Impact of Sustainable Development on Finance

This assignment explores the connection between sustainable development practices and a company's financial performance. It delves into international empirical research on this topic, analyzing how businesses that prioritize sustainability may see positive results in their financial outcomes. The provided list of references includes academic articles and studies that contribute to understanding this complex relationship.

Running head: INTERNATIONAL BUSINESS
International Business
Name of the Student:
Name of the University:
Author’s Note:

1INTERNATIONAL BUSINESS
Executive Summary
International financial management assists the international organizations in managing the
financial positions in international market through dealing with different foreign currencies,
political environment and market imperfections. The study has discussed the international
financial management of Dantata, which is going to construct its new automobile manufacturing
plants in India. Moreover, the study has discussed and evaluated different available business
finance options for raising adequate capital needed for operating new manufacturing plant in
India. These available business fiancé options are like IPO, equity finance, public deposit,
private finance, bank loans and Eurobond. The study has also critically analyzed the possible
risks for the organization in execution of the project in terms of sensitivities, foreign currency
and political risk. Furthermore, the study has also provided some suitable recommendations
through SMART objectives towards raising adequate capital for executing new manufacturing
plant in India.

2INTERNATIONAL BUSINESS
Table of Contents
1.0 Introduction................................................................................................................................4
2.0 Business Finance Options..........................................................................................................6
2.1 Banking Option......................................................................................................................6
2.1.1 Drivers of Banking Options............................................................................................6
2.1.2 Advantage and Disadvantage of Banking Option..........................................................7
2.1.3 Process for Involved in Banking Option........................................................................8
2.2 Share Stock............................................................................................................................8
2.2.1 Drivers for Share Stock..................................................................................................8
2.2.2 Advantage and Disadvantage of Share and Stock........................................................10
2.2.3 Process of Share Stock..................................................................................................10
2.3 Private Finance....................................................................................................................11
2.3.1 Drivers for Private Finance...........................................................................................11
2.3.2 Advantage and Disadvantage of Private Finance.........................................................11
2.3.3 Process Involved in Private Finance.............................................................................12
2.4 Public Deposit......................................................................................................................12
2.4.1 Drivers or Public Deposit.............................................................................................12
2.4.2 Advantage and Disadvantage of Public Deposit..........................................................13
2.4.3 Process Involved in Public Deposit..............................................................................13
2.5 Initial Public Offering (IPO)................................................................................................14

3INTERNATIONAL BUSINESS
2.5.1 Driver of Initial Public Offering...................................................................................14
2.5.2 Advantage and Disadvantage.......................................................................................15
2.5.3 Process of IPO..............................................................................................................16
2.6 Merger and Acquisition.......................................................................................................16
2.6.1 Driver of Merger and Acquisition................................................................................16
2.6.2 Advantage and Disadvantage of Merger and Acquisition............................................17
2.6.3 Process of Merger and Acquisition...............................................................................18
2.7 Issuing Eurobond.................................................................................................................18
2.7.1 Drivers for Issuing Eurobond.......................................................................................18
2.7.2 Advantage and Disadvantage of Issuing Eurobond......................................................19
2.7.3 Process of Issuing Eurobond........................................................................................19
3.0 Critical Risk Analysis..............................................................................................................19
3.1 Critical Risk for Project Execution Using Sensitivities.......................................................19
3.2 Critical Risk for Project Execution Using Foreign Exchange.............................................20
3.3 Critical Risk for Project Execution Using Political Risk.....................................................21
4.0 Conclusion...............................................................................................................................22
5.0 Recommendation.....................................................................................................................23
Reference List................................................................................................................................26

4INTERNATIONAL BUSINESS
1.0 Introduction
International business defines the business activities, which involve cross-border
transactions of goods and services between two or more than two countries. Due to liberation,
open market and freedom of conducting business, most of the organizations are highly inclined
towards operating business in international markets (Christiaens et al., 2015). In such situation,
financial management is the most important aspect for every internal business organization. The
success of an international business is highly dependent on effective international financial
management. International financial management is extremely important for an international
organization, which helps in trading and making money through exchange of foreign currency
(Cremers et al., 2016). Proper international financial management assists in maintaining the
international organization financially stable through properly dealing with different currency,
different political situation, diversified opportunity and imperfect markets. Such financial
management also contributes in currency derivatives, multi-currency bonds, cross-border stock
listing and international mutual funds.
While considering the international financial management in New Zealand, it can be
found that the organizations of this country are adopting several effective finance options for
proper managing the financial status in international markets. Free trade agreement and open
marker of business have encouraged the organizations in going beyond their domestic boundaries
and operate internationally (Demir & Bahadir, 2014). Moreover, the organizations of this
country adopt alternative paths towards globalizing the cost and availability of capital. They
often issue international bonds as debt investment for raising capital in operating international
business. Apart from that, the organization also utilize equity listing for selling shares to public

