StudentShare
Contact Us
Sign In / Sign Up for FREE
Search
Go to advanced search...
Free

Investing In Early Developing Country - Research Paper Example

Cite this document
Summary
The paper "Investing In Early Developing Country" describes that plan for investment involves the banking and financial sector as the industry, Kenya as the destination country, joint venture as the model of investment and Capital One Financial as the investing company…
Download full paper File format: .doc, available for editing
GRAB THE BEST PAPER91.4% of users find it useful
Investing In Early Developing Country
Read Text Preview

Extract of sample "Investing In Early Developing Country"

Investing In Early Developing Country with One of the 500 Fortune Companies In my endeavor to invest in early developing country with one of the 500 fortune companies, I selected Kenya as the destination country for purposes of investment and the company chosen among the fortune 500 is Capital One Financial. My choices were informed by several factors including the nature of the country and sector of investment. I preferred the banking sector due to its huge potential of growth and development. Furthermore, the banking and financial sector being a service industry bestows excellent opportunities for expansion and investment. The aspect of globalization was the core consideration with regard to the type of company selected. Since I was more inclined to a service company particularly in the baking and financial services sector, I settled on Capital One Financial, which is a reputed banking corporation with a global presence as well as being among the fortune 500 companies. Capital One Financial Corp is a bank holding firm based in the U.S and focuses in auto loans, home loans, and credit cards banking along with savings products (Icon Group International, Inc. Staff and Icon Group Ltd 12-15). An associate of the Fortune 500, the corporation helped establish the mass marketing of credit cards in the initial periods of 1990s, and it is currently the fourth-largest client of the American Postal Service and its deposit assortment is ranked fifth in the country (Paige 14). Capital One Financial firm is the mother corporation of Capital One Auto Finance, or COAF, stationed in Plano, Texas. Subsequent to buying PeopleFirst, it grew to be the largest Internet auto lender and one of the highly ranked US auto lenders in general (Hitt et al 85). Kenya is my country of choice for investment for a number of reasons, first is the fact that Kenya is the fastest growing economy in the expanse and its performance is robust making it a viable destination for investment (Ndung’u, Collier and Adam 89-92). Commercially, Kenya has made numerous gains and its financial sector along with general economic environment is based on the contemporary economic standards. Kenya’s financial and banking sector is among the most robust and lucrative not only in East Africa but also in the entire world. Therefore, investing in the Kenyan financial and banking sector is a lucrative idea. The investment plan by Capital One Financial in Kenya’s financial and banking system will be organized in a number of stages to achieve the required results (Goodman and Downes 106). In essence, the investment program will echo the relevant realities in Kenya regarding the investment protocols that ought to be followed. Essentially, the investment will be done through joint ventures that represent the most convenient way of investing in Kenya. Therefore, Capital One Financial will seek joint venture with local banks in Kenya through which it will launch its services and operations in conjunction with the local bank. The choice of local company will be done in a categorical manner to make certain that the concerns and goals of the investing company are safeguarded. Nevertheless, the option of foreign direct investment (FDI) will be left open so as to ensure that Capital One Financial may invest directly in the Kenyan financial system. However, this will depend on the probability of success of FDI by the company on request of the Kenyan authorities. Financial banking is the discipline of administration of money along with other valuables pertaining to a particular business. It is obvious that banks tender basic advances, deposits in addition to financial counsel, though they as well facilitate dealings on complicated financial instruments like private equity, bonds along with mutual funds (IBP USA Staff 56-61). The majority of top performing contenders typically perceive careers in Banking as the pinnacle of accomplishment, and sectors such as coffers, equity trading, speculation banking along with private banking is perceived as the most worthwhile jobs for innovative graduates. Besides traditional banks, other monetary institutions like credit amalgamations, trust companies, credit loan companies, insurance firms, brokerage corporations and asset administration firms also present a host of financial counsel. For this reason, when observing the opportunities in the segment, one must as well carefully deem these other dedicated financial institutions. The financial disaster of 2007-2008 was activated by a bankrupt United States banking system (mediums of which were sub-major lending, over leveraging, as well as poor guideline) resulting in the crumple of great financial institutions, the rescue of banks by national administrations and declines in stock markets across the world. The deterioration of the banking division in the U.S. had a domino consequence on the worldwide financial commerce, with effects experienced in Europe, the Middle East in addition to the Asia Pacific. 