Presentation by Celine Israel, Edward Charfauros and Tawnya Tanudra
Baderman’s Island Resort
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Agenda
• Introduction• Option Approach Strengths • Effects Of Globalization On Financial Decisions
Edward
Celine
Tawnya
• Option Approach Weaknesses• Option Approach Opportunities• Option Approach Threats
• Contributing Factors To Exchange Rate Risks• Mitigating Exchange Rate Risk• Conclusion
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• A modern complex luxurious resort • Best known for its customer adjustments meeting
every customer want through BIR’s amenities and facilities.
• Consists of a convention center, a pro shop, a spa, two gift shops, three world-class hotels, and four restaurants.
• Boardman Management Group manages the resort as each business entity is operating independently.
• Currently growing its recreational tourist centre • Prioritizing its business surrounding total quality
management (TQM) • Which implements BIR’s strategic objective. • Emphasizes continual empowerment for
improvement • Is seeking software development to upgrade BIR’s
word processing software by integrating Microsoft’s excel, outlook, power point, and word.
Introduction
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• Sells its shares publicly to attain funding
for its expansion projects.
• Considers acquiring the Atlantis Resort
because of its assets to increase growth
and market share.
• Considers merging as a last option by
acquiring the assets and absorbing the
liabilities of another hotel resort by
merging with Marriott International
Incorporated
• Seizing advantage of Marriot’s
recognition for market power
increase.
Merger
Initial Public Offering
(IPO)
Option Approach Strengths
Acquisition
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Option Approach Weaknesses
• Sustainability • Influencing viability• Structural changes• Capacity building of the organization or value
addition to the operations• Firm growth
• A bust in activity • Company activity may witness a bust in form
of profitability • Shareholding value to firm owners• Corporate strategies through mergers and
acquisitions
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Option Approach Opportunities• Acquisitions
• Restructures companies • Leads to massive external growth • Takeover of assets and liabilities
• Mergers• Combine operations to expand shareholder growth and profitability
• Operation expansion• Enhance continuation in firm operations
• Start green field projects
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Option Approach Threats
• Mergers• Expensive to start green field projects• Equally complex
• Acquisition• Poses a challenge to firm ownership • Equally complex
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• Able to globally trade freely to increase capital gains from countries worldwide.
• Technology upgrades continue organizational development.
• Becoming more profitable through trades of services at a profit while minimizing communication and transportation costs.
• These affects assist BIR’s financial decisions lowering concern and lessening globalization costs.
Effects Of Globalization On Financial Decisions
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• The risk that tomorrow’s exchange rate will differ from today’s rate
• Adverse affects on value of a company’s operations and investments
• Potential gain/loss in foreign markets if currency value rises/drops
• Impact on shareholders, customers, creditors
Contributing Factors To Exchange Rate Risks
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Mitigating Exchange Rate Risk
• Avoid Foreign Exchange exposure
• Forward Contracts
• Currency Swap
• Foreign Exchange Options Hedges
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Summary
• Recommendation: Merge
• Increase market power
• Better financial leverage to expand internationally
• Requires less risk than IPO and Acquisition
• Hedge foreign exchange rate risks and exposure to maintain and develop firm’s value
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Questions?