5INTERNATIONAL BUSINESS
for managing their international financial status through raising capital from the foreign public
for operating international business. On the other hand, the organizations often issue
Euroequity in foreign markets for raising capital from the public. Such options help the
international organizations of New Zealand in effective international financial management.
Figure 1: International Financial Management Options
(Source: Altman et al., 2017)
This study will discuss the international financial management of Dantata, which is an
automotive organization listed on both Australia as well as USA. Now, the organization is going
to construct a new manufacturing plant in India. The study will evaluate and discuss various
business finance options for the organization towards raising capital for constructing the new
manufacturing plants. The study will also provide a critical risk analysis for the organization
through sensitivities, foreign exchange and political risks associated with project execution. At

6INTERNATIONAL BUSINESS
last, the study will also provide some recommendation to the organization through SAMRT
objectives towards effectively managing the international financial management for its new
project in India.
2.0 Business Finance Options
2.1 Banking Option
2.1.1 Drivers of Banking Options
Banking can be an effective option for Dantata for financing its new manufacturing
plants in India. In India, the organization can get both options like working capital loans and
funding. According to Alexander et al. (2014), in working capital loans, the Indian banking
institutes offer loans for running one complete cycle of revenue generating operations. On the
other hand, in funding option, the baking institutes of India allow the business organization to
share their business plan, valuation of the business and project report for sanctioning the business
loans. Therefore, Dantata can avail options for two of loan options for establishing their new
manufacturing plant in India. Furthermore, Richards and van Staden, (2015) opined that one
interesting driver for banking options in India is collateral free business loans offered by some
banking institutes. Moreover, some Indian Lending business banks like HDFC, Baroda, Axis and
ICICI have more than 7 to 8 different options for collateral free business loans. In such options,
Dantata can even get loan approval without sharing the inventory of the business.
Stent et al. (2017) pointed out that with the developing economic condition of India, the
business organizations can avail bank loans from the Indian banks even at less interest rate.
Moreover, the average interest rate range for business loans in Indian banks is between 10%-
20%. Therefore, Dantata cab avail adequate business loans with quite less interest rate. On the

7INTERNATIONAL BUSINESS
other hand, India is full of banking finance options, where numerous banks provide easy and
flexible business loans options. Moreover, Dantata can easily avail business loans for new
manufacturing plants from the Indian banks like State Bank of India, ICICI Bank, HDFC Bank,
Kotak Business Loan, Tata Capital, Yes Bank and many more.
Figure 1: Banking Options in India with Lower Cost of Funds
(Source: De Jonghe & Öztekin, 2015)
2.1.2 Advantage and Disadvantage of Banking Option
Martínez‐Ferrero and Frías‐Aceituno (2015) pointed out that banking loans are always
available in Indian banks, as the banking institutes must need to keep their depositor’s money
working and earn more interest than the banks pay to its depositors. Therefore, Dantata can avail
their business loans for new manufacturing plants in India whenever required. On the other hand,
Attig and Cleary (2014) opined that borrowing too much amount of business loans can lead to
decreased cash flow for the business. In this way, it can hamper the business success of Dantata
in Indian market. Furthermore, Jiang et al. (2013) opined that the interest generated in business

8INTERNATIONAL BUSINESS
bank loans is tax deductible. Therefore, it can help the organization in reducing overall
organizational cost. Furthermore, in case of fix rate loan, the loan servicing payment remains
same throughout the life of the loan. Therefore, it will become easy for Dantata towards
calculating the budget for monthly loan payment. However, in order to get low cost loans,
Dantata must have a good credit score, which can be challenging for it.
2.1.3 Process for Involved in Banking Option
After deciding on the type of banking loans required by the organization, it must know
the scores of the business. Moreover, the organization will need to calculate credit score, time in
business, debt to income, repot on industry risk and report on cash flow. After this, the
organization will need to prepare the loan application package and submit to the concerned
lending bank (Zhang & Elmaghraby, 2014). The documents mostly required with the loan
application form are detailed business plan, financial results and projection and tax return. Based
on this information, the lending bank will sanction the specific business loan and sent a loan
approval letter to the organization. The organization can soon avail the bank loans after
receiving this loan approval letter.
2.2 Share Stock
2.2.1 Drivers for Share Stock
Equity financing can also be an efficient business financing option for Dantata in Indian
market. In such financing option, organizations issue shares, which are mostly offered for sales
towards raising share capital. Share is the indivisible unit of capital, which expresses the
relationship between the shareholder and the corporation (Enqvist et al., 2014). Unlike repaying
the invested amount of the shareholders, the organizations mostly share the amount of profit with

