NOTE: Free essay sample provided on this page should be used for references or sample purposes only. The sample essay is available to anyone, so any direct quoting without mentioning the source will be considered plagiarism by schools, colleges and universities that use plagiarism detection software. To get a completely brand-new, plagiarism-free essay, please use our essay writing service.
One click instant price quote
In the effort to reduce company risk while simultaneously expanding operations, the firm should consider expansion into a new geographic market. By taking advantage of the unique attributes of the Irish economy and aligning them with the characteristics of this company, the potential to maximize shareholder wealth improves while the risk exposure of the company declines. By expanding our information technology operations into Ireland, this risk / return strategy can be successfully accomplished. Located just west of Great Britain, the Republic of Ireland is a small island state surrounded by the Atlantic Ocean.
The population in 1999 was estimated at 3, 632, 944 people. The estimated growth rate each year was also estimated at. 38 % each year. Of this, people held the Nationality of being Irish, and their decent was mostly English and Celtic. Their has been a very distinct religious dominance in this country, with 92 % of the population being Roman Catholic, and 3 % Anglican, and the other 5 % was comprised up of Jehovahs Witnesses, Jewish, and Others. As for a language, the people of Ireland mostly speak English, but Irish, a unique dialect of Gaelic, is spoken mainly in areas located along the western coast. In 1921, the pushes of Nationalism resulted in the Independence of Ireland from their mother country, the United Kingdom.
Since then, much dispute about the status of Northern Ireland, which remains under the control of the British, have caused periods of severe conflicts between the Protestant control government and the Catholic population of Northern Ireland. Currently, peace talks are in progress between the Northern Ireland and British governments. In terms of their governmental structure, Ireland is a republic, and they have had their Independence since December 6, 1921. Internally, the structure of their governing powers is as follows. There is a Chief of State (president), Head of Government (Prime Minister), a Cabinet, a Legislative Branch and a Judicial Branch. These governing offices do work together in order to establish a well functioning government for the country.
Along the lines of politics, there are also practicing political parties that represent different areas of interest to the Irish people. There are active military branches including the Army, Naval Services and Air Corp. , as well as the National Police. The government of Ireland has worked very hard to boost its countrys economy. Over the past ten years, the government has implemented a series of national economic programs that have been designed to hinder inflation, reduce government spending, and to also promote foreign investments. Although Ireland is a small, modern, trade-dependent country, there have been some recent changes.
The economy of Ireland is averaging a growth rate of 9. 5 % per year. For the last ten years, the growth rate of Irelands economy has been over three times the EU average. Exports have remained the primary contribution to Irelands growth, but consumer spending, and the recovery of construction and business investments, have contributed to the economy's performance. In 1998, the estimated GDP was $ 67. 1 billion.
In terms of per capita income, its estimate was $ 18, 600. Ireland has an unemployment rate of about 5 % - less than half the EU average. In a recent article in the Irish Times, Irish Unions Warn Govt Wage Pact Threatened By Inflation, it was reported that the Irish government has recently made agreements with labor unions regarding a national pay agreement. They received warning by labor unions that this agreement may be threatened by rising inflation. Ireland currently is facing a very high inflation rate of 5 %. This is the highest percentage in the whole EU.
This new wage deal that had been agreed upon locked in cumulative pay raises totaling 15. 75 % over the next 33 months. According to many economists, over the past 10 years, the wage pacts have become a cornerstone for Irelands economic reversal. This reversal has seen GDP grow for an average of 9 % per year between 1994 and 1999. The pact was called the Program for Prosperity and Fairness, and its purpose was to draw up a plan to make cost of living expenses reasonable in relation to inflation. Currently, Ireland is working to create a prospering economy, make sure that inflation is under control, and keep unemployment down.
Irelands information technology industry has developed rapidly in recent years. Since 1980, 40 % of all investment in European electronics has been based in Ireland. It is the software capital of Europe 60 % of all software packages sold in Europe are produced in Ireland. Considering the IT industry is expected to rise by 117 % before 2003, it would be beneficial to draw from the pool of IT knowledge that currently exists in Ireland and, by doing so, avoid creating and developing this industry from the ground up. Another factor that may attract multinationals is the existing legislation regarding the tax system.
Depending on the company, at the governments discretion, they may not be obligated to pay taxes for the first three to five years of operations. So, new companies that want to expand into and explore the overseas market may choose to establish themselves in Ireland for this reason alone. This will allow them to get involved with the overseas market, while doing it tax-free, thus reducing the risk of the venture. The location of Ireland is something that may be unattractive to multinational corporations. When looking for a location to which to expand, many factors must be considered.
