Essay 7BSP1245: Finance for International Business – Hatfield Manufacturing Systems Plc – Business Finance Assignment Help

Assignment Task:

Learning Outcomes: Knowledge and Understanding tested in this assignment:

1. strategies available to an organisation to enable the creation and maintenance of value; 
2. the financing choices available to organisations and the relevance of capital structure; 
3. the financial and operating risks faced by organisations and the strategies for mitigating these risks; 
4. the specific issues relating to investing and raising finance on an international basis.

Learning Outcomes: Skills and Attributes tested in this assignment: (7BSP1245)

5.analyse financial statements and interpret the results in the context of value creation;
6. critically evaluate capital investment proposals both domestic and international including estimation of component and overall capital costs;
7. devise strategies for identifying and managing foreign exchange risk and the risks of international investment;
8. devise financial strategies for enhancing enterprise value.

Assignment Title: Hatfield Manufacturing Systems plc

Description of the assignment: The Coursework involves the analysis of an investment proposal using the mini case study: –  ‘Hatfield Manufacturing Systems plc’ which can be found on the module Studynet site in ‘Units’ along with detailed assessment criteria.

Hatfield Manufacturing Systems plc (7BSP1245) 
 
Hatfield Manufacturing Systems plc (HMS plc) is an engineering firm which specialises in the design, development and manufacture of additive layer manufacturing systems (3D printing). Not only do HMS produce and sell 3D print machines to other engineering firms, but recently they have been supplying components to the aerospace and motor vehicle industries on an R&D trial basis. The trial has been so successful in terms of both component durability and production cost that HMS is evaluating a proposal to invest in a new plant dedicated to the manufacture of these components to be located in Turkey. 
 
Turkey has a number of advantages in terms of plant location. The Turkish government is keen to attract inward investment and has been investing heavily to improve infrastructure. Turkey has an increasingly competitive automotive industry which achieved a record output of 1.75 million vehicles in 2017 and a substantial and developing aerospace sector. Thus there is a high level of local engineering skills. Turkey also has a large and growing young population which is well educated. The unemployment rate in Turkey is currently 9.7%. However, the non-agriculture rate is 11.4% and amongst young people, the rate is 16.9%. The HMS Board view is that this should give scope to recruit, train and retain staff without wage costs getting out of control. The Turkish economy is experiencing good growth with GDP growing by 7.3% in 2017 led by government investment in infrastructure and is on track for 5.5% growth in 2018. 
 
There are, though, some challenges. The country is still dealing with the fallout from the recent coup and negotiations with the EU have stalled. More recently a trade spat with the USA has created some instability particularly for the currency which is now trading at TL8.8257/£. Exchange rate and inflation data relating to Turkey and the UK are shown in Table 1 below.

Required: 
 
Evaluate the investment proposal on behalf of Hatfield Manufacturing Systems plc and advise the firm whether the project is acceptable on a financial basis. Also, comment on the potential impact of foreign exchange risk on the project. You should support your arguments with relevant theory and calculations 
 
Your answer must be presented in the form of a report of 2000 words total. You must also submit an Excel spreadsheet containing your calculations and an appropriate formula linked evaluation model.