24 months later on, the global financial manufacturing still has not recovered its lost glory, along with even countries with profound pockets like the U.A.E. along with Singapore have displayed limited sectoral enlargement. The Kenyan financial sector underwent quick conversion post liberalization in the early 90’s, ensuing in greater inflow of outlays from FII's into the capital market. In spite of the incursion of foreign banks in the nation, nationalized banks persist to be the main lenders in the state, above all due to their size and diffusion of networks. In fact, commerce estimates point out that over 80% of profitable banks in Kenya are in the community sector. In addition to of the 50-odd confidential banks, fewer than half are overseas banks. The chances in this realm remain tremendously promising owing to its comparatively low infiltration, in addition to superior financial products. Despite the fact that the Kenyan finance along with the banking sector did undergo significantly in the course the precedent 2 years, it was moderately sheltered from the developments of the universal melt-down, misery instead because of monies from FII’s drying up, declining interest rates, hurriedly rising inflation and pitiable investor assurance. Annual reports recommend that nearly all of the superior Banks have started to rise from where they left off, although with more care, and most sector pundits are positive about the existing fiscal year. Joint venture corporations are the most preferred manifestation of commercial entities for doing commerce in Kenya. There are no strange laws for joint ventures in Kenya. The corporations integrated in Kenya, still with up to 100% overseas equity, are handled the same as local companies (Campbell and Netzer 41). A joint venture could be any of the commercial entities existing in Kenya. A typical Joint Venture incorporates: 1. Two entities, (persons or corporations), create a company in Kenya. Business of one faction is transferred to the corporation then as consideration for the transfer; shares are granted by the corporation and subscribed by the entity. The other party subscribes for the shares in cash. 2. The aforesaid two parties pledge to the shares of the joint venture corporation in agreed amount, in cash, and found a new business. 3. Promoter shareholder of a prevailing Kenyan company along with a third party, who/which could be person/company, one of them non-resident or both residents, work in partnership to jointly operate the business of that corporation and its shares are taken by the stated third party throughout the payment in cash. Some realistic aspects of configuration of joint venture corporations in Kenya in addition to the preconditions to consider are enumerated. Overseas companies are additionally free to launch branch workplaces in Kenya. On the other hand, a branch of an overseas company draws a superior rate of tax than a supplementary or a joint venture corporation. The accountability of the parent corporation is also superior in case of a branch workplace. All the strategic alliances in Kenya entail legislative endorsements, if a foreign collaborator or an NRI or PIO associate is involved (Fru 24). The endorsement can be attained from either RBI or FIPB. If, a joint venture is enveloped under usual route, then the endorsement of Reserve bank of Kenya is needed. In other particular cases, not taken care of under the repeated route, a special endorsement of FIPB is required. The Government has delineated 37 high precedence areas covering nearly all of the industrial areas. Investment suggestions involving up to 74% overseas equity in these regions receive usual approval in a period of two weeks (Luo and Yan 97). A submission to the Reserve Bank of Kenya is necessary. In addition to the 37 high preference areas, automatic endorsement is obtainable for 74% overseas equity holdings developing international trading corporations engaged mainly in export activities. Approval of overseas equity is not restricted to 74% and to elevated priority industries. Superior than 74% of equity, as well as areas external to the high precedence list are granted to investment, but government agreement is required. For these superior equity investments or areas of investment exterior of high precedence, an application in the appearance FC (SIA) has to be formed with the Secretariat for Industrial endorsements. A reply is given within 6 weeks. Full overseas ownership (100% equity) is willingly permitted in power generation, electronics, or a component in one of the Export dispensation Zones ("EPZ's"). For main investment suggestions or for those that fail to fit within the offered policy constraints, there is the towering-powered Foreign Investment Promotion Board ("FIPB"). The board is positioned in the office of the Prime Minister which can offer single-window clearance to applications in their entirety without being confined by any prearranged parameters. There are a variety of retail careers to go well with the most talent sets, including banking representative, probationary official, loan manager, assessor, credit loan sponsor, loan processing officer, accountant, merchandise marketing as well as sales administrative, and client service executive in the midst of others (Bhatia 56). On the other hand, job security is not exceptionally towering in retail banking as numerous players endure from lessening margins and meager customer withholding due to increasing contest and limited market segregation, leading to lay-offs. In the meantime, there are moreover more skilled professions available like actuarist, equity investigator, international currency trader, and securities tied products developer along with group manager. The principal opportunity in this segment remains in civilizing information surge to customers. Therefore, there is rising importance on in-house study and market intelligence. In the first 12 months, appointing is likely to linger robust. Countless banks are investing in teaching programs to promote worker proficiencies to enhance their spirited edge in anticipation of the division once additional regaining its fair place as the harbinger of expansion and progress. Investing in Kenya will not be an easy project for Capital One Financial, there will definitely be various obstacles and bottlenecks that will provide a huge challenge to the venture. Therefore, the investor ought to be prepared to surmount the many obstacles facing foreign banks and financial institutions in Kenya (Pratt and Grabowski 44). Among the many factors that will challenge the global bank is the fact that the Kenyan banking and financial sector is inherently localized. There are several local banks and other financial institutions already operating in the Kenyan banking sector and most of these have well established niches making it difficult for foreign banks to operate in the country. Additionally, Kenyan customers trust local banking services and solution and have little or no trust at all for foreign entities. The joint venture arrangement may work well for the foreign bank, but still the reception will be cold and suspicious. Perhaps Capital One Financial will require rebranding