International Money and Finance

This document provides an overview of international trade and finance, focusing on currency risk and political risk. It includes a case study of Vodafone Plc and offers recommendations to manage these risks.

International Money and
Finance

Contents
INTRODUCTION.......................................................................................................................................4
MAIN BODY..............................................................................................................................................4
Overview of an organisation....................................................................................................................4
Corporate and strategic actions................................................................................................................5
Identification and analysis of currency risk.............................................................................................7
Identification and analysis of political risk..............................................................................................9
CONCLUSION AND RECOMMEDATIONS..........................................................................................10
REFERENCES..........................................................................................................................................12

INTRODUCTION
International trade (also known as foreign macroeconomics or global econometrics) is the
international policy division concerned primarily with the financial and macroeconomic
interconnections among two or more nations. Global finance, also referred to as foreign
economic theory, is the analysis of financial relations among two or even more nations,
concentrating on these areas as foreign investment and exchange rate (Meegan, Corbet and
Larkin, 2018). International finance struggles with multi-country economic transactions, rather
than a limited emphasis on regional markets. Big businesses including the Global finance Corp,
undertake central banking analysis. To complete this project select Vodafone Plc which is a
multinational telecom company that situated in Newbury, Berkshire, England. In this report
consist of size, industry, market, financial trends, and risk analysis. Along with identify risk
strategies to overcome from these risk and provide specific recommendations.
MAIN BODY
Overview of an organisation
Vodafone Group Plc (Vodafone) is a telecom company, founded on 17 July 1984. The
sector of the Organization is divided into two regional regions: Europe, and Africa, Near east and
Pacific. Its divisions include Europe and AMAP. The division of Europe includes geographical
regions such as Germany, Italy, the United Kingdom, Spain and Europe. The Other Europe
contains amongst others the Netherlands, Portugal, Greece and Romania. Its AMAP section
includes, among others, India, South Africa, Tanzania, Mozambique, Lesotho, Africa, Australia,
Egypt, Ghana, Kenya. The Business offers a variety of services through mobile and fixed
networks including voice, messaging, and data. It is a leading organisation in telecommunication
sector that presents that company has big size in the market. It is a telecommunication sector
business that provide different services to customers (Claessens, and Van Horen, 2015).
The Company provides its clients with a variety of mobile applications, allowing them to
call, email, stream video, download apps and upload videos. It provides a variety of networking
tools, like mobile phones, online content, internet and storage, and deals on the Cloud

computing. Via its system of about 300,000 transceiver locations, it delivers such facilities.
Vodafone offers a variety of managed facilities to subscribers in its territories, namely voice,
telecommunications and tv services and a range of benefits to its enterprise customers, namely
storage and networking, and Encryption-Virtual Core router (IP-VPN) facilities. It also involves
itself in the business of carrier products.
Market share: Its market share rose to 10.55 percent from a market share of 10.49 percent on
November 19. Personal providers' share has decreased from 89.51% to 89.45%. Reliance Jio
leads the telecom operator group with a market dominance of 32.14 per cent led by Vodafone
Idea with 28.89 per cent and Bharti Airtel with 28.43 percent.
Key markets: When analyzing and researching industry dynamics in Europe only, the patterns
in Business income, Corporate Business Revenue, exiting speech levels and data revenue tend to
be steadily increasing. In terms of sales development Vodafone shows good economic
prosperity. The major competitors of the company such as:
Administration training and development
Personal development planning
Job descriptions
Vodafone PLC has had many key rivals and can be calculated in terms of marketing strategies,
sales or the benefits it brings. They are looking at three main rivals here, such as Virginity
Group, British Telecommunications PLC and O2 Group (Miranda-Agrippino and Rey, 2015).
Corporate and strategic actions
Financial trends of Vodafone plc:
The mobile phone industry continues to increase exponentially, powered by new revenue
streams, elevating the prevalence of smart phones and technological innovations. The
convergence of rivalry and governmental uncertainty has led over the last three years to a 17
percent annual decrease in the median price per minutes throughout their international network.
Continued economic and administrative factors have led to substantial smart phone price cuts
that are partially offset by increased smart phone use. Competitiveness is high in the telecoms

industry. Buyers have a broad range of internet services available from existing wireless and
twisted pair providers. The financial growth is good as compare of other organizations and
develops effective financial strategies to engage with customers and take right decisions on time.
The Risk Score is a valid measure for assessing an attraction of a stock. Vodafone Group
Plc presents a 6.00 Risk Rate. 0 correlates to a really increased risk and 10 correlates to a very
low risk. "Vodafone Group Plc's danger rating is substantially higher than that of its peer group,
meaning Vodafone Group Plc is substantially less dangerous than its social circle.

