International Banking and Finance

International Banking and Finance
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International banking and finance
The activities involved in global finance and business significantly influence the worlds finance crises. According to Eiteman, Stonehill, & Moffett (2012) the characteristics of the balance sheet have a responsibility in the transmission of liquidity risks. If the growth development product surges over the credit ratio, the banks are more exposed to international shocks. Internationally recognized banks have come together to discuss the effects and causes of the global economic crisis. Dealing with these risks requires policymakers to have developed methods of improving capital inflows in the organizations. The paper is a case of a Brazilian company which is suffering from the uncompetitive and high price of capital. The firm faces these challenges despite being considered as the worldwide frontrunner in the technology of deep water.
According to calculations carried out, the Brazilian company was found to have a dollar claim amounting to nine percent. The cost is higher than the debt for the other global companies which produce oil which only pay about five percent. The value of equity in the company would be affected risk-free and adjusted percentage of interest. The group has placed a lot of efforts in global diversification and globalization of its value of money, but the cost of investment of the firm is still higher than that of its international competitors. The company should consider using the lower cost of financing to equal that of its global counterparts.

There is a better method which can be used in the calculation of the cost of capital. The technique is more efficient than the pure expression of principal asset evaluating because it considers debt and equity and its estimates.
For the Brazilian company to improve its competitive advantage, it will have to lower the value of capital. Eiteman et al., (2012) state that the company has to use a strategy which will help in achieving its objectives. Some Mexican entities have employed the strategies which help them attain a competitive advantage in the market. Professionals argue that the company can operate using a similar approach in its activities. The company produces the oil to be used by the whole country. Its primary objective was to reduce the dependency on oil coming from other countries. But when making their goals, they failed to consider international diversification. These factors have been stated as the causes of the company’s low competitive advantage. It will, therefore, require diversifying its operations when to market its products effectively.
The process of globalizing the entity involved various transactions. One of the operations required was having a guarantee which could last for eight years. The warranty was meant to protect the company against all the risks associated with currency (Eiteman et al., 2012). Trying to develop an entity which has many debts will require new strategies and a lot of capital input. The company cannot succeed if you continue using the same procedure of another one which is inferior. The capital will also be required first to settle the debts and renovate the company with improved assets. Problems of uncompetitiveness usually lead to economic crisis within the entity due to increased liabilities and unproductivity. Experts have developed a way where companies can use equity insurance to improve the industry’s equity capital. But you need to consider the cost involved and the value of money in your business when you want to globalize your firm.
When assessing the risks involved in the company, it was found to have economic instability, high rate of inflation, currency depreciation and currency devaluations (Eiteman, Stonehill, & Moffett, 2012). These companies which produced gas and oil used the dollars. The dollar was therefore used in the evaluation of these entities. The cost of capital became more accepted when the company listed its shares in an equity market of United States. Some factors indicate that what the international market analyzers said was true. One is that the risk associated with Brazilian country was the autonomous spread. The value of dollar funds or the additional output that the Brazilian government had to recompense on worldwide markets and that which was to be paid to the united states treasury to borrow dollar funds also indicate the risk involved in the company. The country has a lot of debts which also lead to the uncompetitiveness of the Brazilian oil and Gas Company. The perception about the Brazilian shows up in the calculations of the cost of capital because the debts are essential components in the forecast.
According to Eiteman et al., (2012), the Brazilian companies have been faced with many challenges such as high cost of investment, debts, and competitiveness. It has placed many efforts such as globalization of the firm and diversification but has not gained much. It will, therefore, require considering coming up with a better strategy which can be borrowed from one its global competitors. A functional approach will help in increased competitive advantage and reduction of claims. These plans also help the company in reducing or eliminating the financial which arise because of poor performance. The Brazilian market also has to come together when making important investment decisions correctively. If such a thing happens, it will eliminate the risk perception in the Brazilian government. The company should ensure that it uses low costs on investments and also avoid accumulation of debts. If it achieves these qualities, it will be able to compete in the global market efficiently.

Reference
Eiteman, D. K., Stonehill, A. I., & Moffett, M. H. (2012). Multinational business finance. Pearson Higher Ed.