in order to peal to the Kenyan tastes; this will definitely take a very long time. Apart from the hostile environment and the flooded banking and financial sector, Capital One Financial will encounter government restrictions through legal and statutory frameworks will in essence favor local banks and financial institutions. Foreign banks are perceived suspiciously by the government and their operations strictly scrutinized. The best way to overcome the aforesaid challenges will of course be through a joint venture arrangement, which will have a reputation effect on the company. Collaboration with a purely indigenous bank will make the foreign bank in a better position to weather a hostile market reception, as well as a step motherly treatment by the government. However, in the course of operation the bank will require to quickly adjust to market environment realities by taking an inventory of the local needs and inculcating them in its policy frameworks (Marquardt 25). The investment of Capital One Financial in the Kenyan market will have multifaceted implications on various perspectives. First it will represent the expanding commercial muscle of the global bank, which by investing in Kenya will send signals around the world of its endeavor to spread through the world. Secondly, the investment venture will be a good sign for Kenya, which will be perceived an investment destination. A successful investment by Capital One Financial will bring good tidings to Kenya, which will be perceived by other countries as a welcoming business environment (Kazmi 67). Generally, the investment will improve the Kenyan banking and financial system which is inherently local thus lacking foreign input. Through the introduction of new products and services to the Kenyan market, Capital One Financial will change the shape of the Kenyan banking and financial system (Hitt et al 51-54). Hence, the proposed investment is a great idea that will undoubtedly bring a lot of change to the investing company, destination country along with the industry. The investment similarity has great potential of success and will be perfect case study on globalization, banking and financial sector, Kenya along with Capital One Financial. In summary, my plan for investment involves the banking and financial sector as the industry, Kenya as the destination country, joint venture as the model of investment and Capital One Financial as the investing company. I preferred the services sector for the reason that it is very lucrative and convenient to operate; my choice of the country was informed by my understanding of the Kenyan economy particularly the banking and financial services sector. I opted for Capital One Financial because of its enormous experience and reputation in global banking system. Kenya is a little conservative with regard to foreign investment, most government policies encourage local participation in economic affairs and seek to thwart and discourage direct involvement of foreign companies. Therefore, I decided to use the joint venture model that will be convenient in enabling the company to penetrate the Kenyan market. Through the joint venture arrangement, I will select a well entrenched local bank that will partner with Capital One Financial. There is huge potential for the venture, and I strongly believe that the venture will be very successful. However, there will be several challenges and obstacles through the way that will require strategy to overcome. There is a need to build up a clear guideline on how to penetrate the local market. This will start by the understanding the local market tastes of the Kenyan market and developing product and services that are in line with the needs and requirements of the local market. However, my hope and belief is that the venture will be greatly successful, and it will be of greater wider implication to the company, Kenya, banking sector as well as to the investing company. Through proper planning and administration, it is possible to make the venture a great success. Works Cited Bhatia, Sethi. Elements of Banking and Insurance. New York: PHI Learning Pvt. Ltd., 2007. Print Campbell, Dennis and Netzer, Antonida. International Joint Ventures, Volume 30. New York: Kluwer Law International, 2009. Print Fru, Valentine. The International Law on Foreign Investments and Host Economies in Sub- Saharan Africa: Cameroon, Nigeria, and Kenya. Washington: LIT Verlag Münster, 2011. Goodman, Jordan and Downes John. Finance and Investment Handbook. New York: Barron's Educational Series, 2003. Print Hitt et al. Strategic Management: Competitiveness and Globalization: Cases. New York: Cengage Learning, 2009. Print IBP USA Staff. Doing Business and Investing in Kenya Guide. Washington: International Business Pubns USA, 2009. Icon Group International, Inc. Staff and Icon Group Ltd. Capital One Financial Corp.: Labor Productivity Benchmarks and International Gap Analysis. Washington: Icon Group International, Incorporated, 2000. Print Kazmi. Strategic Management and Business Policy. New York: Tata McGraw-Hill Education, 2008. Print Luo, Yadong and Yan Aimin. International Joint Ventures: Theory and Practice. Washington: M.E. Sharpe, 2001. Print Marquardt, Michael. Building the Learning Organization. London: Nicholas Brealey Publishing, 2011. Print Ndung’u, Njuguna, Collier, Paul and Adam Christopher. Kenya: policies for prosperity. Oxford: Oxford University Press, 2011. Paige, Christopher. Capital One Financial Corporation. Washington: Harvard Business School, 2001. Print Pratt, Shannon and Grabowski, Roger. Cost of Capital. Washington: John Wiley & Sons, 2008. Print Read More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“Investing In Early Developing Country with One of the 500 Fortune Research Paper”, n.d.)
Investing In Early Developing Country with One of the 500 Fortune Research Paper. Retrieved from https://studentshare.org/business/1399751-invest-in-early-developing-country-with-one-of-the
(Investing In Early Developing Country With One of the 500 Fortune Research Paper)
Investing In Early Developing Country With One of the 500 Fortune Research Paper. https://studentshare.org/business/1399751-invest-in-early-developing-country-with-one-of-the.
“Investing In Early Developing Country With One of the 500 Fortune Research Paper”, n.d. https://studentshare.org/business/1399751-invest-in-early-developing-country-with-one-of-the.
  • Cited: 0 times

