Business essay last min feedback (1 Viewer)

[anumahmed]

Hi, I wrote a finance essay for this question, 'Evaluate the financial management skills that a business can adopt to manage global financial risks and influences.' I literally did not know what to write can someone please check if I've answered it right. Sorry if it doesn't make sense. Thank you

 

[jimmysmith560]

This a slightly odd question in terms of wording, meaning that your interpretation is important as it may affect the quality of your response to a certain extent. Regarding your response, here is what I think:

Financial management strategies that businesses adopt in response to the management of global financial risks and influences have overall been effective to a significant extent, dictating their successes. It is pivotal for businesses that operate on a global level to manage exchange rates, interest rates and the type of payment internationally utilised in response to the respective influences, being the projected economic outlooks, interest rates and the availability of funds to combat potential risks. Businesses that have masterfully portrayed effective global financial management have been are Apple Inc and Tesla.

Your interpretation of the question is valid. You have stated the main components of your response as well as the case studies that you will be incorporating.

I made one minor change to the wording in the last sentence.

Financial management strategies, such as responding to exchange rates have been highly effective to a significant extent to in manage managing international risks and influences such as economic outlooks. Businesses must be responsive to the influence of discerning their economic outlooks, positive or negative, which refer to the projected changes to the economic conditions. Exchange rates are ratios of one currency to another and fluctuate in relation to economic conditions. For example, if the projected economic outlook is that the economy in Australia will be stimulated, there is a likelihood that the Australian dollar would appreciate in comparison to the currencies around the world. Whilst this would make imports cheaper for Australia, it would simultaneously suppress the international competitiveness of the business as it would become more costly for them to purchase the product. As such, businesses must enact appropriate financial strategies to combat and retain their international competitiveness. On the other hand, if the economic outlook is negative, meaning the economy would not be stimulated, it would lead to the deprecation depreciation of the Australian dollar against other currencies. This would subsequently result in imports being higher for Australian businesses, however, its international competitiveness would increase, being beneficial and allowing profits to be gained.

There is a good discussion of the economic outlook and while you have also covered exchange rates, the way that this strategy can help manage the influence of the economic outlook is not clearly established.

I made some minor changes to the wording throughout the paragraph.

An effective example of a business which has embedded appropriate global financial management strategies to combat risks in the influence of projected economic outlooks is Apple, a globally renowned tech company. Exchange rate fluctuations impact Apple due to its global manufacturing and sales operations, often altering its profit levels. For example, Apple’s Mac products generated about $40 billion in revenue in 2022, with over 60% of sales coming from outside the U.S. To protect its profit margins in a strong-dollar environment, Apple raised Mac prices in regions like Europe and Japan as a financial strategy to prevent being impacted by global financial risks and influences. Thereby, exchange rate impacts are clear when demand decreases in response to price increases. For instance, during the strong-dollar period in 2022, Apple saw a slight decline in Mac unit sales, despite strong demand earlier in the year. Moreover, when the economic conditions are as well, the slowing of sales growth is evident from the appreciation of decreasing international competitiveness. This has been demonstrated within the sales of Apple’s highly regarded iPad, accounting for $30 billion of revenue from around the world. During the COVID pandemic, Apple saw an iPad sales boost by 12% as exchange rates and economic conditions favoured increased consumer spending on technology. But with the 2022 dollar rise, iPad sales growth slowed by 5% as consumers felt the impact of higher prices abroad. Despite these implications Apple has retained its success by earning USD $550 billion dollars in revenue in 2023, displaying the effectiveness of its global financial management strategies in relation to influences such as global outlooks.

Good incorporation of relevant case study material, the only issue being that this paragraph builds on a strategy that should have been clearly established in the previous paragraph.

