MULTINATIONAL FINANCIAL MANAGEMENT (MFM)

ASSESSMENT 1: COURSEWORK GUIDELINES

Module Tutors: Dr Handy Tan and Saad Aftab
Contact Details: handy.tan@bbk.ac.uk and s.aftab@bbk.ac.uk

Assessment 1: Group coursework (2,250 words) (50%)

Deadline: 17 February 2023 at 5PM GMT on Turnitin in Moodle

Please note that you have to submit both: Assessment 1 (Group coursework) and Assessment
2 (Final exam) in order to pass the module.

The MFM module requires an overall mark of 50% for both components. If a student fails
any of the components (Assessment 1 or 2), and the overall mark achieves a grade less than
50% in total, the student will fail the module and will need to resit the exam.
Learning Outcomes
On successful completion of the module, students should be able to:
1. understand globalisation and its impact on financial decisions
2. understand the components of the international monetary system and the importance
of exchange rates
3. know the different types of risk related to international finance such as political risk,
currency risk, and economic exposure
4. understand the macroeconomic aspects of the economy including inflation and fiscal
policies
Assessment 1: Group coursework (4 up to 5 maximum number of students in a group)
This assessment is designed to assess your ability to convey external and internal information
to assess financial decisions by a multinational company. To this extent, you are playing the
role of one of the top executives for this company (e.g., CEO, CFO, COO, etc.) in making the
decisions. The assignment covers all the learning outcomes (as stated above) of the module.

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 Inflation Targeting – Should a multinational firm transact in the UK (a country that
adopts inflation targeting since September 1992)?
Disclaimer: This assignment is not about Brexit in its entirety! You do not need to write and
define what Brexit is and/or when, where, why, and how it happened. It suffices to say that
the readers are knowledgeable enough about the event. The focus is on understanding the
implications of post-Brexit event in the UK for a multinational firm (coupled with the current
economy in terms of inflation and post-COVID transitions).

Inflation Targeting
One of the most popular strategies for central banks is inflation targeting. This was
championed by the New Zealand parliament in 1989 through its Reserve Bank of New
Zealand Act. In fact, New Zealand was the first nation in the world to adopt inflation
targeting. At present, many of the western industrialist nations have adopted inflation
targeting strategy in one form or another as a part of their central banks’ mandate to achieve
low and stable inflation. Notwithstanding this, in practice, the outcomes of this strategy vary
for different countries.
In the context of the United Kingdom, the Bank of England (through their Monetary Policy
Committee (MPC)) has had some challenges in the implementation of this strategy post EU
Referendum and coupled with the current inflation and post-Covid issues. One example of
this was the then BoE Governor Mark Carney and this team who had a press conference on
03 August 2017 hinting at the possible rate hike by 25 basis points and planned to unwind the
stimulus programme in the coming years (contrast this scenario with where we are now – via
the recent Monetary Policy Report that was published on 02 November 2022).

Your tasks:
1. Provide an overview of the UK economy from the central bank’s perspectives by
taking into account inflation targeting with the emphasis in the UK around Brexit
outcomes and where we are now. Based on the most recent press conference (03
November 2022), do you find justifiable evidence from the MPC team’s plan for any
kind of rate adjustment and the reduction of the stimulus programme? In other words,
are we experiencing a smooth transitional exit period of adjustments or are we
assuming a smooth transitional exit period? Is inflation currently on track with the
target? Use Bank of England site and economic data to do your analysis. You should
read and use the Bank of England Inflation Report (now it is called simply Monetary
Policy Report) as early as February 2016 all the way up to November 2022 to support
your arguments as a start. You are also required to use secondary data from various
databases (e.g., Bloomberg, Bank of England, Office of National Statistics, Prudential
Regulation Authority, Financial Stability Board, etc.) to support your analysis. In
addition, some common sense from your general knowledge in accounting,
management and other business disciplines should be adopted.
2. As an executive of a multinational firm who may be thinking about doing business in
the UK, what decisions and/or plans (or contingency plans if you are already doing
business in the UK) should you implement following the announcement? Use past
financial statements information to highlight important decisions that you are making
(i.e., income statement, balance sheet and cash flow statements). Use a real publicly