Geographical location: With Vodafone. A global communications corporation is the Vodafone
Group plc/ in the world. Its corporate headquarters is in Newbury, Berkshire, England and is
located in London, England. It primarily provides support in the Asian, African, European, and
Oceanian areas (Christiaens and et. Al, 2015).
Degree of competition: There has been a whatsoever for policymakers to interfere since the
emergence of telecom networks to guarantee that dominant players, including Europe's fixed line
telecommunication companies, were unable to exploit their pricing power. Enforcement action
has concentrated on ensuring competitiveness at retail level by establishing market connectivity
requirements where there is inadequate competitiveness for resources.
Financing and implications: All the financial activities presents that growth and success in
achieved by the business in effective manner.
Identification and analysis of currency risk
Currency risk which is commonly known as exchange rate risk. currency risk arises from the
change in price of one currency in relation to another that is basically fluctuations in currency of
a particular country is known as currency risk. Investors and organizations invest the money for
earning extra returns of their resources but when these investments are made in assets or business
operations across national borders then the risk of currency for exchange rate risk arises. The
international investors and organisation are then exposed to currency risk that may cause them
unpredictable profits for losses due to fluctuation in the currency of the investing country.
Currently the world and different economy around the globe are suffering from the outbreak of
Corona virus or COVID-19. This is a deadliest virus due to which people cannot leave the
houses and all the different economic and businesses are suffering because almost the whole
world is under lock down and no financial or any transaction is taking place. Therefore currency
risk for exchange rate risk is very high in the current scenario for all different types of industries
and companies as well as Vodafone. The company is a leader in technology communication
through mobiles broadband and Television (Boubaker and et. Al, 2019). Currency risks can
affect a company differently, whether it works nationally or overseas. Economic exposure does
not have a cash flow impact but if the organization understands the quality of its foreign currency
assets or liabilities it may be turned into currency fluctuations or price exposure. If either small,
medium , or large, globally buying and selling business owners are striving tough to fulfil their

financial goal, working 24x7 to implement in “ hard work on complicated methods. However,
whenever it comes to information their outcomes, success is often severely impacted by a
component that is unconnected to the quality of its items, facilities, advertising or sales: currency
risk from growing turbulent changes in exchange rates.
The organisation has always worked hard for building a digital future for everyone and
old different segments of the society. There are various different types of currency risks to which
multinational organizations like Vodafone are exposed. The three main types of currency risk
which cannot the business of Vodafone with the impact of covid-19 are as follows:
1. Transaction risk is basically cash flow and deals with the effects of exchange rate
moves on translational account exposures related to receivables, payables and dividends.
Any change in exchange rate in the currency of denomination with any such contract of
Vodafone with International organisation can result in a direct transaction exchange risk
to the business and to the entity (Pilkington, 2015).
2. Translation risk refers to do the balance sheet exchange rate risk and relates to the
changes in rates moves to the valuation of a foreign subsidiary to a parent company’s
balance sheet. Any International subsidiary of Vodafone will be usually measured by the
exposure of net assets to potential exchange rate moves. This is another risk which is
associated with currency and exchange rate risk because if the subsidiaries net profit and
balance sheet fluctuates the overall and consolidated balance sheet of Vodafone will also
fluctuate.
3. Economic risk is third type of risk which basically reflects present value of the future
cash flows from exchange rate movements. This risk implies the most on Vodafone due
to the current situation of the world as the impact of covid-19 is very severe and
unpredictable. Therefore it is very difficult for Vodafone to you read its present value of
future cash flows of the different operations the organisation is engaged in or will be soon
going to be engaged.
Therefore, it is very important for Vodafone to identify all different types of currency risk it
is going to face in the foreseeable future so as to be prepared and take appropriate measures in
order to develop a strategy that helps the company to manage these currency risks as the

outbreak of covid-19 and its implications will be having long term impact on the domestic and
international business of the organizations belonging to different industries and business sectors.
Identification and analysis of political risk
Political risk was the risk that the yields of expenditure may bear the brunt of a political
and social adjustments or volatility. Uncertainty influencing investment returns may result from
changes in society, administrative agencies, other international relations leaders or military
occupation. Foreign investment is a strong means of diversifying a portfolio and increasing it.
Moreover, risk rates are also greater than those in local investments (Bartram and et. Al, 2015).
Many of these threats are specific to foreign investment, and can be triggered by wars,
instability, shifts in countries' foreign policies, and domestic politics. Political risks are threats
linked to changes that take place inside the legislation, employment laws, or development
legislation of a nation. Many key factors involve foreign affairs and any other circumstance that
could have an impact on a certain economy of the country. In present time whole world face of
Covid 19 that impact on the all the business activities in negative manner. It impacts on the
political activities that impact on the Vodafone Plc in direct manner. For this require to identify
this risk in broad manner. Accordingly apply effective strategy to overcome from this.
Political factors play a key role in deciding the variables that may affect the lengthy-term
competitiveness of Vodafone Group Plc in a specific country or sector. Vodafone Group Plc
operates in more over a hundred markets in Wireless Telecommunications and exposes itself to
various forms of political climate and threats to the political structure. Diversifying the systemic
threats of the political atmosphere is the achievement of performance in such a competitive
wireless transmission market throughout different nations.
Expropriation/government interface: Foreign nations may acquire, repossess and
otherwise nationalize the property of a corporation, for no clear reason or without justification.
They can also take a set of steps which have the effect of being expropriated. In this case, the
effect would be that a corporation may lose resources or properties offshore in Vodafone Plc.
Transfer and conversion: During a financial crisis, government officials or private
banks can attempt to enforce controls or quotas on domestic currency translation to hard
currency, or may stop foreign currency from going overseas.

