430hanlei19890907 付款.docx

1、430hanlei19890907 付款Management of Yorkshire Electronics plcs FinanceTable of ContentsExecutive Summary IntroductionMethodsPPP TheoryData Analysis Theory AnalysisTransfer PricingTreasury CentralisationConclusionRecommendationReferenceExecutive Summary Here is a report about the expansion of Yorkshire

2、 Electronics plc of its overseas sales, there are mianly two ways, one in Poland and one in India, the Purchasing Power Parity Theory which is also known as PPP will play a leading role in the report. Since the Yorkshire Electronics bank has undertaken to underwrite the investments in Poland and Ind

3、ia the companys overseas ventures. So the main purpose of this report is to discuss the undergoing strategies and look elsewhere for the funding of further overseas expansion and lower the companys overseas ventures. IntroductionYorkshire Electronics is located in Leeds UK. The company services comp

4、anies involved in electronics manufacture, aerospace, security, automotive and medical industries. The company does the majority of its business in the UK but also has a significant level of export sales via its web site. But the company has found it is very slow to expand its sales. And its larger

5、wholesale outlets are demanding too large discounts. So Yorkshire Electronics is looking for the alternative strategies or ways to expand of its overseas sales. The report is a assessment of all the possible ways for the company to expand its sales overseas.MethodsThe report is produced to look for

6、other viable options for the company in order to maximise its future overseas business. This report will show a assessment of the company for about five years. But the fact is that all the statement are estimated, we can not give a exact definition for its future development, what we can do now is j

7、ust forecasting the trend it goes, wha t is more, five years is a long period, many factors such as consumer price index (CPI), interest rate, inflation and exchange rate might lead the result to a complete difference.PPP TheoryThis report mainly discussed the expansion in Poland and India of Yorksh

8、ire Electronics plc for about five yeas, the current exchange rates and inflations have been provided and the tendency of exchange rates for the three countries were given, so the report will use the Purchasing Power Parity Theory (PPP) as the main method to get the report through, in addition, all

9、the issues in the report will be discussed objectively. The idea of the Purchasing Power Parity Theory (PPP) was first mentioned in a School of Salamanca in the 16th century. Then in 1918 Gustav Cassel developed and changed it into the modern form. Krugman and Obstfeld (2009) said that the concept o

10、f this theory is based on the law of one price, if there are no transaction costs and official trade barriers the traders can deal the same goods with the same price in different markets when the prices are expressed in the same currency. It can be also explained as the proportion in the inflation r

11、atesis equal to the percentage depreciation or appreciation of the exchange rate of home and abroad. The theory be suitable for the determination of the relative value of different currencies, especially for a long-run tendency.So in thie report we will use the theory to estimate the viability of th

12、e expansion in the two countries of Yorkshire Electronics plc.The fact is that the company has raised two possibilities for its expansion, one is setting up manufacturing companies in Malaysia and Australia and purchasing additional distribution capacity by buying established distributors in Europea

13、n and Far Eastern countries. The two strategies is very good for its expansion, Yorkshire Electronics plc is located in Leeds, UK, if it delivers its products to the overseas customers from its headquarters, it will be a large cost of its delivery, so new companies in new markets will lead its produ

14、cts made locally and what is more, the strategy will lower the delivery costs hugely, and another method for its expansion is purchasing additional distribution capacity by buying established distributors in European and Far Eastern countries. This can be treated as some kind of merger. For the comp

15、any is a newer in those countries, it does not have many advantages there, so it will be better for the company to expand its business by buying established distributors, it is very easy and will save the precious operating time. The two possibilities have been discussed which is currently being deb

16、ated. As can be seen that they are two viable options in order to maximise its future overseas business, besides this, some other opinions are also available for its expansion. Some other opinions such as finding joining traders, agents, transfering the possession of the trademark and launching adve

17、rtisements overseas maybe also viable for the company. Then in the next part, these opinions will be discussed in detail.Nowadays, the joining traders can be seen everywhere. They are a group of people or companies who sells the specific goods or provides services under the issue of the lisences fro

18、m the speciallying permit trader. Yorkshire Electronics is located in leeds, however, the company wants to expand its business overseas, so finding some joining traders in the two countries will lower its delivery costs largely, the joining traders have their own bases or factories there, moreover,

19、they know the situations of the market better than Yorkshire Electronics, once the Yorkshire Electronics authorizes the joining traders to sell the specific instruments, the products will have their own competitive advantages and the delivery costs will reduce. In conclusion, the joining traders wil

20、l help Yorkshire Electronics to expand its overseas business.Agents can be also called joining traders to some extent. They have many things in common. The Yorkshire Electronics can also authorize these members to manufacture and sell the specific instruments as joining traders do. Another way to ex

21、pand its business overseas is transfering the possession of the trademark. Contract transfer and inheriting transfer are the two main ways in the strategy. Yorkshire Electronics can transfer its trademark to the overseas joining traders or agencies by contract transfer. The joining traders and agenc

22、ies manufacture and sell the specific instruments, and Yorkshire Electronics receive money from them.Last but not least, almost everyone watch TV or search the internet, so it will be great for the company launches new and attractive ads on TV or the internet. The company can introduce its products

23、and services all-sided and this will help the company to find more potential customers and distributors.In addition, many other ways will also helpful for Yorkshire Electronics to expand its business overseas, but we must have a comprehensive comparison and analysis of them for all the ways are very

24、 complex, and no matter which opinions the Yorkshire Electronics will take into consideration, they should be put into practice with many efforts on the analysis of their viability and their future. We have discussed the different and possible ways for Yorkshire Electronics to maximise its future ov

25、erseas business. In addition, the company has discussed two options. One in Poland and one in India. And the detailed projections for these companies has been given, so in the next part of this report we will analyse the data and will give a comparison of the viabilities in the two countries.Data an

26、alysis The company has decided to use the Purchasing Power Parity Theory to estimate future exchange rates but is a little concerned regarding its accuracy. Particularly for India. What is more, the fluctuation of inflation in the UK is forecasted smaller than that in India, so in this report the sp

27、ot rates in the UK will be calculated as 2.1% each year and 1% in Poland.Owing to the central bank in India are taking some efforts to “calm it down”, and the IMF has estimated that “it will fall to 6% eventually if the interest rate increase is successful”. But we will use the PPP theory in the pro

28、ject, so the inflation in five years in India will be calculated as 10%.First of all, we will make a brief summary of net present value and Net present value (NPV) or net present worth (NPW) is a total of cash flows, is recognized widely as the sum of the present values (PVs) of the cash flows of th

29、e same entity. NPV is the difference amount between cash inflows and cash outflows. It is a comparison of the present value of money today with the present value of money in the future, taking inflation and other aspects will be taken into consideration too.The net present value is a evaluation meth

30、od which is mentioned in about 19th century. Karl Marx refers to NPV as fictitious capital, and the calculation as capitalising, and this method is written into textbooks until 1950s. The net present value (NPV) is a display of how much value an investment or project adds to the firm. The viablity o

31、f a project in light of the net present value can be seen directly from the table below: NPV 0the investment would add value to the firmthe project may be accepted and is viable NPV 0the investment would subtract value from the firmthe project has no valueNPV = 0the investment would neither gain nor

32、 lose value for the firmWe should be indifferent in the decision whether to accept or reject the project. This project adds no monetary value. Decision should be based on other criteria, e.g., strategic positioning or other factors not explicitly included in the calculation.Inflation is generally known as a continuous uping of price of goods or services in a period of time. It is a reflection of the reduction of purchasing power and it is a symbol of money depreciation, the effects of Inflation on an economy can be positive and negative, it depends. The two options of its expa