisveryslowtoexpanditssales.Anditslargerwholesaleoutletsaredemandingtoolargediscounts.SoYorkshireElectronicsislookingforthealternativestrategiesorwaystoexpandofitsoverseassales.Thereportisaassessmentofallthepossiblewaysforthecompanytoexpanditssalesoverseas.

Methods

Thereportisproducedtolookforotherviableoptionsforthecompanyinordertomaximiseitsfutureoverseasbusiness.Thisreportwillshowaassessmentofthecompanyforaboutfiveyears.Butthefactisthatallthestatementareestimated,wecannotgiveaexactdefinitionforitsfuturedevelopment,whatwecandonowisjustforecastingthetrenditgoes,whatismore,fiveyearsisalongperiod,manyfactorssuchasconsumerpriceindex（CPI）,interestrate,inflationandexchangeratemightleadtheresulttoacompletedifference.

PPPTheory

ThisreportmainlydiscussedtheexpansioninPolandandIndiaofYorkshireElectronicsplcforaboutfiveyeas,thecurrentexchangeratesandinflationshavebeenprovidedandthetendencyofexchangeratesforthethreecountriesweregiven,sothereportwillusethePurchasingPowerParityTheory（PPP）asthemainmethodtogetthereportthrough,inaddition,alltheissuesinthereportwillbediscussedobjectively.

TheideaofthePurchasingPowerParityTheory（PPP）wasfirstmentionedinaSchoolofSalamancainthe16thcentury.Thenin1918GustavCasseldevelopedandchangeditintothemodernform.KrugmanandObstfeld（2009）saidthattheconceptofthistheoryisbasedonthelawofoneprice,iftherearenotransactioncostsandofficialtradebarriersthetraderscandealthesamegoodswiththesamepriceindifferentmarketswhenthepricesareexpressedinthesamecurrency.Itcanbealsoexplainedastheproportionintheinflationrates—isequaltothepercentagedepreciationorappreciationoftheexchangerateofhomeandabroad.Thetheorybesuitableforthedeterminationoftherelativevalueofdifferentcurrencies,especiallyforalong-runtendency.

SointhiereportwewillusethetheorytoestimatetheviabilityoftheexpansioninthetwocountriesofYorkshireElectronicsplc.

Thefactisthatthecompanyhasraisedtwopossibilitiesforitsexpansion,oneissettingupmanufacturingcompaniesinMalaysiaandAustraliaandpurchasingadditionaldistributioncapacitybybuyingestablisheddistributorsinEuropeanandFarEasterncountries.Thetwostrategiesisverygoodforitsexpansion,YorkshireElectronicsplcislocatedinLeeds,UK,ifitdeliversitsproductstotheoverseascustomersfromitsheadquarters,itwillbealargecostofitsdelivery,sonewcompaniesinnewmarketswillleaditsproductsmadelocallyandwhatismore,thestrategywilllowerthedeliverycostshugely,andanothermethodforitsexpansionispurchasingadditionaldistributioncapacitybybuyingestablisheddistributorsinEuropeanandFarEasterncountries.Thiscanbetreatedassomekindofmerger.Forthecompanyisanewerinthosecountries,itdoesnothavemanyadvantagesthere,soitwillbebetterforthecompanytoexpanditsbusinessbybuyingestablisheddistributors,itisveryeasyandwillsavethepreciousoperatingtime.

Thetwopossibilitieshavebeendiscussedwhichiscurrentlybeingdebated.Ascanbeseenthattheyaretwoviableoptionsinordertomaximiseitsfutureoverseasbusiness,besidesthis,someotheropinionsarealsoavailableforitsexpansion.Someotheropinionssuchasfindingjoiningtraders,agents,transferingthepossessionofthetrademarkandlaunchingadvertisementsoverseasmaybealsoviableforthecompany.Theninthenextpart,theseopinionswillbediscussedindetail.

Nowadays,thejoiningtraderscanbeseeneverywhere.Theyareagroupofpeopleorcompanieswhosellsthespecificgoodsorprovidesservicesundertheissueofthelisencesfromthespeciallyingpermittrader.YorkshireElectronicsislocatedinleeds,however,thecompanywantstoexpanditsbusinessoverseas,sofindingsomejoiningtradersinthetwocountrieswillloweritsdeliverycostslargely,thejoiningtradershavetheirownbasesorfactoriesthere,moreover,theyknowthesituationsofthemarketbetterthanYorkshireElectronics,oncetheYorkshireElectronicsauthorizesthejoiningtraderstosellthespecificinstruments,theproductswillhavetheirowncompetitiveadvantagesandthedeliverycostswillreduce.Inconclusion,thejoiningtraderswillhelpYorkshireElectronicstoexpanditsoverseasbusiness.

