Identify the macro sovereign risks

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Reference no: EM13254277 , Length: 2000-2500 Words

QuickNourishplc is considering new developments abroad. The two prime candidate countries are the United States and India. The main rivals of QN (Fatmoreplc) have recently pulled out of the US and are also thinking of investing in India. Not being in India now it is feared might mean difficulties in the future as they have only recently invited supermarkets to invest in their country. This is not thought to be the case for the US.

The Finance Director, William Money, holds a meeting of the finance team to consider the implications of the two options.

The first consideration Mr Money suggests is to identify the macro sovereign risks and problems and their potential effect on QN's competitive advantage (in fact QN has not established what its competitive advantage really is, though it has been very successful in the UK and the euro area).

Mr Money then addresses the problem of valuing the 2 potential investments and asks you to consider how they might be valued.

At a more detailed level, Mr Money is concerned about managing the current risk and provides some illustrative data for the Indian Rupee. He asks the question: how are we going to manage our business operations without always having to go to the marketplace to buy derivatives to protect ourselves from the various risks.

Finally, Mr Money notes that interest rates are higher in India so at least any money we hold there will be earning a good return.

You are required to write a report that addresses these 4 topics.

Reference no: EM13254277

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