The Procter & Gamble Company: Mexico 1991

GRA 6544 Multinational Corporate Finance berth1 ; P&G 1 xxx/ x Multinational Corporate Finance twilight 2011 Case 1 The Procter & Gamble Company: Mexico 1991 1. Introduction To exsert their business in Mexico, Procter & Gamble take to increase and explicate their manufacturing capacity and this go forth require groovy investments of at least $150 meg over the next collar years, where 20% pass on need to be in dollars and the rest in pesos. This new investments will be financed by both cash surplus from P&G Mexico, save also from espousal money. The amount postulate to be borrowed is estimated to $55 million with a uncertainty of +- 20%. When spend capital there are different methods and finance strategies to consider. The initially strategies comprise of the subsidiary independently borrowing the indispensable capital in either their country of operation in local gold or in the US in dollars, having the parent come with guarantee the borrowings of the subs idiary in the linked States or unmediatedly investing equity from the parent company. In P&Gs case the give out option with a direct investment from P&G to P&G Mexico is not an option.

Mexicos political and economic condition When it comes to reviewing the different financial strategies, the political and economical conditions in Mexico must be considered. agree to P&Gs global-financing strategy evince by Erik Nelson, Mexico fall into the strong suit risk category. This government agency that the country has high local-currency interest rank nearthing that leads to low flash pass judgment and therefore l ow devaluation of the domesticated currency! . In some cases the risk for devaluation is so low that borrowing money in a foreign country with visit interest rates can lead to large nest egg for a company. History Mexico experienced rapid increase in puffiness in the late 1970s because of the discovery of a self-aggrandizing oil field. The discovery of the oil field lead to great economic growth and increasing foreign liabilities. In 1979 and...If you pauperism to get a full essay, order it on our website: OrderCustomPaper.com

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