Strategy US International Equity Investment

Question: Discuss about theStrategyfor US International Equity Investment. Answer: Introduction Shefa is a small private company founded ten years ago as makers of potential and highly effective herbal painkillers. They employ 50 persons including employees and scientists and most of them are working with the company since their establishment. Their strategies were based on differentiation focus given by Porter. According to this approach, generic policies are not commonly exclusive and each of the strategy can be connected to various strategic means. At the time of foundation they made philanthropic pledge that if they ever find out a treatment for a chronic sickness, then it will be made accessible to everyone who requires it despite of their economic condition. Two years past, they found an amazing thing with their painkiller named Herball that it could be used to shrink organ cancer. They decided to purify the new drug and to increase its effectiveness they allocated more funds. However, the allocation of resources did not go well with the company and they were almost ruined. They expensed all their savings and went under debt of 10 million Dirham. However, in the last month the company made a burst through as the drug completely healed liver cancer of a rat in lab test (Popelka and Hopkinson 2015). They are thinking of testing the drug on human. The company, at present, has various choices to go with and continue in future: Cash out: Under this method, the company can sell the technology to any big pharmaceutical company and use the money to pay off their debt and continue their business like before with their other drugs. However, if the technology works on human, it can be proved as a boom in the industry and can shake the whole industry. Thus, selling the technology to other company will result in loss of long-term earnings opportunity for the company (Walker et al. 2015). Begin Human Testing: Under this strategy, the company can sign up with any big American hospital for trials on human. They have offers from a major hospital from US who are willing to sign an agreement with them to begin with human trials. If the human trial does not begin, then it is not possible to assess the outcome of the drug on human beings and if it succeeds, the company will get an opportunity to earn high in the long-run. However, there are various disadvantages of human trial like life risk, adaptability and chances are there that the trial will make the situation worse (Meister 2014). Equity method: Under this strategy, the company can sign up with the investor who has expressed their willingness to invest in the project. They already pledged amount of $2 Billion as initial investment to own the majority of share in the company. However, the major issue under this method is that if majority of the share goes to the investor, the company will lose its ownership as well as the earnings (Ammer et al. 2012). Philanthropy: The philanthropic pledge involves a pledge to dedicate assets, money, property or anything to needy people without any cost, that is, as charity. At the time of establishment, the company pledged a philanthropic promise that if they ever find out heal for a chronic sickness, then it will be made accessible to everyone who requires it despite of their economic condition (Jones Christensen, Siemsen and Balasubramanian 2015) From the above-discussed factors, it is concluded that if the company goes for the cash out strategy, they have to sell the technology to any third party for a consideration of large amount of cash. Using those amount, the company can pay off their debt amounting to 10 million dirham and carry on their research for other chronic diseases like AIDS, Alzheimers and Diabetes. However, selling the technology to other company will result in loss of long-term earnings opportunity for the company. Therefore, it is not suggested to adopt the cash out strategy. On the other hand, adopting being human testing strategy has its own disadvantages; However, without adopting this strategy they cannot proceed further to make the drug a success. Therefore, the company can go for this strategy and to fulfil this strategy, they can sign with the major hospital from US. If the technology works on human, it can be proved as a boom in the industry and can shake the whole industry. The company will then be in a far better position to pay off their debts and carry on their business in a better way. However, there are chances that the project will not succeed and company will be in a worst position, but keeping in mind the companys present position they have nothing to lose. So the company shall take some risk and must go for this strategy. If the company goes for equity method, they have the offer from the investors who are willing to pay $2 billion as initial investment (Markus, M.L and Loebbecke 2013). However, at the same time, they will lose their ownership also. Thus, if profits arise in the near future, maximum part of the profits will go to the stakeholders and the company will not be able to pay off their debts and the company will not be able to improve their position to a better one. Therefore, this strategy is not suitable for the company, considering their current position. Lastly, about the philanthropic pledge strategy, as the company made a promise at the time of establ ishment, the company pledged a philanthropic promise that if they ever find out heal for a chronic sickness, then it will be made accessible to everyone who requires it despite of their economic condition. Every company have some responsibilities towards the environment and society in which they are conducting their business. Therefore, to fulfil the social obligation, the company must contribute a part of their drug to fulfil the promise made at the time of their establishment. References: Ammer, J., Holland, S.B., Smith, D.C. and Warnock, F.E., 2012. US international equity investment.Journal of Accounting Research,50(5), pp.1109-1139. Jones Christensen, L., Siemsen, E. and Balasubramanian, S., 2015. Consumer behavior change at the base of the pyramid: Bridging the gap between for?profit and social responsibility strategies.Strategic Management Journal,36(2), pp.307-317. Markus, M.L. and Loebbecke, C., 2013. Commoditized digital processes and business community platforms: new opportunities and challenges for digital business strategies.Mis Quarterly,37(2), pp.649-654. Meister, D., 2014.Human factors testing and evaluation(Vol. 5). Elsevier. Popelka, P. and Hopkinson, C., 2015. Business Strategies and Adaptation Mechanisms in Family Businesses during the Era of the Industrial Revolution: The Example of the Klein Family from Moravia.The Hungarian Historical Review, pp.805-833. Walker, J.S., Tedesco, R.C., Jorasch, J.A., Tedesco, D.E. and Patterson, M.W., Igt, 2015.Method and apparatus for enabling a player to simultaneously control game play on multiple gaming devices. U.S. Patent 9,039,534.