CHEMICAL PLC

Chemical plc, a manufacturer of pharmaceutical chemicals, is a company based in the United Kingdom that has been slowly losing domestic market share in the face of increasing competition.  The managing director has decided to undertake foreign direct investment into an overseas country in order to increase sales in that part of the world and also decrease overall costs of production.  The initial investment is expected to be £10 million. He has selected [Country X] as a possible candidate.

REQUIRED

As the Finance Director of Chemical plc, you have been asked to write a report on the proposed foreign direct investment for a Board meeting that has been called to discuss the matter.  You report should cover the following matters.

(1)       A discussion of the exchange rate management system of [Country X], together with an outline and discussion of the recent trend in the exchange rate of the [Country X Currency] against sterling.

[30% of the overall mark]

(2)       A critical discussion of the various methods that Chemical plc could use to finance the proposed foreign direct investment in [Country X], together with an analysis of the possible consequences for Chemical plc of these different financing methods.

[40% of the overall mark]

(3)       A discussion of the ways that Chemical plc could hedge the exchange rate risk arising from the foreign direct investment in [Country X].

[30% of the overall mark]

All books, journals or electronic data systems used in the preparation of your report should be clearly and appropriately referenced.  Any quotations made directly from books, journals or other information media should be clearly acknowledged, for example by the use of footnotes.  You are reminded that plagiarism - the deliberate and substantial unacknowledged insertion in your assignment of material derived from the work of another - involves a breach of University assessment regulations.

Your assignment must be word-processed and be no more than 3,000 words long.

General criteria for assessment

• A mature grasp of relevant ideas and concepts
• Focused discussion and clear argument, coherently and lucidly expressed
• A critical and analytical approach to theories and evidence
• Scholarly presentation, including clear and appropriate referencing