9INTERNATIONAL BUSINESS
shareholders in future. Therefore, the more Dantata will be able to sell its share to the investors,
the more it will be able to raise finance for successfully running the new manufacturing plant in
Indian market.
According to Karadag (2015), India is considered to be a strong stock market, where
stock prices are gradually rising and the confidence of the investors is also growing. The
investors’ optimism is also associated with economic boom of Indian market, where the investors
can easily expect profit of a particular industry. In this way, the positive sentiment of the
investors has led to bull market in Indian stock market. Therefore, Dantata can easily sell huge
share or stock to the investors for raising its share capital for new manufacturing plant in Indian
market. On the other hand, Gerschewski and Xiao (2015) opined that wide industry growth of
automobile market and growing economic condition of India can boost the equity financial
options of an organization. The organization can also sell its share to the venture capitalists and
angel investors for raising its share capital. National Stock Exchange represents 62% of the
market capitalization in Indian stock market, which is around US$1.41 trillion (Zaman, 2017).
Bombay Stock Exchange has also grabbed considered amount of Indian stock market, which can
encourage Dantata for equity financing towards raining capital.

10INTERNATIONAL BUSINESS
Figure: Rise in Benchmark Stock Exchange in Indian Stock Market
(Source: Ning et al., 2014)
2.2.2 Advantage and Disadvantage of Share and Stock
Lantto (2014) pointed out that organizations have no obligation to make interest payment
or repaying the equity to the initial investment of the investors. Unlike debt capital, equity capital
does not require periodic interest payments and repaying to the borrowing money. Therefore,
Dantata do not have to bother about repaying the investors. However, Kollmann, (2013) opined
that with every share of stock, an organization reduce its ownership stake in its business.
Therefore, Dantata can gradually lose the control on their business in such financing option.
2.2.3 Process of Share Stock
After analyzing the business funding needs, the organization can issue equity shares for
sale to the public. It can issue its shares in Indian stock market both through Bombay Stock
Exchange and National Stock Exchange (Nielsen & Roslender, 2015). After that, the
organization can find the investors like venture capital, angel investors, business owners and
event family and friends. Moreover, the organization will need to gain the confidence of the

11INTERNATIONAL BUSINESS
investors in a persuasive way through providing right valuation of the business. The organization
will need to convince the investors through projected business growth and specific intent of
capital. Furthermore, the organization can also require negotiating with the investors in regards
to profit sharing in future.

12INTERNATIONAL BUSINESS
2.3 Private Finance
2.3.1 Drivers for Private Finance
Private financing can be an effective business finance option for Dantata towards funding
the new manufacturing plant in Indian market. The organization can successfully use this
financial option in the crisis time, when it fails to get loan approval from major financial lending
institutes. In such situation, the organization can easily avail business loans from private loan
lenders of India. The parties of private loan lenders are even willing to advance unsecured
private loans for running business. According to Bruton et al. (2015), the private loan lenders are
emerging at a higher rate in Indian market. Moreover, most of the secure and reputed private
loan lenders are established in the cities like Delhi, Mumbai, Kolkata, Bangalore and Chennai.
Therefore, Dantata can easily avail private loans for private financing for their new
manufacturing plant in India.
2.3.2 Advantage and Disadvantage of Private Finance
According to McLean and Zhao (2014), private financing options can be advantageous
for business funding even in the crisis time, when it gets failed in availing bank loans or any
loans from large financial institutes. Therefore, Dantata can definitely be assured upon this
financing option for gathering business funding for their new manufacturing plants in Indian
market. However, Al-Najjar (2013) opined that the unsecured business loans can lead to legal
complication for an organization. Therefore, it can be risky for Dantata in terms of raising
capital.

