Question

Wangy & Company are a construction and real estate company incorporated and operating in Zambia. They have been in this business for 15 years and are considering venturing into the Mauritian market. They have approached you for advice.
Required:
Advise Wangy and Company on the particular risks they may be faced with if they decided to start doing business overseas.
(b) Suggest why a private company might go public.
(Wangy & Company are a construction and real estate company incorporated and operating in Zambia. They have been in this business for 15 years and are considering venturing into the Mauritian market. They have approached you for advice.
Required:
Advise Wangy and Company on the particular risks they may be faced with if they decided to start doing business overseas.
(b) Suggest why a private company might go public.
(

Answer 1

RIsks of doing business overseas for Wangy & Company

1) Forex Risk - Value of Mauritius Currency vs Zambian currency might fluctuate leading to variation in revenue cost margins

2) Competitive Risk - Mauritius might have well established real estate companies and it might be difficult for a foreign co. to breakthrough.

3) Technology Risk - M being a more developed country than Z , it might want better technologies for their construction

4) Cash flow - Initially Wangy has to spend a large amount for marketing themselves as they are likely to be unknown in M .

5)   People /Culture - M will have different work and people culture which will make it more difficult to manage the business at least in the initial phases.

Private vs Public

Generally a private co goes public to raise money . If the private partners are unable to bring in more capital or the company might have expansion plans due to which capital is required ...these companies will try to list themselves in the public stock exchanges.  

Secondly the initial promoters might want to divest a part of their holdings and they can try to list their company in public bourses and in order to obtain cash for their investments.

Thirdly company may go public to increase their valuation ( chances are stock prices will go up post listing) .

Finally a company may decide to go public to build more visibility /credibility and a better brand image .