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strategy_and_performance.pptxSTRATEGY AND PERFORMANCE
Columbia’s current worth, cash flows and FDI strategy
Name
Institutional Affiliation
Introduction
Cash flows refers to the total that is being transferred into and out of an organization after liquidity has been affected.
Foreign Direct Investment (FDI) is the act of a company physically investing in another country by building a factory.
It may also include the direct purchase of a permanent management interest of a firm located outside the buyers’ country.
Cash flows normally change the cash account over a given period of time. Cash flows are normally are normally as a result of the following three activities: financing, investing, operations or financing. Cash flow is used to gauge performance. FDI basically involves investment in terms of buildings, machineries and equipment. FDI plays a major role in globalization.
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Columbia’s worth
Monetary policies are formulated by Junta Monetaria (Monetary Board).
Banking operations are supervised and regulated by Superintendecia Bancaria.
Monetary policies are conducted by the Central Bank depending on the financial sector dynamics.
The Columbian currency, peso has been able too float freely against the dollar since 25 September 1999.
It is also the work of the Central Bank to determine the amount of money that should be in the system and decision making with regards to inflation and other aspects of economic growth. Prior to the floating of the peso, the currency had an exchange regime with a crawling band.
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Colombia’s current worth and cash flows
Colombia gains its cash flows from the following:
Cash from operations.
Cash from government capital contributions.
Borrowing from financial institutions.
Running down cash balances.
Selling of government assets and bonds.
When Columbia is looking seeking to get a loan from a financial institution like the World Bank, the World Bank will basically analyze the cash gained from operations to be able to determine whether or not the country is in a position to repay the loan. The remaining three will come in when this first option has failed. In the event that the country already has a loan that is being serviced with the money from operations, then the Statement of Cash Flows can be used to show the alternative source of the money.
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Colombia FDI strategy
Monitoring its FDI competitors.
Identifying sectors in which the Pro-exports should be aimed at FDI.
The reviewing of the Vision and Mission statement of Pro-exports.
Monitoring will involve the evaluation of Colombia’s strengths and weaknesses as FDI destination. This will make them make the necessary changes an adjustments needed to improve Colombia’s FDI. Sectors to be identified include: Pharmaceuticals, IT sector, call centers, financial services among others. The revision of the Mision and Vision will enable the functions of each of the proposed divisions to be set out clearly.
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Changes experienced in the Colombian FDI patterns
Technological advancements and innovations have greatly changed the face of FDI.
There have been small IT companies that has drastically grown as a result.
There are companies who products are intellectual property rights, e.g. Computer software.
Large companies are invest in these small companies without acquiring the outright of these small companies.
FDI is no longer an issue of putting up a huge investment in terms of machinery and equipment. Some of these small companies do not necessarily need such kinds of investments. The large companies that invest in these IT companies do so because they find it too risky to acquire the whole company. The large companies are also concerned about the longer times it takes to develop the small company’s products, i.e. the incubation period which is normally quite a long period of time.
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References
United Nations. (2006). Foreign investment in Latin America and the Caribbean. New York: United Nations.
Becker, B. E., Huselid, M. A., & Ulrich, D. (2001). The HR scorecard: Linking people, strategy, and performance.
Jury, T. (2012). Cash Flow Analysis and Forecasting: The Definitive Guide to Understanding and Using Published Cash Flow Data. Hoboken: John Wiley & Sons.
Kruschwitz, L., & Löffler, A. (2006). Discounted cash flow: A theory of the valuation of firms. Chichester, England: John Wiley.