13INTERNATIONAL BUSINESS
2.3.3 Process Involved in Private Finance
In private finance, the organization will need to give loan application to the concerned
private financing organization. Moreover, the organization requires qualifying the criteria set for
getting loans from the private financing options. Based on the details of the business valuation,
the private loan lending companies will sanction the application of the loans (Syriopoulos et al.,
2015). In this way, Dantata will gather its business funding for its new manufacturing plant in
India.
2.4 Public Deposit
2.4.1 Drivers or Public Deposit
Public deposit can be an extremely important option for Dantata for raising its capital for
new manufacturing plant in India. In this business finance option, the organization can invite the
shareholders, employees and even the general public towards depositing their saving in its
business. Moreover, such financing option can be used for meeting the short-term and long-term
financing needs of the organization. The investors in return get the interest generated from their
deposited money. According to Boso et al. (2016), growing industrialization of automobile
industry has increased the optimism of the depositors in this industry. Therefore, increasing
confidence of depositors in Indian Market can drive the scope public finance for Dantata. On the
other hand, Kroes and Manikas, (2014) opined that Indian public can avails much higher interest
rate in the public deposit option than the banking interest. Therefore, there is a growing interest
of public deposit among the Indian public. Therefore, such growing interest of public towards
public deposit can drive Dantata towards choosing this option as their business finance option for
new manufacturing plant in India.

14INTERNATIONAL BUSINESS
2.4.2 Advantage and Disadvantage of Public Deposit
According to Da Gbadji et al. (2015), organizations need to pay quite less interest rate to
the depositors than it has to pay to the bank as banking interest. Furthermore, issuing public
deposit is quite less expensive than issuing share to the public. Unlike equity finance, such
option does not also provide any kind of ownership to the depositors. Dantata can gather
adequate finance for its new manufacturing plant in India with less cost. However, Ramiah et al.
(2014) opined that Indian government has fixed the public deposit period up to 3 years only.
Therefore, this finance option can be available for shorter period for Dantata.
2.4.3 Process Involved in Public Deposit
The organization can invite any public, employee or shareholder for depositing their
savings in their business. The members can easily fill up the fill up form and deposit money with
the organization. The organization will in return issue a deposit receipt, which is an
acknowledgement of debt by the organization. The rate of interest in public deposit will be
dependent on the period on the deposit. The organization will be allowed to invite public deposit
for only six months to 3 years period. However, the depositors can renew their deposit time to
time. The organization will require setting aside 10% of deposit maturing by the end of year.

15INTERNATIONAL BUSINESS
2.5 Initial Public Offering (IPO)
2.5.1 Driver of Initial Public Offering
Initial Public Offering can be an effective funding option for Dantata for raising capital in
Indian market for the first time just after entering into the market. In such business finance
option, the organization can offer its share to the public for the first time. The organization can
avail adequate funding for its new manufacturing plants in India through selling their shares to
the public for the first time. According to Sorrentino and Smarra (2015), the qualified
institutional portion of public issue continues to be oversubscribed. It assures attractive return for
the investors in future. Therefore, the organization can avail huge numbers of investors for
raising large amount of funding for its new manufacturing company in Indian market. On the
other hand, Enomoto et al. (2015) opined that Government initiatives of Indian towards divesting
its holding in the public limited companies encourage the investors in investing in public limited
companies. Therefore, the company will be able to raise adequate amount of funding for its new
manufacturing plant through offering public shares initially. Moreover, the initial public offering
activity has headed a record in India in this year. It has exceeded the target of USD 5 billion.
Therefore, such trends and positive market sensitivity will also facilitate in encouraging the
public towards purchasing the initial shares of the organization.

16INTERNATIONAL BUSINESS
2010 2012 2014 2016
0
10
20
30
40
50
60
IPO Trend in India
Figure 3: IPO Trend in Indian Stock Market
(Source: Dikova et al., 2017)
2.5.2 Advantage and Disadvantage
According to Razman (2015), in IPO, a publicly listed company can have large and
diverse group of investors towards raising capital. It can also provide the organizations a lower
cost of capital. Furthermore, unlike other finance options, IPO can help an organization beyond
just raising fund and increase it towards increasing its exposure, public image and prestige to the
public. Therefore, Dantata can successfully use this finance option for raising its capital for new
manufacturing plant in India and enhance its public image to public. However, Tseng et al.
(2015) opined that IPO can lead to increased risk of legal and regulatory issues in terms of listing
in government list of the country. Furthermore, the funding may not be raised, if the price of IPO
is not accepted by the public.

