By issuing the IPO in Hong Kong, it opens up the possibility for bankers to get a wave of similar share sales from other European luxury goods brands including Hugo Boss and Salvatore Ferragamo. Similarly, it places Hong Kong in a position to rise to become the premier international listing destination for companies from all over the world, cutting across sectors such as mining to financial services. The issuance of the IPO could be justified by the fact that Hong Kong is fast becoming the capital of global finance, and as such offers the green grounds for global investments. However, companies from across the world that have been listed in Hong Kong have shown profitability (Surahman, 2011). Shares of companies like Russia's Rusal, for instance, have tumbled after its HK's listing, questioning the expectations of Prada as running ahead of reality.
What is Prada's future in the region of Hong Kong and China?
In as much as it is true that of the recent past the Hong Kong and China markets have been failing, it will be amazing to see how Prada's IPO I Hong Kong plays out in the long run. If Prada aligns its investors with its strategy, it stands to benefit from this new market. Many companies are choosing HK despite its underperformance in the recent past because their long-term plan lies in the aspirations of doing more business in Asia. If Prada strategizes to increase its proportion of investors who live in Asia, they more closely align their investor base with their strategy. This will pay off in the long run despite the somewhat failing markets. If Prada learns to tap into the vibrancy, the diversity, the cultural and business practices differences, then it is bound to realize success in the region.
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Why did Prada need to raise additional funds?
Offering luxury products for consumers seeking a high-quality maker, Prada's decision to raise additional capital in the form of equity was quite complicated. Known as a family company, the decision for Prada of global expansion was a key partying from the company's core values. The fact that Hong Kong is the largest IPO market, Prada would need to increase its capital significantly to secure any return on their venture. It is only natural for any producer aspiring to compete with global giants in one of the world's biggest IPO markets to have a larger capital base to secure its production and clientele in the face of such a strong force of competition. Hitherto this expansion, Prada had been a relatively smaller producer targeting only a limited international consumer base and as such did not need much capital base.
Types of foreign exchange risks facing Prada and how to edge against them.
Prada faces interest rates risks, inflation rates risks, economic growth, or recession risks among others. Speaking of interest rates risks, Prada's cost of a dent will depend on interest rates fluctuations because the vast amount of Prada's long-term debt is in these currencies. It is correct to point out that as interest rates increase, people tend to spend less and the economy gradually slows. To deal with these, Prada would need to hedge foreign assets in its portfolio to safeguard itself against money loss in case the currency the investment is in falls. The other way of protecting itself is for Prada to short the currency it is exposed to (Phau & Teah, 2009). By doing so, Prada can sell currency for a predetermined price on a specific date in the future, thereby protecting itself against currency fall.
Week Four
Should America legalize the importation of lower-cost pharmaceuticals?
Yes. Quite evidently, there is a significant disparity between domestic and foreign prices of drugs in which the local drugs tend to cost so much. This is because of the regulatory regime established in the country to ensure drug safety and efficacy. In as much as the FDA does an excellent job in providing the safety of these drugs and the general health of Americans, local drugs tend to cost the average American too much and should, therefore, be supplemented by low-cost imports. However, this should only apply to pharmacies and other entities of reputable conduct to ensure the safety of the drugs in question (Remington, 2006). These bodies should be vetted to ensure the safety of the drugs they import into the country do not put the American citizens in any danger whatsoever.
Should this importation apply to all foreign countries or a limited number?
It may be tricky in deciding which country should be allowed to import their pharmaceuticals drugs and which ones should not. While at one hand there is the issue of diplomacy and fairness to be practiced by the government, there is the safety of the American citizens that should not be taken for granted. To ensure both of these ends are represented well, importation of foreign pharmaceuticals drugs should be left open for all foreign countries subject to the vetting and verification of the FDA. In other words, rather than judging the medications by their country of origin, they should be decided along the lines of authenticity and their safety. As such, the FDA should put up strict regulations to assess the drugs being imported into the country from whatever country of origin. The drugs should be of certain set standards by the regulatory body.
Should this apply to all pharmaceuticals or just some?
Drug importation is a sensitive matter because of the nature of processes involved in ensuring the drugs are of a certain standard. Importation schemes need to realize that the resources required to ensure the safety and efficacy of any drugs being imported into the country would outweigh any potential savings. Based on this fact, it would be economically draining to allows for the importation of any pharmaceuticals into America. That being said, criteria such as drug costs should be considered. If the price of importing a pharmaceutical into the country equals that of local production or purchase, then it is better for that specific drug not to be imported but instead be purchased locally. On the other hand, if there are possibilities of locally manufacturing a certain kind of medication rather than importing it, and if these costs are relatively lower, the said pharmaceutical should not be imported as well.
