Widget Manufacturing Case study Example | Topics and Well Written Essays - 500 words

Widget Manufacturing - study Study Examplerom investments in Mexico, but were affected by the global recession which reduced the Mexico GDP from an average of 2.3 percent to a 6.5 percent. Despite the I.M federal agency that the firm will have alternate methods to reduce the FX in expenses such as payroll, purchasing, and lease costs, there are major risks involved, which Arnold has to address. After investment funds in Mexico, the widget company will experience three types of up-to-dateness volatility risks, which include motion exposure, translation exposure and economic exposure. The three major risks are not covered in the IM assurance and hence Arnolds concerns are logical and valid.In prior to investing, the Widget Manufacturing peachy management should try the capital investments involved in a larger perspective. The main aim of the capital management squad is to ensure that the value of the firm increases gradually and to uphold profitability. Therefore, Arnold shoul d consider several other factors other than the currency volatility (FX rates) the factors to be considered include, but not limited to, Support capital, liquefaction value, account receivables and payables, and general risks. Support capital is the supplementary resources that are required to enhance productivity of the mainstream capital they include infrastructure, labor, management etc. forwards investing, Arnold should consider the possibility, whether Widget Manufacturing will find the desired workers, management, and sufficient infrastructure network to support the proposed venture. Similarly, he should consider the liquefaction/resale value of the investment, following the thriving unstable economy at the time of decision-making it is highly potential that the capital will depreciate after investment. The risk calls for an indepth analysis of Mexico market to ensure that the business withstands the aspiration and attracts a reasonable liquefaction value in case of collapse . In addition, account payable and account receivables