17INTERNATIONAL BUSINESS
2.5.3 Process of IPO
While considering the process of IPO, the organization fist has to be listed in the
government list of India for issues Initial Public Offering. The issuers mostly obtain assistance of
an underwriting firm towards determining the types of security, best pricing and the amount of
shares to be issued and the best time issue share in the market. The financial statements of the
organization are submitted for official audit towards getting approval of issuing shares to the
public (Islam et al., 2015).
2.6 Merger and Acquisition
2.6.1 Driver of Merger and Acquisition
Merger and acquisition can an extremely important business finance option for Dantata
towards raising capital for its new manufacturing plant in India. Moreover, the organization can
be merged with any reputed automobile company in India for getting shared access the vital
resources of the merged companies (Allen et al., 2014). Moreover, the organization will have the
authority to use the financial funding of the merged company. Therefore, in merging option, the
organization can realize higher revenue than if it operates separately in Indian market.
According to Terjesen et al. (2016), the international investors and business houses are
expecting India with a hope of tremendous growth. Moreover, the ease of foreign direct
investment can also encourage the company in opting for merger finance option for its new
manufacturing plant. On the other hand, the organization can also raise its capital through
acquisition financing. In such financing option, the organization can get access to the financial
funding of the acquired firms for operating new manufacturing plant. Cheng (2015) pointed out
that there are several Indian companies, which need has great potential to grow. Such companies

18INTERNATIONAL BUSINESS
may drive Dantata towards taking over those potentially growing companies towards raising
capital for their new manufacturing plant. Furthermore, the growing value of merger and
acquisition in India encourage the organization towards opting for this option towards raising
capital.
Figure 4: Announced Merger and Acquisition in India
(Source: Bruton et al., 2015)
2.6.2 Advantage and Disadvantage of Merger and Acquisition
According to Fraser et al. (2015) merger finance option can assist an organization
towards utilizing the financial resources of the merged company. Moreover, it can be the best
option for penetrating foreign market with having huge market knowledge. On the other hand,
Baños-Caballero et al. (2014) opined that acquisition option assist an organization towards
raising huge capital of acquired company and getting expanded market reach. However, Razman

19INTERNATIONAL BUSINESS
(2015) opined that the new company after merger and acquisition may experience diseconomies
of scale because of its increased size.
2.6.3 Process of Merger and Acquisition
While considering the process involved in merger and acquisition, the organization needs
to develop merger and acquisition strategy. After that, the organization needs to set the criteria
for merger and acquisition and search for target. In the next process, the organization requires to
perform value analysis and negotiation with the target company for planning the merger and
acquisition. After all these, the organization needs a due diligence for ensuring the financial
position of the target company and purchase and sale contacts towards framing financial strategy.
2.7 Issuing Eurobond
2.7.1 Drivers for Issuing Eurobond
Dantata can also opt for issuing Eurobond for raising adequate capital for constructing
new manufacturing plant in India. Eurobond is actually denominated in a foreign currency and
not in home currency. The issuance of the bond is usually handled by international financial
institution for the borrowers. In such business finance option, the Dantata can issue bonds in the
Australia or USA, but the denomination of the bond will be in Indian currency. Moreover, the
organization will invite the people in Australia or USA having Indian account. The capital raised
from those migrant people will help the organization in funding the new manufacturing plant in
India.
According to Da Gbadji et al. (2015), 15.7% of Australian populations are Indian
migrants, which can increase the scope of issuing Eurobonds in the country. Furthermore, 2.4
million people in USA are Indian migrant, which can also increase the scope of issuing

20INTERNATIONAL BUSINESS
Eurobond in the country. In this way, increasing migration rate from India can drive Dantata
towards opting for this option. Furthermore, Kroes and Manikas (2014) opined flexible
regulatory environment and low currency rate of India can help an Australian or USA
organization towards issuing Eurobond in Indian currency. Therefore, Dantata can easily issue
bonds for raising capital with lowest possible cost.
2.7.2 Advantage and Disadvantage of Issuing Eurobond
According to McLean and Zhao (2014), organizations have the opportunity to issue their
Eurobond in the country of their own choice having favorable market condition. Investors would
get greater security, as the Eurobond can be manageable for the issuer. Therefore, Dantata can
encourage the Indian migrants towards purchasing such bonds. However, Kroes and Manikas
(2014) argued that the lack of Fiscal discipline can often hamper the efficiency of issuing
Eurobond. It can discourage Dantata towards issuing Eurobond.
2.7.3 Process of Issuing Eurobond
After selecting the country for issuing Eurobond, the organization requires selecting a
lean manager underwriting the bonds policies. After that, the organization needs to organize the
lead syndicate in the Indian market for negotiating the terms of bonds with the borrowers. Then,
the organization can sale its bonds to the borrowers and set principle paying agent for receiving
the interest from the borrowers.
3.0 Critical Risk Analysis
3.1 Critical Risk for Project Execution Using Sensitivities
According to Bruton et al. (2015), interest rate sensitivity is the most influential
sensitivity, which has greater influence on the selection of funding options and project execution.