Political violence: Political violence, conflict, social unrest or other types of religious
violence may harm or ruin the property of a business and prohibit it from carrying out critical
activities essential for business economics.
Political risk can change a companies' practices and competitiveness as clearly and
rapidly as any monetary, technical, or consumer risk variable.
The effect of political risk is perceived to be lengthy-term although, despite the strong tendency
for occurrences and changes all the time, the risk increases in time (Maggiori, Neiman and
Schreger, 2018). Given the inherent complexity of quantifying financial risk, businesses and
stakeholders must analyze and appreciate the capacity for downside risks by carefully observing
the past, political systems, and geopolitical issues at stake in the country.
CONCLUSION AND RECOMMEDATIONS
As per the above report it has been analyzed that Company have good performance and
position at international levels. Accordingly they are take right decision in regard of the business.
To overcome from the political risk take right steps such as:
Maybe the most critical foundational pillars in any developed market marketing plan are
independent research, previous research and political risk assessment. Speak with EDC and the

British Exchange Regulator Service, which have specialists in most developing markets on the
floor.
Try consolidating your holdings abroad so all of risks are not centered in either one or
more emerging economies. Have a straightforward and present plan for managing political risk
centered on the "what ifs" in your business. Know how it'll react to a zone of risks in advance.
Involve your main existing investors in minimizing political risk, where possible. Brief
clients, distributors and representatives on emergency measures to deal with potential political
threats and organize the risk mitigation where necessary.
It is likely that emerging from an unfavorable international incident would be easier and
faster if they plan for it in advance and can organize answer from most relevant shareholders.
To overcome from the Currency risk applies these strategies in appropriate manner such
as:
The best way to preserve foreign transfer is to buy stock in diversified bond funds or
transaction-traded financing, Boyle says. These funds typically use advanced investment
decisions such as futures markets to diversify a relationship or real estate's interest rate risk, and
decrease casualties.
High inflation normally goes before rampant inflation, states Carrillo. And then when
recession sets in, assets typically go down as faith falls in them. Countries with higher debt to
GDP, nevertheless, have growing currency, which could be attractive to US shareholders.
Exchange rates can be positive or negative 10 per cent while participating in a
international bond fund, "says Ed Boyle, lead money manager for New York City's American
Century Investments.”These improvements are almost what a bond can yield." Yet, to be sure,
there is less influence on stocks as they can have better returns.
Therefore, all the strategies are applied by the Vodafone plc in order to overcome from
these risks. It is recommended that to take all appropriate steps. It is analyzed that company have
good position at international level and prepare effective strategies.

REFERENCES
Books and Journal
Maggiori, M., Neiman, B. and Schreger, J., 2018. International currencies and capital allocation.
Bartram, S. M. and et. Al, 2015. How important are foreign ownership linkages for international
stock returns?. The Review of Financial Studies. 28(11). pp.3036-3072.
Pilkington, M., 2015. Where did the money go? Endogenous money creation for international
fraudulent purposes: the case of the 2015 Moldovan banking scandal. International
Journal of Pluralism and Economics Education. 6(3). pp.251-71.
Boubaker, S. and et. Al, 2019. Financial development, government bond returns, and stability:
International evidence. Journal of International Financial Markets, Institutions and
Money. 61. pp.81-96.
Christiaens, J. and et. Al, 2015. The effect of IPSAS on reforming governmental financial
reporting: An international comparison. International Review of Administrative
Sciences. 81(1). pp.158-177.
Miranda-Agrippino, S. and Rey, H., 2015. World asset markets and the global financial cycle.
Claessens, S. and Van Horen, N., 2015. The impact of the global financial crisis on banking
globalization. IMF Economic Review. 63(4). pp.868-918.
Meegan, A., Corbet, S. and Larkin, C., 2018. Financial market spillovers during the quantitative
easing programmes of the global financial crisis (2007–2009) and the European debt
crisis. Journal of International Financial Markets, Institutions and Money. 56. pp.128-
148.
de Dios, M. A., 2015. The Sixth Pillar of Anti-Money Laundering Compliance: Balancing
Effective Enforcement with Financial Privacy. Brook. J. Corp. Fin. & Com. L.. 10. p.495.
Online
Risk analysis. 2019. < https://www.infrontanalytics.com/fe-EN/GB00BH4HKS39/Vodafone-Group-
PLC/gprv-risk>
Political Risk. 2019. < https://www.thebalance.com/understanding-and-managing-political-risk-
1979066>