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 listed company from which you can extract real audited financial statements (between
3 to 5 years of financials should be good). At the end of the day, you should explicitly
state in your conclusion of whether or not you and your company are willing to invest
in the UK in its current market conditions.
3. As an executive of a multinational firm, you should also discuss the following issues:
a. What impacts the EU referendum outcome, war in Ukraine and COVID have
at present on UK’s demands, supplies and exchange rate?
b. Are there issues at present about the uncertainty of market access?
c. What are the UK government’s plans in terms of forging trading relationships
with the EU27 and other countries where the multinational firm is domiciled?
Is the UK currently ‘re-orienting’ trade relationships? Do we have a strong
external environment? Is there a difference in the type of trade relations with
the EU before and after the referendum?
d. What is the country’s current Balance of Payments (BoP) and the effects of
this balance on global trade (growth)?
e. What is the current inflation rate and how does that affect real income growth?
f. Is the BoE’s current inflation projection in line with the current inflation rate?
g. What is the current trend of consumptions by UK Households? What was the
trend before the referendum? What is the firm’s current trend of productions,
capacities, and wages? What was the trend before the referendum?
h. Are we currently experiencing twin shocks (between Brexit crisis outcome and
oil prices) that require conflicting actions from the MPC? This was the case
during the credit crunch whereby UK experienced a severe financial crisis
whilst oil prices spiked to an all-time high.
NB: The list is not exhaustive by any means that there may be other issues that
merit further discussion.

Sources:
You are to utilise ‘reputable sources’ in gathering your materials for the write-up and AVOID
using the ‘usual suspects’ (e.g., Wikipedia, Investopedia, Trading Economics and other ‘less
reputable’ references) in your reference list and in-text citations. You are to cite and present
your references throughout your writing using a proper referencing format (e.g., Harvard,
MLA, APA, etc.). Some good references include: IMF, OECD, BIS, FSB, SEC, FDIC, OCC,
CIA, foreign banks’ websites, Bloomberg, central banks’ websites, WSJ, the Economist,
World Bank, US DoJ, LA Times, NY Times, Credit Ratings Agencies (Moody’s, Fitch and
S&P), and various academic journals.
In today’s environment, students are permitted to use other types of references such as
interview scripts, podcasts, iTunes and other good quality ‘social media’ facing for as long
as they are of good quality and can be re-verified. If citing a podcast, for example, you
should cite the podcast source, title, presenter, the date of the podcast and the time stamp
where you are citing specific sentences or phrases. For example of excellent podcasts include
UBS Nobel Perspectives podcasts
(https://www.ubs.com/microsites/nobel-perspectives/en/home.html) and Lex Fridman
podcast on Spotify.

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How the assessment is graded:
Introduction and conclusion (10 marks)
Bank of England and the MPC (20 marks)
Discussion on the overview of the UK’s economy from the central bank’s
perspectives taking into account the information provided in task 1 (including
their rationale in achieving the inflation target). Use data to support your
argument.
Your executive expectations (20 marks)
Discussion surrounding your expectations based on the outcome of the most
recent MPC’s press conference as well as your critical analysis of how the UK
economy has transformed from pre- to post- referendum (including Ukraine
war and COVID). Use data to support your argument.
The empirical evidence (20 marks)
Based on your expectations above, are they in line with the actual empirical
evidence of the current events that have unfolded? Make some predictions or
forecasts of where the UK economy is heading for the first quarter of 2023
(March 2023). You can use, for example, the Taylor Rule to predict future
movement of short-term interest rates.
Decisions, decisions, decisions (20 marks)
What are the implications of the post EU Referendum, war in Ukraine and
COVID pandemic on the UK economy (specifically) and the global economy
(generally – if any). What decision(s) will you implement as an executive of
your multinational firm now with regards to investments or doing business in
the UK? The decisions have to be well thought out with specific examples
(including numbers/figures) about what you plan to do with your company
(i.e. you need to articulate and quantify your decisions). This is where the
financial statements of your company will be relevant/important.
Reference (usage and quality) (10 marks)

Other relevant information:

 Do be careful when quoting other people’s work within your report (in-text citations)
to avoid penalties for plagiarism.
 The ‘how the assessment is graded’ provides you with an overview of what is
expected in the report. This does not mean that you should structure your report in
this way. The structure should have a front page (title, name of the module, name of
the university, date and word count), introduction, analysis and review, findings,
conclusion and reference list. You may include an appendix section (if necessary).
The total word count excludes reference list and the appendix sections.
 Use headings and sub-headings whenever possible to enhance the quality and
appearance of your work.

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