International Investment Project on Multinational Corporation and Foreign Stock

Published: 2021-07-19
1881 words
7 pages
16 min to read
Vanderbilt University
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Term paper
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The research presents an analysis of NASDO and IBM companies in U.S and two foreign stock companies such as Mesoblast LTD and Melco Crown Entertainment LTD. The analysis of the two companies and the two foreign stocks takes into considerations the topics covered in the course outline. Some of the topics covered in the course include capital budgeting and trade, international risk, exchanges rates and corporate governance. The topic covered in the course is relevant in the analysis of the traded multinational corporations. It is apparent that the performance of a foreign stock and multinational corporations depends on different factors which include exchange rates, capital budgeting, and trade, inflations, governance of the corporations and the international risks. This project provides an opportunity to understand the MNCs and foreign stock performance. It is apparent that some of the multinational corporations are more exposed to the many economic conditions than other MNCs.

The variations in the exchange rates affect the prices of stock directly in different parts of the world. However, some of the stock and MNCs are more exposed to global economic factors because of the number of countries involved in the trade. Similarly, some of the MNCs are in contact with the world economic conditions because they are attractive to many foreign investors in the international market. Many international investors have an interest in the change in the global economic conditions to make investment decisions. Additionally, the understanding regarding firms competing in the global arena is an added advantage for an aggressive investor.

Any factors affect valuations of stock prices. The market forces such as demand and supply of stock prices causes a change in the value of stock. The earnings per share depend on the performance of the stock in the international market. The investors on the stock exchange earn dividends from their shares. When the value of shares rises, the shareholders gain profit from individual share. Inflations and deflation affects the value of the stock in different ways. For example, devaluation is a bad effect on the prices of the stock because it causes lose to the foreign investors. Inflations have positive effect on the prices of the stock because in increases the pricing power of the companies. A substitute affects the valuations of stock prices in the foreign market. For example, when there are many asset classes in the stock market play an important role in the stock valuation. Some of the common traded stock includes government bonds, commodities, and real estates. When a variety of stock exists in the international market, the valuation techniques vary. In some instances, the stock prices are lower because the supply for the stock is high.

The performances of the MNCs in the international market depend on many factors. For example, the political factors such as laws and government policies in different economic blocks regulate the international trade. The European Union has it rules and regulations that affect the performance of the MNCs. The economic factors on the other hand affect the demands of good and services. The economic growth rates in different countries vary because the growth rate in one country maybe higher and lower in other countries. For example, the neighboring countries of the European nations were booming economically during the 2010-2012 the debt crisis in Europe. The European debt crisis is a good example of economic factors that affect the planning and the operations of the multinational corporations. The technical factors in the host countries of multinational corporations are important determinants of the success of the MNCs. The technical trainings and connectivity through broadband are important factors that contribute to the performance of the international corporations. Besides, the social factors such as the religion and different cultural practices matters in the performance of the multinational corporations. It is paramount for the management of the international corporations to interpret different cultural cues and understand the various cultural environments for success in the operations. The general motors are an example of multinational corporations that failed to address the cultural cues in the Spanish market. As a result, the market for their product lost market in the Spanish countries. In this project, the diversity of cultures in the United States matters in the analysis of NASDAQ and the IBM.

An important consideration is also an implication of the U.S market on the performance of the MNCs (Wenger et al.2016). Often; the market conditions affect the prices of goods and services in the market. Stock prices changes with economic conditions of both the domestic and the international market. The exchanges rates of the U.S dollar against other currencies are one of the factors that affect the stock market exchange. The local and the international investors on the stock market anticipate the decline of the value of the stock to invest. However, when the value of the stock is high, most investors sell their shares and earn the profits from their investments. The changes in the stock prices and the factors that contribute to change are important considerations in the analysis of the MNCs and the feign stock.