Should regulations be put into effect to pass some/all cost savings to consumers?
The logic behind drug importation is to save on consumer costs of purchasing drugs. It is common knowledge that locally available drugs are costly and that is why the country opts for cheaper alternatives outside the country. But if the cost incurred in this foreign acquisition of drugs were to be passed to consumers, then the initial plan of saving consumers the extra dollar would be in vain (Angell, 2005). Having said this, I hold that no additional charges should be passed onto consumers whatsoever and that the government should take this as its duty to provide better and affordable healthcare to its citizens. After all, it is the government's mandate to do so.
Week Five
Overview of the company selected and the business strategy.
Apple Incorporation is a global technology production company (multinational corporation) focusing on the production of technological devises and services such as the popular iPhone series smartphones, Apple computers, laptops and watches, and the MacBook (Khan, Alam, & Alam, 2015). The company practices the global strategy of business widely by owning and controlling the production of its services and goods in other countries other than the home country
What does the strategy entail?
The global strategy involves thinking in an integrated way about all aspects of business such as the suppliers, production sites, markets, and competition. It equally entails assessing the products and services produced or offered from the perspective of both domestic and international market standards. In this strategy, global perspectives are embedded in product formulations at the point of design, and not as afterthoughts. The approach equally entails making significant investments in a foreign country, and penning manufacturing facilities or assembly operations in foreign countries.
What are the implications to configuring and coordinating value chains?
A typical value chain has primary and secondary activities where primary activities are those activities involved in the physical movement of materials and finished products at any given point in production. Secondary operations, on the other hand, make up the managerial infrastructure of Apple Inc. that supports carrying out primary activities. This includes the processes and systems installed to coordinate transactions among the various value chain activities. Global strategy competitiveness depends on efficiently distributing value activities and linking them effectively as well. Distributing value activities on the global scale is the mater of configuration (Grant, 2016). Connecting them, on the other hand, is a matter of coordination. In simple words, configuration and coordination, both flip sides of the value chain coin, are intrinsically related hence go hand in hand.
What are the benefits of the strategy as it pertains to your company?
Apple Inc. has benefited a lot from adopting the global strategy. It has been able to expand its target customer. Having penetrated such markets as in Africa, Asia, and the rest of the continents, Apple's famous product, the iPhone series have been able to raise a significant force of competition in those markets even in the face of local production. In Asia for instance, local producers such as Samsung Inc. continue to feel the pressure iPhones have in the local Asian market. The other advantage is that Apple Inc. has been able to diversify the business. This has helped the corporation in offsetting any losses that might have been incurred during an economic downturn in America; the domestic front.
What are the limitations as it pertains to your company?
However, Apple Inc. has not been spared from the wrath of the challenges of a foreign culture. The drawbacks of this strategy have derailed the company's marketing efforts due to cultural differences. For instance, the problem of language differences has skewed the company's marketing message, prompting it to hire local expert translators in regions such as the Arab world and Asia. The other limitation is the financial risk involved. Setting up a company on the global front is an expensive investment. Apple Inc. incurred, and continues to bear a lot of resources in terms of time, effort and finances on the local market while setting up their operations overseas. Equally, this effort and time put into settling into a newer market eat on production by delaying the production process while adapting to the new systems.
References
Angell, M. (2005). The truth about the drug companies: How they deceive us and what to do about it . Random House Incorporated.
Grant, R. M. (2016). Contemporary strategy analysis: Text and cases edition . John Wiley & Sons.
Khan, U. A., Alam, M. N., & Alam, S. (2015). A critical analysis of internal and external environment of Apple Inc. International Journal of Economics, Commerce and Management , 3 (6), 955-961.
Phau, I., & Teah, M. (2009). Devil wears (counterfeit) Prada: a study of antecedents and outcomes of attitudes towards counterfeits of luxury brands. Journal of Consumer Marketing , 26 (1), 15-27.
Remington, J. P. (2006). Remington: the science and practice of pharmacy (Vol. 1). Lippincott Williams & Wilkins.
Surahman, N. R. (2011). Andrea Sach’s Struggles Against Exploitation and Alienation in Lauren Weisberger’s the Devil Wears Prada (Doctoral dissertation, University of Diponegoro).