Financial management strategies in response to international interest rates are highly effective to a significant extent for business success. Interest rates is are the cost of borrowing money and is are typically presented as a percentage and is are a reflection of the financial risk associated with borrowing money. Borrowing money from banks is difficult for Australian businesses as interest rates are higher domestically. A strategy which can be implemented is to borrow money from international countries such as Japan or China, which have lower interest rates. In response this can allow businesses to spend less of their costs towards interest and more towards business expansion, to retain towards the direction of international success. However, businesses must take into account exchange rates which can cause an imbalance between the costs being saved from paying less interest and exchange rates being unfavourable.

Good discussion of the content in this paragraph, including a clear suggestion regarding an appropriate strategy to be used.

I made some minor changes to the wording towards the start of the paragraph.

Tesla, a highly regarded electric car manufacturer, has demonstrated being globally is influenced by global interest rates, and using uses them to strategically finance operations in lower-interest regions to reduce costs. Tesla typically finances expansion via loans or bonds which are heavily influenced by local interest rates. As a strategy to intercept the lowest interest rates, Tesla in 2022 expanded its Shanghai factory in China, financed through local Chinese loans having an average of 4% less compared to loans taken out from US banks. Subsequently, this allowed reduced borrowing costs and capital expenditures, improving profitability by lowering the cost of production. Thus, the financial management strategy of responding effectively to interest rates has been affirmed to a significant extent from Tesla making profits of an upwards of 2.2 billion in 2023.

Good incorporation of relevant case study material to support your point. I made some minor changes to the wording towards the start of the paragraph.

 

[jimmysmith560]

(Continued).

Global financial strategies such as implementing the appropriate method of payment allows for the suppression of risks, from forming an effective response to the financial influence of the availability of funds. An appropriate method of payment must be selected by businesses to minimise any international risk. There are 4 types, with the one with the least risk towards exporters being payment in advance. This is when the exporter receives a payment first from the buyer before sending it (sending what?) to them. Another method is the letter of credit, where the importer's bank makes a promise to the exporter that the amount for the product will be paid and if it is not then the bank itself will pay for the amount, being another method which is not very risky for the exporter. The third option is the bill of exchange where the exporter draws up this a type of document requiring payment from the importer at a specified time. The last method is the most risky for the exporter and is clean payment, and is when they send the product first then receive payment after the importer has reviewed (consider using the word "received" for greater accuracy) it. By Picking the most appropriate method of payment with the least risk it can be beneficial towards businesses as they would be able to get active revenue. As a result this would allow for working capital, making it easier to borrow funds from banks for future expansions.

Good discussion of the content in this paragraph. Please ensure that you use clear language and accurate wording.

I made some minor changes to the wording throughout the paragraph.

Apple is an example of a business which has implemented the financial strategy of payment in advance as an international payment method to minimise risk and respond to the influence of the availability of funds. Its success has been exemplified from Apple's 2023 Q3 report, in which the company held $166 billion USD in cash and marketable securities, largely due to its upfront payment model and efficient cash management. This substantial liquidity gives Apple the flexibility to fund operational costs, expansion, and R&D without incurring debt, from its large availability in of funds. Payment in advance as an international financial strategy has demonstrated its heightened impact during product launches, such as the iPhone 15, allowing Apple to meet demand quickly and efficiently as cash flow is generated even before the products are shipped. Therefore, it can clearly be perceptionised is clear that recognising payment in advance as an appropriate international payment method is highly effective to a significant extent in minimising risk and allowing availability of funds for ease of expansion.

Good incorporation of relevant case study material to support your point. Please avoid using redundant expressions as those may obstruct the clarity of your response.

Ultimately, financial management strategies, such as effectively responding to exchange rates, interest rates and implementing the appropriate method of payment have been implemented by businesses such as Apple and Tesla, has have dictated their success. This must be in response to navigate the respective financial influences such as projecting the economic outlook, interest rates and the availability of funds.

A concise conclusion that briefly summarises the main elements of your response. I made one minor change to the wording.

Overall, this response is leaning towards the higher quality responses, and I would give it 17/20.

I hope this helps!