International marketing strategy and theory ch18

Chapter 18

Financial Strategies:
Financing and
Currencies


Chapter Outline
 Nonfinancial

Institutions
- Self Financing and Debt Financing
- Equity Financing
 Financial Institutions
 Government Agencies


Chapter Outline
 International

Financial
Institutions/Development Banks
–
–
–
–
–

World Bank
International Development Association (IDA)
International Finance Corporation (IFC)

Multilateral Investment Guarantee Agency (MIGA)
International Centre for Settlement of Investment
Disputes (ICSID)

 IMF

(International Monetary Fund)


Chapter Outline
 Money
 Foreign

Exchange
 Foreign Exchange Market
 Foreign Exchange Rate
- Currency Equilibrium
- Effect of Devaluation


Chapter Outline





Exchange-Rate Systems
Gold Standard
Par Value (Adjustable Peg)
Crawling Peg (Sliding or Gliding Parity)

Wide Band
Floating (Flexible) System
Official Classification of Exchange Rate Regimes
Evaluation of Floating Rates


Chapter Outline
 Financial

-

Implications and Strategies
Early Warning Systems
Hedging
Leading and Lagging
Invoicing
Pass-Through Costs
Other Strategies


Self Financing and Debt Financing
 own

capital
 withholding of dividends
 trade credit
 joint venture partners
 borrowing from affiliated firms and employee
retirement fund
 issuing commercial paper or bonds

Equity Financing
 Selling

Stock
 Venture Capital


Financial Institutions
 Factoring
 Forfaiting
 Banks

Houses


Government Agencies
 Concessionary

Financing
 Mixed/Blended Credit


International Financial Institutions/
Development Banks
 World

Bank (IBRD)
 International Development Association (IDA)

 International Finance Corporation (IFC)
 Multilateral Investment Guarantee Agency
(MIGA)
 International Centre for Settlement of
Investment Disputes (ICSID)


Money
 Hard

(International) Currencies vs. Soft
Currencies
 Functions of Currency
- medium of exchange
- unit of account
- store of value


Foreign Exchange Market
 Credit

(Financing)
 Clearing
 Hedging
 Spot Market vs. Forward Market


Foreign Exchange Rate
 Currency

Equilibrium
 Effect of Devaluation
- Exports and Employment
- Imports and Consumer Welfare


Exchange Rate Systems
 Gold

Standard
 Par Value (Adjustable Peg)
 Crawling Peg (Sliding or Gliding Parity)
 Wide Band
 Floating (Flexible) System


Official Classification of Exchange
Rate Regimes






-

Floating Exchange Rate Regimes
independently floating regimes
managed floating regimes
Intermediate Exchange Rate Regimes

soft pegs
tightly managed floating regimes
Hard Peg Regimes
currency boards
exchange rate regimes with no separate legal tender


Financial Implications
and Strategies
 Early

Warning Systems
 Hedging
 Leading and Lagging
 Invoicing
 Pass-Through Costs
 Other Strategies