Lecture week 4
How to develop International Business Strategy Proposition
- Develop international strategic business alternatives
- Capital budgeting – assess international cash flows (operating, investment) &
international cost of capital
- Value it and select business proposition: NPV is best
- Corporate funding: international financial structures, sources and instruments
(treated as ceteris paribus)
- Choose best way forward: trade-off options (in case)
Goals financial aspects IBS
- Analyse and conduct financial planning and investment selection on international
business strategy proposition (lecture 1)
- Assemble data, analyze strategies, make financial model and produce shareholder
report for specific international business case (lecture 2)
- In concrete: lecture 1 treats the base concepts whereas lecture 2 deals with the ‘’how
to do’’
Core concepts
- Strategy: business proposition (business case)
- Finance: cash flows, time value of money, risk
- Internationalization: Foreign exchange (FX) rates
Business proposition
- A business proposition is a concrete strategic alternative that creates value to a
market
- In our case, we refer to a foreign market entry and/or further development of a local
market.
- Selection requirements: fitting with strategy, non-EU country, access to sufficient
data
Strategic assessment
- Strategic value is analysed in terms of the firm’s contribution to its value chain
(market)
- Make a market/product analysis, find out key success factors, reason on key value
drivers
- Specific (e.g. ‘’SWOT’’) techniques and models can (and must partially) be used in
conjunction
Financial assessment
- Model historical (3 yr.) company financial position
- Use e.g. GDP data business forecasts to scale the case, first assume it being a 1:1 x%
carbon copy. Then forecast growth. Next adapt to reality ideas.
- Calculate operating/investment cash flows, discount them with ‘’a’’ WACC, mind
terminal values
- Run fitting sensitivity and scenario analyses
, Classroom model
- Classroom model is an example model. You can deviate from it (just) wherever
reasonable.
- Model consists of income statement, balance sheet, equity statement, WACC
calculation, terminal value and business case valuation
- Classroom model assumes stable ratios and 0 growth. Your specific model will need
plugs.
Timeline and marking
- Find a probable non-EU case with sufficient data, write up 1-pager B4 Friday 17-09 11
AM.
- Final paper deadline: Tuesday October 12, 11:59 AM (key: develop paper/model
jointly)
- Team paper counts for 30% of total course mark. Team presentation counts for 5% of
total mark.
Guidelines and tips
- Use multiple sources of information (e.g. financial reports, newsfeeds, interviews)
- Structure text as a company research report
- Summarize the information applied and list the base assumptions that you use.
- Be clear but brief (max 10 pages excl. appendices)
- You support your text with your Excel file
- Put all less relevant items (general data, concepts, references…) in an appendix
- Presentation is aligning, informative, concise.
How to develop International Business Strategy Proposition
- Develop international strategic business alternatives
- Capital budgeting – assess international cash flows (operating, investment) &
international cost of capital
- Value it and select business proposition: NPV is best
- Corporate funding: international financial structures, sources and instruments
(treated as ceteris paribus)
- Choose best way forward: trade-off options (in case)
Goals financial aspects IBS
- Analyse and conduct financial planning and investment selection on international
business strategy proposition (lecture 1)
- Assemble data, analyze strategies, make financial model and produce shareholder
report for specific international business case (lecture 2)
- In concrete: lecture 1 treats the base concepts whereas lecture 2 deals with the ‘’how
to do’’
Core concepts
- Strategy: business proposition (business case)
- Finance: cash flows, time value of money, risk
- Internationalization: Foreign exchange (FX) rates
Business proposition
- A business proposition is a concrete strategic alternative that creates value to a
market
- In our case, we refer to a foreign market entry and/or further development of a local
market.
- Selection requirements: fitting with strategy, non-EU country, access to sufficient
data
Strategic assessment
- Strategic value is analysed in terms of the firm’s contribution to its value chain
(market)
- Make a market/product analysis, find out key success factors, reason on key value
drivers
- Specific (e.g. ‘’SWOT’’) techniques and models can (and must partially) be used in
conjunction
Financial assessment
- Model historical (3 yr.) company financial position
- Use e.g. GDP data business forecasts to scale the case, first assume it being a 1:1 x%
carbon copy. Then forecast growth. Next adapt to reality ideas.
- Calculate operating/investment cash flows, discount them with ‘’a’’ WACC, mind
terminal values
- Run fitting sensitivity and scenario analyses
, Classroom model
- Classroom model is an example model. You can deviate from it (just) wherever
reasonable.
- Model consists of income statement, balance sheet, equity statement, WACC
calculation, terminal value and business case valuation
- Classroom model assumes stable ratios and 0 growth. Your specific model will need
plugs.
Timeline and marking
- Find a probable non-EU case with sufficient data, write up 1-pager B4 Friday 17-09 11
AM.
- Final paper deadline: Tuesday October 12, 11:59 AM (key: develop paper/model
jointly)
- Team paper counts for 30% of total course mark. Team presentation counts for 5% of
total mark.
Guidelines and tips
- Use multiple sources of information (e.g. financial reports, newsfeeds, interviews)
- Structure text as a company research report
- Summarize the information applied and list the base assumptions that you use.
- Be clear but brief (max 10 pages excl. appendices)
- You support your text with your Excel file
- Put all less relevant items (general data, concepts, references…) in an appendix
- Presentation is aligning, informative, concise.
