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)

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