CHECK THESE SAMPLES OF Investing In Early Developing Country

Social Democratic and Economic Progress in the Republic of Trinidad

off the coast of Venezuela in the southern Caribbean Sea, is an archipelagic country consisting of two main islands Trinidad and Tobago and 21 other smaller islands....  … Trinidadians, Tobagonians, Trinis, or Trinbagonians, as the country's citizens are familiar to the rest of the world, are by nature very peaceful.... nbsp; Trinidad and Tobago is a beautiful country spread over 5128 Sq....   Everything is good for this country, which has seen several vicissitudes about its economy, except for its unstable political conditions....
14 Pages (3500 words) Essay

To what extend has govermental policy been a factor in explaining each country's development trajectory

However, it must be realised that the sovereignty of a government is not infringed upon simply because it has been given some recommendations by the United Nations or other international bodies who aim to help the country in need.... Government is an art as well as a science and while there may be several different forms of government which have been used in the past or those which are active today, the fundamental principles of governing have remained more or less the same regarding the need for… Government policy is the method by which control is established over the various institutions of a society and individuals are given a share over the decisions that directly affect their futures. Policies can be lenient or harsh, soft or hard, cooperative or This can be shown with historical evidence beginning from the development of Britain as an industrialised nation due to the colonisation policies of the time to the current mandates of the IMF and the World Bank which are supposed to help developing nations....
20 Pages (5000 words) Essay

Sustaining tourism within developing countries like the Dominican Republic

As of 1950s developing countries have… During 1996 developing countries received 31% of world international tourist arrivals, an increase of over 2% between 1990 and 1996.... Improved standards of living in the countries of the North, ecreased long-haul travel costs, increased holiday opportunities, changed demographics and strong consumer demand for foreign travel have given rise to large tourism growth to developing countries with global visits to the developing world comprising 25% of the universal total....
15 Pages (3750 words) Essay

Early and Late Industrialization

The ‘early'… After the Second World War, countries such as Japan, Taiwan, Mexico and South Korea amassed a considerable economic growth through large scale modern industrial enterprises and they are rightly termed as These late industrialized nations assumed the role of learner ‘instead of the inventor & innovator' as their economic and industrial development resulted through “borrowing and improving technologies which has already [been] developed by experiencing firm in more advanced nations” (Do the theories of ‘late industrialization' explain national differences in the institutional and organisational characteristic of contemporary business?...
11 Pages (2750 words) Essay

Security Measures at the Olympics

Due to its scope and enormity of international participants in the event, the level and depth of security measures are always of paramount priority, especially of the host country.... The Olympic games originated in Olympia, Greece from as early as 10th or 9th century B....
6 Pages (1500 words) Research Paper

You Decide

Johnson Angel Investments LLC is a venture capital company created with the mission of investing in new emerging new age business opportunities with prospects of tremendous growth for the new economy.... In evaluating which companies to Johnson Angel Investments LLC is a venture capital company created with the mission of investing in new emerging new age business opportunities with prospects of tremendous growth for the new economy.... The company feels that true sustainable economic growth for our economy can only be brought about by reinvesting in redeveloping the productive capacity of our country....
2 Pages (500 words) Essay

The Definitions of Foreign Direct Investment

The perception of FDI, therefore, varies from country to country.... It refers to FDI as “investments done by the non-residents aiming to participate in a permanent and effective basis in the management of enterprises located within the country borders.... Great competition has been relentlessly going on for a long time among world countries including the developed nations to attract as much FDI as possible into their countries from the investing multinational companies/enterprises (MNCs / MNEs)....
40 Pages (10000 words) Term Paper

Investing Qualified Pre-School Teachers

This research paper "Investing Qualified Pre-School Teachers" presents a strategic response to the changes in the early educations sector in response to globalization changes.... This affects future economic progress or compromises the quality of early childhood education and the implementation of the vision.... The government has a strategy for assessing the needs of the workforce regularly to ensure they get regular and professional training for early childhood preparation....
23 Pages (5750 words) Research Paper
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Contact Us