Background
International projects present multinational corporations with many complexities in organizing a profitable transaction structure. Foreign exchange risk is an underlying problem. Credit risk presents another challenge. Payment terms and the certainty of realizing them can be difficult points. Negotiations with foreign corporations and governments, and with agents and intermediaries, present additional challenges. An example of the demanding environment for global financial activities is presented in the case of “Avicular Controls and Pakistan Airlines”. It is found in Cases in International Finance on page 40-page48.
Expectations
Review the case carefully and be prepared to respond to the following questions:
- Consider the conflicting responsibilities in Avicular Controls’ organizational structure – among the strategic management of the company and the functional areas for marketing and finance. Indicate how these meshed to maximize outcomes for the company’s business and how they diverged to create problems interfering with financial management.
2. Makran is offering potentially critical services. Would you engage Makran and on what basis in terms of fees or other conditions?
3. What position would you take if you were in charge of the negotiations for Avicular Controls? Would you change any points in the proposal? How could you maximize the return for the company and minimize the risk?