Location, availability of resources and accessibility to those resources are just a few of the factors to be thought about. Ireland is an island located in the Atlantic Ocean, off the coast of Great Britain. There is a limitation in getting a variety of natural resources. Since this is true, the manufacturers in Ireland must go elsewhere to get the resources they need to service their production.
Therefore, it makes it very expensive to transport materials by boat, or by plane. If they were inland, they would be able to get materials quicker and cheaper by train, or some other mode of transport. As far as the multinationals that are established in Ireland, there are many. EMC is a huge, rapidly growing corporation that manufacturers and sells computer hardware, mainly data storage devices. Other computer manufacturers include Gateway and Compaq. In the area of telecommunications, AT&T has established itself there as well.
In terms of banking and financial services, multinationals include, but are not limited to Mellon Financial, Brown Brothers & Harriman, and Anderson Consulting. In light of all the beneficial and not so beneficial factors of setting up a corporation in Ireland, these companies have and continue to prove their success overseas. The Central Bank of Ireland is the institution in Ireland one must analyze when defining the characteristics of exchange rate regime in Ireland. The Central Bank of Ireland came into being in 1943 following the passing of the Central Bank Act in 1942.
It replaced the Currency Commission, which functioned as the national currency issuing authority from the years 1927 to 1942. It is now a member of the European System of Central Banks. The primary objective of the bank is the maintenance of price stability in the Euro/Ireland area. The main responsibilities of the Central Bank of Ireland is to define and implement the single monetary policy; to conduct foreign exchange operations; to hold and manage the official foreign reserves of the Member States; and to promote the smooth operation of the payment systems. With all such responsibilities the bank holds, the chance of an exchange rate crisis is low because of the stable Central Bank of Ireland in place in that country. If the bank performs all of its functions properly there should not be any kind of crisis concerning the Irish economy.
The fact that the Central Bank of Ireland is also a member bank of the Europeans System of Central Banks also gives the bank credibility and a network of some other banks. Being part of this European bank network also gives the Central Bank a support system, where if there is any emergency or anything of that nature it has a number of European banks there for assistance. Again, with all of the aforementioned characteristics we feel that the likelihood of an exchange rate crisis occurring in Ireland with the Irish Punt is relatively low. Observing the exchange rate chart in the Appendix, the first and most obvious feature of the chart is the overall decline of indirect quote of the Irish Punt. Over time the decline in the number of Irish Punts per United States dollar shows the appreciation of the Irish Punt over the dollar. In the past year, it has progressively taken less and less Irish Punts to purchase one U.
S. dollar and this shows the appreciation of the currency. Much of this appreciation can be attributed to the booming Irish and European economy. One economic indicator is inflation. Over the past year, the inflation in the Irish economy has been rising. When the inflation is rising this means that many consumers, inside and outside the country, are purchasing goods and services from Ireland.
In particular, when consumers are contributing goods from outside the country that means that Ireland is exporting goods and its trade surplus is increasing. Exports are growing more than imports, meaning there is more of a demand for Irish Punts, which is why the Irish Punt is appreciating. The problem in Ireland is that the economy is so good it may be getting out of control. When the inflation rate gets too high, the nominal interest rates will increase because of the inflation. When nominal interest rates increase, the Purchasing Power Parity says that in comparison to a country with less of inflation rate, the country with the high nominal interest rate will have depreciation in its currency.
This scenario may be the case for the Irish Punt in the near future. When evaluating the financial risk in Ireland, we believe that it is relatively low. Many of Irelands economic indicators show that Irelands economy is healthy, and as aforesaid, maybe too healthy. The real GDP Growth in 1999 in Ireland has been 8. 6 %. This is a remarkable figure in comparison to its European peers: U. K. 1. 7 %, France 2. 4 %, Germany 1. 3 %, the Netherlands 3. 0 %, Spain 3. 7 %, and Portugal with a Real GDP Growth of 3. 1 %.
Ireland has even outgrown the U. S. and Japan in real GDP growth, with the two having growth rates of 3. 8 % and 1. 4 %, respectively. Ireland will continue to grow in its real GDP with one 2000 projection of 7. 5 %. A projected figure also higher than the mentioned countries. Another indication of Irelands low financial risk is the unemployment number.
Most recently, this statistic has been at an annual low. This shows that there are many opportunities in...
Free research essays on topics related to: central bank, atlantic ocean, labor unions, gdp growth, northern ireland
Research essay sample on Labor Unions Central Bank
