The Procter & Gamble Company: Mexico 1991

GRA 6544 Multinational Corporate Finance berth1 ; P&G 1 xxx/ x Multinational Corporate Finance conk 2011 Case 1 The Procter & Gamble Company: Mexico 1991 1. Introduction To boom their business in Mexico, Procter & Gamble take to increase and explicate their manufacturing capacity and this go forth require outstanding investments of at least $150 meg over the next tercet 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, scarce also from espousal money. The amount postulate to be borrowed is estimated to $55 million with a uncertainty of +- 20%. When expend capital there are different methods and finance strategies to consider. The initially strategies brood of the subsidiary independently borrowing the indispensable capital in either their country of operation in local capital or in the US in dollars, having the parent guild guarantee the borrowings of the subsid iary in the linked States or unmediatedly investing equity from the parent company. In P&Gs case the withstand 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 expressed by Erik Nelson, Mexico fall into the strong suit risk category. This operator that the country has high local-currency interest rank roughlything that leads to low lump range and therefore low devaluatio n of the domesticated currency. In some cas! es the risk for devaluation is so low that borrowing money in a foreign country with visit interest rates can lead to enormous nest egg for a company. History Mexico experienced rapid increase in rotundness in the late 1970s because of the discovery of a large oil field. The discovery of the oil field lead to great economic growth and increasing foreign liabilities. In 1979 and...If you loss to get a full essay, order it on our website: OrderCustomPaper.com

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