21INTERNATIONAL BUSINESS
Equity shares and securities are most vulnerable in the interest rate sensitivity. In this case,
increased interest rate of India can be harmful for Dantata, where the organization might have to
pay quite more return as profit sharing than they have purchased them to the public. Increased
interest rate can also impact on the bank loan financing option of the organization. In this case,
the increased rate of interest will ultimately increase the overall cost of the organization, when it
will pay the loan to the bank.
On the other hand, Kroes and Manikas (2014) opined that economic fluctuation of the
foreign country can also have huge influence on international project execution. Moreover,
higher rate of inflation in the foreign market will enhance the commodity price needed for
executing the construction of car manufacturing plant in India. Moreover, it will also impact the
pricing policy of the organization, which will impact the funding options. Furthermore, Enomoto
et al. (2015) pointed changes in investor’s sensitivity can also hamper the project execution of an
organization in foreign market. Moreover, the low performance of the automotive industry can
reduce the optimism level of the investors. In this way, the investors may be reluctant towards
investing the shares, securities, bonds and others. Therefore, the organization may face issues in
funding capitals for their new manufacturing plant preventing their project execution.
3.2 Critical Risk for Project Execution Using Foreign Exchange
Tseng et al. (2015) pointed out that an unfavorable turn of foreign exchange can hamper
an international business, which can even lead the organization towards ending up with giving
more to the shareholders and receiving less from them. While considering the funding options, it
can be said that increased value of foreign currency may enhance the credit value of the investors
after their share or bond purchase. Therefore, currency exchange has huge influence on the value
of funding. Moreover, increased Indian currency rate often increase the credit level of the

22INTERNATIONAL BUSINESS
organization to the investors, which ultimately increase organizational cost and hamper in project
execution of Dantata.
On the other hand, Allen et al. (2014) opined that huge difference on foreign exchange
rate can also create difficulties for the international organization in estimating their financial
budget for longer period. Moreover, with the changes in foreign exchange rate, it becomes very
difficult for the international organization towards paying for the business cost in native
currency. In this way, Dantata will also face issues in paying for the project execution in its
native currency. Therefore, changes in currency exchange will lead to huge problems in project
execution. Furthermore, Fraser et al. (2015) stated that changes in currency fluctuation can also
have huge impact on international organization in terms of calculating the estimating the profit
level of the international business. Moreover, with increased currency exchange rate in India,
Dantata will face increasing cost of business operation will impact on the profit level of the
international business.
3.3 Critical Risk for Project Execution Using Political Risk
Political risk is the fundamental risk to every international business organization, which
can impact on the project execution in international basis. Moreover, Kroes and Manikas (2014)
opined that corruption in political environment of international country may hamper the project
execution of international organizations. The international organizations can highly be under the
influence of powerful political party, which can hamper the control of the organizations on their
international project. Bruton et al. (2015) stated that Political clashes often lead to frequently
changing government policies, which even influence the funding options as well as business
operation. Furthermore, the international organizations can also face the issues in terms of
getting assistance of government in operating business. Therefore, such political environment

23INTERNATIONAL BUSINESS
can also prevent the Dantata in executing the project in Indian market. Moreover, Indian
government is less inclined to provide support to the automotive organizations. Therefore,
Dantata will face risk of not getting government support from Indian government.
Lantto (2014) pointed out that increased tax rate imposed by government on foreign
business can also hamper project execution of international organization in international market.
Moreover, increased tax rate imposed by Indian government on foreign subsidiaries can lead to
risk for Dantata in regards to their construction of manufacturing plant. Furthermore, the changes
in trade agreement of the country may be harmful for Dantata towards executing their business
with high level of regulatory stringent.
4.0 Conclusion
While concluding the study, it can be said that Dantata can have wide ranges of business
finance options for constructing automotive manufacturing plant in Indian market. The
organization can initially offer Initial Public Offering to the public for raising capital through
issue shares to the public. Furthermore, the organization can also opt for bank loans for raising
adequate capital for the new manufacturing plant. Moreover, the collateral free business loans
offered by some Indian banks can drive the organization in opting for this finance options. The
organization can also opt for equity financing, where it will issue share to the public in secondary
market for raising capital. The strong stock market of India can also drive the organization in
opting for this equity finance option. The industry growth of automobile industry has increased
the optimism level of the investors towards purchasing the shares.
Furthermore, the organization can also opt for private finance option for raising capital,
where it will avail finance from the private lending organization when it will fail to get approval