NASDAQ is one of the largest stock markets in the United States. In the world, NASDAQ is the second largest considering the market capitalization. The owners of the company are the NADAQ, Inc. NASDAQ stock market commenced its operations in 1971 as one of the first electronic stock market globally. The NASDAQ stock market has had gradually grown in the international market with the establishment of new methods of trading. The publicity of the business activities of the stock market contributed to its growth in the international market. Initially, the NASDAQ Inc. provided stock guides to the customers to understand the nature of shares available and the procedures to follow in the acquisitions of the shares. Some of the factors that improved the performance of NASDAQ in the stock market are efforts such as installations of automated trading systems, increase for capital invested, and increasing in the media reporting regarding the services offered in the stock market (Pagano et al.2013). The NASDAQ trading companies were the first stock market in the United States. As a result, the company enjoyed the monopoly power in the United States stock market.

The growth of the NASDAQ Company is attributed to the business strategies, technological environment, the political and economic environment in the United States. The major improvement in the U.S stock market regards 1992 when it joined the London Stock exchange. In 2000, the national Association of Securities turned the NASDAQ stock market to a publicly traded company.

In 2006, the NASDAQ changes its name to the national securities exchange after receiving its license (Lincy, & John, 2016). The NASDAQ merged with OMX in 2007 and thus began to enter the international market. As a result, the company was exposed to many economic factors in the foreign countries. Initially, the trading of the NASDAQ was within the jurisdictions of the United States where only the U.S market was the determinant of its success.

The value of the U.S dollar varies with the economic situations in the global market. The forces of inflation affect the trades in different ways in the country. For example, when the U.S dollar gains value, investors from the international market find it hard to trade in the commodities in the U.S. The performance of the NASDAQ in the international market has had an influence on the domestic market in the United States (Pagano et al.2013). For example, the gradual success the NASDAQ in the United States is because of a stable economy in the country. The political stability of the U.S offers a long period has contributed positively to the growth of NASDAQ in the business (Lincy, & John, 2016). The favorable lows and policies regarding the operations of businesses in the United States is also a factor that has contributed to the economic progress of the stock market.

The population of the United States consists of the much middle class who afford to invest in the stock market. The U.S has enjoyed a secure border for a long time and thus many investors view U.S as the land of opportunities in the country. The investors in the local market in the U.S economy are many and thus the capital investment in the stock market.

The performance of the NASDAQ has had many challenges in the United States. U.S economy has many moments of recessions that have affected the performances of the financial institutions. The latest recession in the U.S is that of the 2007- 2009. The housing bubbles triggered a recession in the country and the collapse of the business environment in the United States (Lincy, & John, 2016). During the great recession, it was a hard time for the investors and the stock market because of the unfavorable business environment. In the recession, the international investors withdrew the business deals with the stock securities companies in the United States because of the insecure future.

The NASDAQ has entered into the international market and thus its performance is in direct contact with global economics. For example, in 1992, the company joined the London stock exchange. As a result, the change in the exchange rates, instances of inflations and economic recessions affects the performances of the NASDAQ in the international markets. The change in the European Union policies and laws governing the international market affects the performance of NASDAQ. For this reason, the growth of the NASDAQ into the global market was not without the effect of the political, economic, and technical business environment around the global market (Lincy, & John, 2016). NASDAQ stock market is the second largest after the New York security stock exchange. The company has investors from various parts of the globe and thus its presence in the international market is important.

Expansions into the international market are risky because of change in government, policies, and the economy in different countries. For example, some countries may raise the interest rates to a point that is beyond the capability of the foreign investors. The fiscal and the monetary policies affect the performance of the companies in the international market. The law regarding the pollution limits of the environment changes. For example, the tariffs and sanctions are likely to affect the performance MNCs. In U.S the pollutions limits are low and the interest rates are low.

IBM (International Business machine Corporation)

IBM (International Business Machines Corporation) is a Multinational technology company in the United States. The company sells software, hardware, and middle was in more than 170 countries in the work. The company specializes in the technology products, which comprises of floppy disk, PC, automated teller machine, hard drive and the magnetic strip cards. In this case, the IBM has focused on higher value products and venturing into profitable market. The company has experienced expansion offer the time after making a decision to buy other companies. In the past, the IBM bought SPSS, PwC consulting and Lenovo. The strategy has promoted the gradual growth of the company into various countries in the globe.

The IBM multinational technology company has its foundation on the US market where the majority of the population value technology (Yan, 2016). The U.S population was a suitable environment for the IBM because of the many skilled...

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