University of Rizal System

Binangonan , Rizal
Graduates Studies
Doctor in Business Administration

Name: JOUHARA G. SAN JUAN

Subject: International Financial Management
Faculty: Dr. Virgilio V. Salentes

International Financial Market is consist mainly of International Banking Services

and International Money Market. International Financial Market is a place where an
individual e.g. firms, government, investors with excess cash trade financial asset with
another individual e.g. individual, firms, government and the rest of the world.
International banking services includes trade financing, foreign exchange, foreign
investment, hedging instrument such as forwards and options while International
Money Market includes euro currency market, euro credits, euro notes and euro
commercial papers.
More than anybody else --- International Financial Market is constantly access by
multinational companies with their trade import and export transaction. One of the
most used transactions of these MNC’s is the foreign exchange. Generally FOREX
involves conversion of currency of one country with that of another. MNC’s could utilize
the spot market to facilitate their exchange currency transactions by having an account
with international banks offering foreign exchange services. As they have an existing
account with international bank, should they receive payment in different currency e.g.
pounds ---it would simply deposit the check at their bank and convert the British
pounds received into dollars at a prevailing spot rate. On the other side, since MNC’s
are engaged in FOREX they should also be ready with exchange rate risk---as the value
of the British pounds may change. If in case the pounds depreciate in value, the
payment will be converted into fewer dollars. To hedge the risk---MNC’s could engaged
in a so called forward contract –in which it would sell pounds forward in exchange for
dollars. For example, if it expects receiving a payment in pounds 30 days from now, it
could negotiate a forward contract in which it would sell pounds in exchange for dollars
at a specific forward rate. This would lock in the forward rate at which the pound could
depreciate against the dollar over the 30 day period. This hedge exchange rate risk
over the short run, but does not effectively hedge against exchange rate risk over the
long run.
Like any other type of investment, FOREX Trading has its own risk and potential
profitability or loss regardless of whether you are an individual looking for investment or
an owner of Multinational Company. A good understanding of the basics of how the
market works and knowing how to mitigate the risk goes a long way in determining
your FOREX trading profit and loss; furthermore it would be wise to ensure that you
have other types of investment going. (Reflection paper on Report of Ernie Tano, International Financial Market)
University of Rizal System

jouharagsanjuan Page 1
 Binangonan , Rizal
Graduates Studies
Doctor in Business Administration

Name: JOUHARA G. SAN JUAN

Subject: International Financial Management
Faculty: Dr. Virgilio V. Salentes

Investment in currency has been a trend as economic uncertainty has enveloped

the globe. Historically, trading currency is limited only with Multinational Company
(MNC’s) and well financed investors, but this market has now opened up to average
investors. However, is engaging in foreign exchange market (FOREX) good for average
individual looking for a good investment? Or they are better off to invest in other
market?

Trading is tough and one of the toughest decisions a new trader has to make is
which market to trade. Individuals who choose to enter into FOREX should weigh the
advantages and disadvantages of FOREX in order to decide whether it’s an attractive
and appropriate market for them.
Advantages:
1. Accessibility- Trading through most brokerages can be done online on real time.
2. Leverage-right use of leverage
3. Potential for Fast Returns-FOREX market has fast liquidity which means potential
for faster returns.
Disadvantages
1. Volatility-there maybe unexpected volatility at times resulting to non profit.
2. Small Traders May Face Some Disadvantages-the bulk of the trading for FOREX
is still done by major players , meaning they are at an advantage in terms of
access to information and technology
3. Fewer Residual Returns-compare with investment in stocks and bonds that gives
regular interest and dividend payment. FOREX trading is limited on only
obtaining capital gains from appreciation of one of two currencies in a given
currency pair.
For speculators or for an average individual looking for a good investment,
FOREX maybe a good option where they can put part of their hard earned money
provided that they are willing to study and become familiar with the pros and cons
of handling and playing on the foreign exchange market.

(Reflection paper on Report of Mark Capistrano Exchange Rate Determination)

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The Four Economic  Resources June 25, 2008
Posted by petrarcanomics in  Basic Economic Concepts. 
trackback

The following are the four basic types of economics resources:

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 Land – natural resources such as iron ore, gold, diamonds, oil, etc.
 Labor – human resources such as wage-earning workers
 Capital – plants and equipment used in the production of final goods, such as assembly lines,
trucks, heavy duty machinery, factories, etc.
 Entrepreneurship – the marshaller of resources, the person or group that marshals resources in
the production of final goods (Bill Gates, Steve Jobbs, Henry Ford, etc.)