24INTERNATIONAL BUSINESS
of loans from major financial institutions. Public deposit can also be an effective business
finance option for the organization towards raising their capital. Unlike equity finance, the
depositors of the organization will receive periodic interest on their deposited money. Apart from
that, the organization can also opt for merger and acquisition and Eurobond for raising capital for
their new manufacturing plant in India. Howeverm the organization will face issues in project
execution in terms of sensitivities, currency exchange and political risk.
5.0 Recommendation
Recommendation for Dantata through SMART Objectives
Specific  Raising 60% capital through business finance options
 Choosing IPO, Bank loans, Equity Shares in constructing new manufacturing
plants in India
 Selling 75% shares to the public for raising capital
Measurable  Calculating organizational capital is possible, which will measure 60% raised
capital through selected business finance options
 The organization can easily track on the progress of negotiation with the
shareholders and banks for raising capital from them
 Calculating share value from both IPO as well as equity share is possible,
which will measure 75% sales of share to the public
Achievable  Raising 60% capital from different business finance options is challenging
but it is achievable
 It needs proper effort from the organizational members towards convincing
the banks in taking bank loans

25INTERNATIONAL BUSINESS
 Effort is also required for proper issuing the shares to the public for
encouraging them in purchasing those shares
 Selling 75% shares in also hard, but can be achievable by encouraging
buyers of shares through proper presentation of company’s financial status
Realistic  The goals of the organization for raising adequate capital is obviously
realistic
 The organizational members needs completing all legal proceedings and
proper presentation of company’s inventory for getting approval of banks
loans
 The members of the organization will also require attractive presentation of
company’s financial position for encouraging the buyers of share and
Eurobonds
Time-Bound  The organization will raise its capital within next 1 year time period
Table 1: Recommendation of Dantata for Raising Capital
(Source: Created by Author)
The above SMART table gives the recommendation to Dantata towards raising adequate
capital for constructing and operating its new automobile manufacturing firm. In this
recommendation, the organization will set Specific objectives for raising capital. In these
objectives, the organization will raise 60% capital from difference business finance options,
which required for constructing new manufacturing plant in India. Apart from that, the
organization will choose IPO, equity share, Eurobonds and bank loans for raising this much of
funds. Furthermore, the organization will sell 75% of its issues shares to the public. The
objectives of the organization will be measurable, when raised capital and sold shares can be

26INTERNATIONAL BUSINESS
tracked and calculated. Furthermore, the objectives of the organization can be difficult, but these
are achievable. It needs proper presentation of the company’s inventory to the buyers of shares
and banks towards selling shares and getting loans. On the other hand, the objectives are also
realistic, with adequate effort from the organizational members towards attractively presenting
company’s financial position to the share buyers and banks for convincing them. Furthermore,
the organization is recommended towards achieving these goals within 1 year of time bound.

27INTERNATIONAL BUSINESS
Reference List
Alexander, G. J., Baptista, A. M., & Yan, S. (2014). Bank regulation and international financial
stability: A case against the 2006 Basel framework for controlling tail risk in trading
books. Journal of International Money and Finance, 43, 107-130.
Allen, F., Hryckiewicz, A., Kowalewski, O., & Tümer-Alkan, G. (2014). Transmission of
financial shocks in loan and deposit markets: Role of interbank borrowing and market
monitoring. Journal of Financial Stability, 15, 112-126.
Al-Najjar, B. (2013). The financial determinants of corporate cash holdings: Evidence from
some emerging markets. International business review, 22(1), 77-88.
Altman, E. I., Iwanicz‐Drozdowska, M., Laitinen, E. K., & Suvas, A. (2017). Financial Distress
Prediction in an International Context: A Review and Empirical Analysis of Altman's Z‐
Score Model. Journal of International Financial Management & Accounting, 28(2), 131-
171.
Attig, N., & Cleary, S. (2014). Organizational Capital and Investment‐Cash Flow Sensitivity:
The Effect of Management Quality Practices. Financial Management, 43(3), 473-504.
Baños-Caballero, S., García-Teruel, P. J., & Martínez-Solano, P. (2014). Working capital
management, corporate performance, and financial constraints. Journal of Business
Research, 67(3), 332-338.

