Gentry Inc. is a mid-sized tech firm (200 employees and $300 million in revenue) and has been privately held since the firm’s inception ten years ago. The organization’s board of directors is keen on expanding the operations globally to take advantage of a growing market. Based on reports from the research and development team, the organization can increase its profitability metrics by 15 to 25% if it expands the operations to China, Japan, and Germany. Becoming a multinational organization will not be easy. To finance this expansion, the board of directors has decided to take the organization public and issue some bonds to raise an additional $50 million. The research team has already determined that the organization meets the financial requirements outlined by the Securities Exchange Commission. The goal is to maximize the Initial Public Offering (IPO), and the leadership must efficiently manage the capital, measure the risk of the investments, and ensure the financial metrics are robust relative to similarly sized organizations.
Based on the information that you learned about the different types of risk, scenario, and sensitivity analysis, you will be identifying the risks that will be associated with the IPO and global expansion. Using your readings from this module:
Provide your recommendation in an 800-word paper with APA formatting.
Determine how each of the following risk exposures affects the international expansion of Gentry.
- transaction risk
- translation risk
- economic risk
Include how you would use sensitivity and scenario analysis to make your recommendation. Spell out the advantages and disadvantages of each method.