FIN B281F
Finance for Managers
Special Notes
1. Due date: 11 Nov 2024
2. Weighting: 20% of the total mark in this course is allocated to this assignment.
3. Total mark of this assignment: 100
4. You may make reasonable assumptions in your answers, if necessary.
Question 1
You are one of the management trainees at a business consultancy company. Natalie Hotels Group (NHG), which has operations in major cities across the globe, approached your company seeking advice on improving the company's performance.
Most of NHG's clients are banks and financial institutions. Before the pandemic, these banks and financial institutions occupied most rooms in the properties, as their employees frequently traveled for meetings and conferences. During the pandemic, most of these meetings switched to online platforms, causing room occupancy rates to drop. The situation recovered after the pandemic, but since most conferences now offer hybrid options, although the conference room occupancy has recovered, the guest room occupancy rate is still below pre-pandemic levels. NHG mentioned that they are open to making an investment of no more than HK$90,000,000 and expect to have the principal returned within 3 years. Your manager assigned this project to you and your colleague, Jackie. Since Jackie knows that you are new to the industry, she said she would work on the new business suggestions while you find suitable financing options for the clients.
Below are three of the financing options you found:
● Bank A: Offers a HK$90,000,000 secured business line of credit with an 8% p.a. interest rate.
● Investor B: Willing to subscribe to 8% 5-year mature HK$90,000,000 unsecured bonds at par.
● Investor C: Willing to subscribe 10,000,000 new shares of NHG at a discount, HK$9 per share.
Currently, NHG's shares are trading on the Main Board of the Hong Kong Stock Exchange at a closing price of HK$10 per share. The company has 580,000,000 shares outstanding in the market and paid a cash dividend of HK$0.8 per share this year.
According toNHG's latest annual report, the company's management has committed to maintaining its current dividend payout policy over the next 5 years. Under this policy, 50% of the company's earnings will be retained as internal funds, while the remaining 50% will be distributed to shareholders as cash dividends.
Stock analysts covering NHG have forecast that the company's share price and net profit will remain unchanged at HK$10 and the current level, respectively, in the coming year.
Require
a. Which financing option poses the lowest risk to NHG? (5 marks)
b. What will be the expected net profit of NHG in the coming year? (5 marks)
c. If NHG took up Investor C's offer, what will be the price to earning ratio of NHG in the coming year? (5 marks)
d. Please draw a balance sheet and identify where each of the financing option's funds will belong. (15 marks)
e. Please advise on the cost of funds from Investor B and Investor C. (20 marks)
f. Please write a crituqe on the following article " (Shawn) Jang, S., (Hugo) Tang, C.-H., & Chen, M.-H. (2008). Financing behaviors of hotel companies. International Journal of Hospitality Management, 27(3), 478–487. https://doi.org/10.1016/j.ijhm.2007.08.010" (50 marks)
Rubric for Question 1f (50 marks)
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Need Improvement
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Acceptable
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Average
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Good
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Excellent
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Relevance of Literature
Review
(10 marks)
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● The literature review is not very relevant to the research question(s) and lacks important studies.
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● The literature review includes some relevant studies, but many important works are missing or not analyzed critically.
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● The literature review is somewhat relevant but lacks depth or has significant gaps.
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● The literature review is mostly relevant with some minor gaps. Most key studies are discussed.
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● The literature review is comprehensive, up-to- date, and highly relevant to the research question(s). Key studies are critically analyzed.
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Quality of
Analysis
(20 marks)
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● The analysis is not well presented or what is described is completely inadequate.
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● The analysis is of fair quality but contains major flaws that affect the validity of the conclusions.
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● The analysis has some significant problems or gaps.
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● The analysis is mostly sound with only minor issues.
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● The analysis is thorough, nuanced, and fully supports the conclusions drawn.
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Soundness of Conclusions
(15 marks)
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● No conclusions are well presented or what is described is completely invalid.
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● The conclusions are weakly reasoned and only partially aligned with the findings.
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● The conclusions have some significant issues or are not fully supported by the results
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● The conclusions are mostly sound but could be strengthened in some areas.
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● The conclusions are well-reasoned, fully supported by the results, and make a meaningful
contribution to the field.
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Writing Style
(5 marks)
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● Lacks structure,
organization, and proper grammar and spelling.
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● Adequate structure and organization, but there may be some issues with grammar and spelling.
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● Clear structure and organization, with minimal errors in grammar and spelling.
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● Clear and logical structure, with minimal errors in grammar and spelling.
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● Well-crafted structure and organization, with no or negligible errors in grammar and spelling.
