Your boss has asked you to assess the company’s new financial management requirements
because of new businesses the company wants to engage in. Please provide
recommendations to assist him.
Since your boss is a busy person and has little time to read lengthy reports, your submission
for this task should be concise. You can also use graphs and charts to illustrate your points.
You are an Australian based clothing and fashion retailer in Melbourne.
Your boss intends to establish two retail outlets in Vietnam, one in Ho Chi Minh City (HCMC)
and another in Hanoi. Vietnam is a fast-growing market and growing affluence. These outlets
will be large, and their inventories will be imported primarily from Australia and China, but
also from the rest of the world in addition to the products purchased locally. As the outlets
are expected to make good earnings and there is also a need to remit the profits back to
Australia. Your boss is likely to start additional outlets in other major cities in Vietnam e.g.
Danang, Hue etc. in the future.
For your boss, you need to explain: –
1. How the retail outlets in Vietnam would need to use the spot market in foreign
exchange for the business (2 marks)
2. How the retail outlets in Vietnam would use the forward markets in foreign exchange
for the business (2 marks)
3. Which are the possible payment mechanism which you can put in place for those
outlets? Please elaborate why they are done as such. (2 marks)
4. Explain how the foreign exchange quotation works between AUD and Vietnamese
Dong. If he sends some Australian goods over from Vietnam to Thailand, how would
your advice of the settlement currency best to be and why? (2 marks)
5. Advice your boss how he could use the local and international banking / financial
markets, including money and bond markets to finance the establishment and
expansion of new outlets in Vietnam (2 marks)