Agentscanbealsocalledjoiningtraderstosomeextent.Theyhavemanythingsincommon.TheYorkshireElectronicscanalsoauthorizethesememberstomanufactureandsellthespecificinstrumentsasjoiningtradersdo.

Anotherwaytoexpanditsbusinessoverseasistransferingthepossessionofthetrademark.Contracttransferandinheritingtransferarethetwomainwaysinthestrategy.YorkshireElectronicscantransferitstrademarktotheoverseasjoiningtradersoragenciesbycontracttransfer.Thejoiningtradersandagenciesmanufactureandsellthespecificinstruments,andYorkshireElectronicsreceivemoneyfromthem.

Lastbutnotleast,almosteveryonewatchTVorsearchtheinternet,soitwillbegreatforthecompanylaunchesnewandattractiveadsonTVortheinternet.Thecompanycanintroduceitsproductsandservicesall-sidedandthiswillhelpthecompanytofindmorepotentialcustomersanddistributors.

Inaddition,manyotherwayswillalsohelpfulforYorkshireElectronicstoexpanditsbusinessoverseas,butwemusthaveacomprehensivecomparisonandanalysisofthemforallthewaysareverycomplex,andnomatterwhichopinionstheYorkshireElectronicswilltakeintoconsideration,theyshouldbeputintopracticewithmanyeffortsontheanalysisoftheirviabilityandtheirfuture.

WehavediscussedthedifferentandpossiblewaysforYorkshireElectronicstomaximiseitsfutureoverseasbusiness.Inaddition,thecompanyhasdiscussedtwooptions.OneinPolandandoneinIndia.Andthedetailedprojectionsforthesecompanieshasbeengiven,sointhenextpartofthisreportwewillanalysethedataandwillgiveacomparisonoftheviabilitiesinthetwocountries.

Dataanalysis

ThecompanyhasdecidedtousethePurchasingPowerParityTheorytoestimatefutureexchangeratesbutisalittleconcernedregardingitsaccuracy.ParticularlyforIndia.Whatismore,thefluctuationofinflationintheUKisforecastedsmallerthanthatinIndia,sointhisreportthespotratesintheUKwillbecalculatedas2.1%eachyearand1%inPoland.

OwingtothecentralbankinIndiaaretakingsomeeffortsto“calmitdown”,andtheIMFhasestimatedthat“itwillfallto6%eventuallyiftheinterestrateincreaseissuccessful”.ButwewillusethePPPtheoryintheproject,sotheinflationinfiveyearsinIndiawillbecalculatedas10%.

Firstofall,wewillmakeabriefsummaryofnetpresentvalueandNetpresentvalue（NPV）ornetpresentworth（NPW）isatotalofcashflows,isrecognizedwidelyasthesumofthepresentvalues（PVs）ofthecashflowsofthesameentity.NPVisthedifferenceamountbetweencashinflowsandcashoutflows.Itisacomparisonofthepresentvalueofmoneytodaywiththepresentvalueofmoneyinthefuture,takinginflationandotheraspectswillbetakenintoconsiderationtoo.

Thenetpresentvalueisaevaluationmethodwhichismentionedinabout19thcentury.KarlMarxreferstoNPVasfictitiouscapital,andthecalculationas"capitalising,"andthismethodiswrittenintotextbooksuntil1950s.

Thenetpresentvalue（NPV）isadisplayofhowmuchvalueaninvestmentorprojectaddstothefirm.Theviablityofaprojectinlightofthenetpresentvaluecanbeseendirectlyfromthetablebelow:

NPV>0

theinvestmentwouldaddvaluetothefirm

theprojectmaybeacceptedandisviable

NPV<0

theinvestmentwouldsubtractvaluefromthefirm

theprojecthasnovalue

NPV=0

theinvestmentwouldneithergainnorlosevalueforthefirm

Weshouldbeindifferentinthedecisionwhethertoacceptorrejecttheproject.Thisprojectaddsnomonetaryvalue.Decisionshouldbebasedonothercriteria,e.g.,strategicpositioningorotherfactorsnotexplicitlyincludedinthecalculation.

Inflationisgenerallyknownasacontinuousupingofpriceofgoodsorservicesinaperiodoftime.Itisareflectionofthereductionofpurchasingpoweranditisasymbolofmoneydepreciation,theeffectsofInflationonaneconomycanbepositiveandnegative,itdepends.

Thetwooptionsofitsexpa