28INTERNATIONAL BUSINESS
Boso, N., Oghazi, P., Cadogan, J. W., & Story, V. M. (2016). Entrepreneurial and market-
oriented activities, financial capital, environment turbulence, and export performance in
an emerging economy. Journal of Small Business Strategy, 26(1), 1.
Bruton, G., Khavul, S., Siegel, D., & Wright, M. (2015). New financial alternatives in seeding
entrepreneurship: Microfinance, crowdfunding, and peer‐to‐peer
innovations. Entrepreneurship Theory and Practice, 39(1), 9-26.
Bruton, G., Khavul, S., Siegel, D., & Wright, M. (2015). New financial alternatives in seeding
entrepreneurship: Microfinance, crowdfunding, and peer‐to‐peer
innovations. Entrepreneurship Theory and Practice, 39(1), 9-26.
Cheng, S. (2015). Potential lending discrimination? Insights from small business financing and
new venture survival. Journal of Small Business Management, 53(4), 905-923.
Christiaens, J., Vanhee, C., Manes-Rossi, F., Aversano, N., & Van Cauwenberge, P. (2015). The
effect of IPSAS on reforming governmental financial reporting: an international
comparison. International Review of Administrative Sciences, 81(1), 158-177.
Cremers, M., Ferreira, M. A., Matos, P., & Starks, L. (2016). Indexing and active fund
management: International evidence. Journal of Financial Economics, 120(3), 539-560.
Da Gbadji, L. A. G., Gailly, B., & Schwienbacher, A. (2015). International analysis of venture
capital programs of large corporations and financial institutions. Entrepreneurship
Theory and Practice, 39(5), 1213-1245.
De Jonghe, O., & Öztekin, Ö. (2015). Bank capital management: International evidence. Journal
of Financial Intermediation, 24(2), 154-177.

29INTERNATIONAL BUSINESS
Demir, V., & Bahadir, O. (2014). An investigation of compliance with International Financial
Reporting Standards by listed companies in Turkey. Accounting and Management
Information Systems, 13(1), 4.
Dikova, D., Dikova, D., van Witteloostuijn, A., van Witteloostuijn, A., Parker, S., & Parker, S.
(2017). Capability, environment and internationalization fit, and financial and marketing
performance of MNEs’ foreign subsidiaries: An abductive contingency approach. Cross
Cultural & Strategic Management, 24(3), 405-435.
Enomoto, M., Kimura, F., & Yamaguchi, T. (2015). Accrual-based and real earnings
management: An international comparison for investor protection. Journal of
Contemporary Accounting & Economics, 11(3), 183-198.
Enqvist, J., Graham, M., & Nikkinen, J. (2014). The impact of working capital management on
firm profitability in different business cycles: Evidence from Finland. Research in
International Business and Finance, 32, 36-49.
Fraser, S., Bhaumik, S. K., & Wright, M. (2015). What do we know about entrepreneurial
finance and its relationship with growth?. International Small Business Journal, 33(1),
70-88.
Gerschewski, S., & Xiao, S. S. (2015). Beyond financial indicators: An assessment of the
measurement of performance for international new ventures. International Business
Review, 24(4), 615-629.

30INTERNATIONAL BUSINESS
Islam, M. M., Karim, M. A., & Habes, E. M. (2015). Relationship between quality certification
and financial & non-financial performance of organizations. The Journal of Developing
Areas, 49(6), 119-132.
Jiang, F., Zhu, B., & Huang, J. (2013). CEO's financial experience and earnings
management. Journal of Multinational Financial Management, 23(3), 134-145.
Karadag, H. (2015). Financial management challenges in small and medium-sized enterprises: A
strategic management approach. Emerging Markets Journal, 5(1), 26.
Kollmann, R. (2013). Global banks, financial shocks, and international business cycles: Evidence
from an estimated model. Journal of Money, Credit and Banking, 45(s2), 159-195.
Kroes, J. R., & Manikas, A. S. (2014). Cash flow management and manufacturing firm financial
performance: A longitudinal perspective. International Journal of Production
Economics, 148, 37-50.
Lantto, A. M. (2014). Business involvement in accounting: A case study of international
financial reporting standards adoption and the work of accountants. European Accounting
Review, 23(2), 335-356.
Martínez‐Ferrero, J., & Frías‐Aceituno, J. V. (2015). Relationship between sustainable
development and financial performance: international empirical research. Business
Strategy and the Environment, 24(1), 20-39.
McLean, R. D., & Zhao, M. (2014). The business cycle, investor sentiment, and costly external
finance. The Journal of Finance, 69(3), 1377-1409.