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Example
A Critique on Yuan, W. (2010). Conflict management among American and Chinese employees in multinational organizations in China. Cross Cultural Management, 17(3), 299–311. https://doi.org/10.1108/13527601011068388
Introduction
Yuan's study offers a unique perspective and provides valuable insights into the dynamics of conflict management in multinational corporations operating in China. The study is based on 42 semi-structured interviews with American and Chinese employees who work in multinational corporations operating in China. The study focuses on the conflict management strategies employed by these employees. The result reveals how cultural differences affect employees' approach to conflict management, the factors that influence conflict management strategies, and the role of communication in conflict resolution. Yuan’s study provides a fresh and valuable perspective for academics and researchers studying intercultural business communication or conflict management dynamics in multinational organizations.
This critique will evaluate the strengths and limitations of Yuan's research, highlighting its unique contributions.
Methodological Strengths
From the meta-analysis run by Yamini S et al. (2023), most studies examining intercultural conflict management strategies and preferences employ quantitative surveys to collect data. The adoption of a qualitative approach by Yuan, using semi-structured interviews, brings in a fresh and valuable perspective for academics and researchers studying conflict management dynamics. In the study, Yuan conducted face-to-face interviews with 20 non- Chinese Americans, 19 Chinese citizens, and three Chinese Americans from 28 multinational organizations in China. These interviews took place in China, either in Beijing or Qingdao, in 2005. To capture the essence of the phenomenon, Yuan employed a constant comparative method during data analysis, allowing for a comprehensive exploration of the employees' conflict management experiences and understanding of the phenomenon, respecting the complexity of intercultural interactions, and providing a robust foundation for the research's findings.
Insights and Significant Contributions
Yuan’s interviews provide valuable insights into the conflict management strategies utilized by both American and Chinese employees. The study reveals that American and Chinese employees may employ similar conflict management strategies, such as integrating, insisting on one’s own idea, compromising, complying with authority, avoiding passive resistance, dissolving the relationship, and using a third-party approach. Still, their motivations and expectations behind employing these strategies differ. In the study, Yuan goes beyond the surface-level observation; its exploration uncovers the cultural backgrounds and mindsets that significantly influence the approach to conflict resolution.
The research highlights that American employees, driven by their cultural values of individualism, independence, and assertiveness, tend to prioritize open communication and constructive dialogue to find practical solutions in conflict resolutions. In contrast, Chinese employees place greater emphasis on harmony, hierarchy, and face-saving; they tend to opt for indirect approaches and aim to have conflicts dissolve naturally. Their conflict resolution style. is characterized by a more interdependent and harmony-focused manner. When power dynamics are at play, Chinese employees frequently comply with authority. Also, they demonstrate a greater willingness to integrate conflicting perspectives, avoid direct confrontation, and seek mutual understanding through communication. Furthermore, the study identifies language barriers as one of the contributing factors to Chinese employees ’ avoidance of conflicts.
Limitation
The study presented has several limitations that merit attention. Firstly, the interviews were conducted exclusively in China with the American and Chinese employees working at multinational organizations with offices in Beijing or Qingdao. As a result, the data collected relies on a relatively small sample size with high geographical constraints. Therefore, caution must be exercised in generalizing the findings to all American and Chinese employees across multinational corporations. Secondly, the interview participants reflected on their conflict management practices based on their behaviors and opinions. These reports may incorporate historical practices as well as anticipated future practices, making it challenging to fully capture the actual conflict management behaviors employed. Thirdly, it is worth noting that the article does not contain any graphs, tables, or figures; instead, the qualitative evidence is presented through descriptions and illustrative quotes from the interview data. Although this approach provides rich and nuanced insights, the absence of visual representations may limit the ability to present data in a more concise and visually accessible manner.
Conclusion
In summary, Yuan's research offers valuable practical insights into the conflict management strategies employed by the multinational corporations ’ American and Chinese employees in China. It focuses on the interplay between cultural, situational, and personal factors.
Although there are potential opportunities for methodological improvements, the study's findings hold a significant, valuable perspective for academics and researchers studying intercultural business communication or conflict management dynamics in multinational organizations. Yuan’s work also gives insight to management teams of multinational organizations in China and developers of employee training programs.
Yuan's research offers theoretical advancements and practical implications and greatly enriches the understanding of conflict management in multinational organizations. By embracing the study's findings, organizations can develop a highly relevant training program that fosters inclusive and effective conflict resolution practices. These programs can effectively enhance cross-cultural competence among American and Chinese employees working in multinational companies.
Reference ：
Yamini, S., Fousiani, K., & Wisse, B. (2023). Self-construal, face concerns and conflict management strategies: a meta-analysis. Cross Cultural & Strategic Management, 30(2), 375– 412. https://doi.org/10.1108/CCSM-07-2021-0130