Of the countries under consideration, which five would be most suitable for theimmediate...

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Of the countries under consideration, which five would be most suitable for the

immediate establishment of a BFSI subsidiary? Highlight the key issues for each of the

selected countries and discuss the reasoning behind your recommendation.

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BERTOS MANUFACTURING CORPORATION Evaluating Markets to Invest Abroad E. N. Roussakis and Anastasios Moysidis Abstract: This case deals with the key considerations when planning an international expansion through direct investment in foreign markets. These considerations must be addressed by a finance company seeking to establish foreign subsidiaries to support the international sales of its parent firm, a U.S.-based multinational enterprise (MNE). The company already operates three foreign subsidiaries--in Canada, Mexico (both NAFTA members), and the United Kingdom--but wishes to increase this network further through entry into additional markets. Ten candidate countries are being considered to determine the five most suitable for entry. Hence the need for a rational decision of where to invest. Keywords: Subsidiaries; multinational enterprise; transnational activities; foreign direct investment; greenfield investment; leveraged institution; wholesale financing; captive finance company; retail installment contract 1 Introduction Victoria Pernarella is a recent university graduate in business administration and a new hire in Bertos Financial Services, Inc., a major finance company in Nashville, Tennessee. After a month long rotational training to gain insights into the company?s scope of activities, she was placed in the international department where she has been assigned to work on a project. Bill Pappas, her manager, had asked her to analyze a select number of foreign countries to determine the best prospects for the local establishment of subsidiary finance companies. He went on to clarify that the mode of entry into the foreign markets-- acquisition of an existing company or a greenfield investment (from the ground up, that is, from a green field)--was not a primary consideration at this stage. The candidate countries were Argentina, Australia, Brazil, China, France, Netherlands, Russia, Switzerland, Turkey, and...

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Robert · Accepted Answer

Assignment  
 
1. Identify the key criteria and considerations that need to be taken into account in 
evaluating BFSI entry in the proposed foreign markets. 
Answer:  
Market perception is that a foreign bank’s subsidiary provides better protection for local 
depositors compared to locally owned bank. As discussed in the case, companies should 
consider the pros and cons of expanding their business across borders. Mode of investment 
like franchisee, subsidiary, fully owned, captive or branch office should be decided so as to 
take out the maximum benefit from the investment. Below are few of the factors which 
should be considered before investing in the foreign market by the BFSI:
i. The rules and regulations for the entry and operation 
ii. Accounting and taxation laws 
iii. Requirement of the company and related demand-supply in the foreign market 
iv. Time zone of the foreign country and its effect on the business 
v. Licensing vs. Joint Venture vs. sole venture 
vi. Location advantage 
vii. Internationalization advantage 
viii. Competition 
ix. Difference between parent Bank’s strategies and foreign bank’s policies 
x. Credit Risk and its mitigation strategy
These are few of the important factors; there can be other factors too. The main difference 
in the international expansion of manufacturing companies and BFSI is that where 
manufacturing companies expand for increasing sales or capturing new market, BFSI expand 
to match the needs of their multinational clients. As these clients want to limit their 
transactions to certain banks need for BFSI globalization arises.
2.  Of the countries under consideration,

Of the countries underconsideration, which five would be most suitable for the immediate establishment of aBFSI subsidiary? Highlight the key issues for each of the selectedcountries and discuss...

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