MNC Financing. The MNC will need financing to purchase the product or raw material new supplier.
Discuss the amount of financing needed.
The product Rossy plans to market must be identified before he begins to discuss how much money he needs. First off, Rossy is a $28 million corporation that is currently in operation. In order to create 500,000 retail locations in Canada after opting to launch a new product in the Mexican market, the company will require at least $3.5 million in finance (Berezkina, 2022) Rossy will require $2 million if the supplier sells retail goods at his $2.0 per item and takes other manufacturing costs, such as labor and factory setup, into account. There are other expenses, transportation, and promotions. Therefore, a budget of at least $3.5 million is appropriate.
Explain how you arrived at the amount and how it will be spent.
Approximately $1.5 million of that budget will be used for production costs. The business must then invest approximately $1 million in creating a product that is helpful, appealing, and marketable. Once True Earth had established a presence in the market and a sizable client base, additional product promotion would help it gain market share, leaving around half of the competition behind.
Explain the different options available for financing.
To get financing there are different options available –
• Bonds- In exchange for regular interest payments, investor loans money to a business or the government in the form of a bond for a set length of time. When the bond matures, the bond's issuer pays the investor their money back (Chaudhry et al., 2021).
• Stock- A stock is a specific kind of instrument that certifies ownership of the issuing corporation by the bearer. Corporations issue (sell) stock to raise money so they can fund their operations. Common and preferred stocks are split into several categories.
• Bank Loan- One of the most popular ways to acquire money for a business is through a business loan. A loan is a more advantageous source of funding for a successful company than share capital since it permits greater leverage. Financial resources were necessary for a business's expansion.
From your discussions from “c” choose the best option for your corporation and explain its advantages for the corporation
Rossy is still growing and right now needs additional management oversight. The company would have had the chance to involve more stakeholders by pursuing equity financing, but since Rossy is all about its narrowly focused product segments and providing exceptional experiences for the particular target audience, involving more stakeholders could alter how the company interacts with that audience. In light of the foregoing, depending on the exchange rates and current interest rates, it is preferable for Rossy to borrow money from overseas markets. Doing so has numerous advantages for the company.
Will you seek financing in the domestic or foreign country, why, how, and where? Include the impact of interest rates and foreign exchange rate in your answer.
Rossy invest in Mexican markets, as was already discussed in this article. Rossy is offering high-end hair care products, something the Mexican business has very little experience with. Offering shares in the company can help the company get the most money out of this agreement (Hasibuan et al., 2021). The daily care business in Mexico is dominated by a number of enormous companies, with Rider shops being the main player in terms of retail goods.
The business has decided to borrow money from Mexican markets. As of June 8th, 2022, the benchmark interest rate for borrowing money from central banks is fixed at 4.90%. Mexican banks set their average borrowing interest rate at 10.3%. As of June 26th 2022, the average prime interest rate for borrowing money from Mexican banks is 3.70%, which is undoubtedly lower than the interest rate Rossy would pay if he borrowed money from Mexican markets. However, because of the foreign exchange difference, Maxicon markets do offer the advantage of having access to more fun. On June 26th, 2022, one Canadian dollar will be worth 60.49 currents.