Reffonomics.com has a helpfuil slideshow which explains these concepts further. View it

here: http://www.reffonomics.com/TRB/chapter1/resources.swf.

An Organization’s success is irrevocably tied to its customers’

satisfaction and loyalty. To ensure that an organization is properly
aligned with its customers’ expectations, it must have a reliable and
comprehensive enough understanding of its Market Segments and
Micro-Segments. Clarifying the specific demands or expectations of
each Market Segment allows the organization to justify its engagement
towards each targeted customer group. Customers’ trust and hopefully
their long term loyalty can then be effectively secured and nurtured by
the organization through its profound understanding and indisputable
fulfillment of customers’ expectations.

Influencing Organizations are sources of Influence. Influencing

organizations could be Partners, Competitors, or Regulatory bodies. In
some sense, Partners and Regulatory bodies are also Customers of the
organization since they bring specific constraints or expectations often
key to the organization’s success. Competitors’ influence is undeniable
as they often cater to the same pool of customers as the ones targeted by
an organization. With a clear understanding of Customer Demands and
Relationships and the proper consideration of influences generated by
Partners, Regulatory bodies, and Competitors, Organization
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Stakeholders are empowered to formulate effective Business Strategies
and Objectives that have a high probability of securing a desired Market
Position.

It is fundamental to hold Stakeholders accountable for Business

Strategies and Objectives. Stakeholders when held accountable for a
given set of Business Strategies and Objectives become advocate for
their effective implementation. Some stakeholders will carry this
responsibility further than others by actually driving the Business
Strategies and Objectives toward their fulfillment and by being actively
involved in, or accountable for, all activities required for their
realization. Some Stakeholders play the role of Governance body by
creating and enforcing Business Policies applicable to the entire
Organization and/or specific Business Units. These Business policies are
meant to support and articulate agreed upon Directives that contribute to
the achievement of the established Business Strategies and Objectives.

A Capability Road-map is a well-articulated set of successive changes to

the organization’s Business Capabilities aimed at progressively
transforming the organization from its current state to its desired future
states. Capability Road-maps must be prioritized according to selected
Assessment Metrics that highlight the most valuable opportunities for
Capability improvements. Therefore, Capability Road-maps are solid
foundations upon which Business Initiatives and Programs can be
chartered.

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The organization’s desired future Capabilities are the outcome of
fulfilling its Business Strategies and achieving its Business Objectives.
Business Initiatives and Programs chartered from Capability Road-maps
drive changes to Business Capabilities in a coordinated and effective
manner.

Properly assessed and understood Customer Demands and Relationships

along with Influences created by Competitors, Partners, and Regulatory
bodies all come into consideration for the formulation of desired product
and service offerings that effectively package Business Capabilities
specified by Capability Road-map.

The Value Proposition can be formulated by describing the rationale

behind an organization’s featured products and services. Securing the
targeted Market Position mandates Required Competencies through
exceptional Capabilities included in or contributing to the organization’s
product and service offerings.

Once an organization has defined its Value Proposition and Required

Competencies, it can elicit its Assets. Assets are resources employed,
possessed, or controlled by the organization in order to deliver its
products and services. The next step is for the Governance body to
formulate Directives that govern the use of Assets in a way that
contributes to the achievement of the established Business Strategies and
Objectives.

The organization is now in a more reliable position to consolidate its

structure by forming or allocating Business Units responsible for each
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Business Capability. Required Competencies can guide this allocation
process.

From the elicitation of Business Assets and their respective Directives,

the organization can further refine its structure by designating Business
Units responsible for each Asset.

Since Products and Services package Capabilities and since Business

Units are mapped to the Capabilities that they are responsible for, it is
possible to determine which Business Units provide which products and
Services based on the Capabilities packaged within products and
services. A Business Unit consumes a Product or Service when it uses a
Product or Service that is provided by another Business unit.

Typical resulting organizational structures reflect the overall business

strategy and are listed below:

 Administrative Office structure for a Volume Expansion strategy

 Departmental Headquarters structure for a Geographic Dispersion
strategy

 Division Central Office structure for Vertical Integration strategy

 Multi-divisional General Office structure for a Diversification

strategy

 Three-Dimensional structure for an International Growth strategy

 Front/Back and Four-Dimensional structures for a Customer Focus

strategy.

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