Wal-Mart a renowned brand is going to start its set up in Botswana. They wanted to invest in Botswana to increase their sales as because of an international brand they are almost in every country to increase the business they are going to launch their setup in Botswana. First, the thing Wal-Mart is looking at is the condition of Botswana country from every aspect to consider the results successfully. The condition of Botswana is somehow different from other countries economically and from other aspects as well. This is the most important thing that any business setup should consider before starting the new business in any country.

            Botswana's economy is one of the fastest-growing economies in the world as it has a record of giving 5% per anum profit to every business working in it, this has been recorded in past decades. It GDP level crosses among 6-7% targets and this has been recorded at the highest level of growth among all economies. A cautious foreign policy, international financial assistance, technical assistance, fiscal policies of different products and foundation of diamond mining in Botswana's economy takes the economy to the world's highest economy Rankings (CAMPBELL, 2003).

Economic conditions of Managerial Finance Resource

The economic condition of Botswana in private sector employment is almost averaged about 10% after the first 30 years of its independence with per anum figure. The 21s't century stagnation causes the highest growth in Botswana’s economy. For sustaining one of the highest and longest economic booms, African Development Banks praises Botswana’s economy. Some of Asia's largest economies on par with some is increased with economic growth until the late 1960s. Botswana’s government has extensive foreign exchange reserves and consistently maintained budget surpluses so keep their economy in a great form. In the Corruption Perception Index in Africa, Botswana was listed as the least corrupted country by the watchdog of international transparency corruption. Above the world average and in Africa it is listed as fourth-largest gross national per capita income in purchasing power.

According to the Botswana Department of Agriculture, in the year 2010, Botswana tossed out the food worth $46.7 billion sustaining a loss of roughly $160 billion to the Botswana economy but why do the grocery stores throw such amount of food?  Well, the reason for this is generally consumers. Consumers have developed a bad habit of buying cosmetically good food that doesn't have a bruise or bump on it. Even if the food tastes yummy and is still good for human consumption but has gone a little ripe, the customer would probably not buy it. Several grocery stores assume that if the product is fully stocked, the customers are more likely to buy it. This results in overstocking of produce causing damage to the items at the bottom.

This could be attributed to the lack of education of both sellers and consumers on food waste and food safety and has led to bad habits and wasteful selling practices. Instead of discarding or destroying unsold food, all unsold but edible food should be donated to NGOs or charities which shall be immediately distributed to the poor or those in need. Food that is unsold and is not edible either should be donated to farms for agricultural purposes. Further, employees should be allowed to take home the unsold food at the end of the day. Grocery stores could also benefit from different computer software to help plan things and curb food wastes.

Political risks of Managerial Finance Resource

The Botswana political system is little different as its president is both head of state and head of government, and they also follow the multi-party system worked under parliamentary representative’s democratic republic framework. The government exercised Executive power and both Government and parliament of Botswana. Since independence, their Democratic party system is the strongest and the most important thing it still lost its power.

If we talk about Botswana district, the consumer spending shows no change while Food/Beverages counters a decline. Overall retail says that they have gained a moderate pace in retail sales volume. They further added that it is further stated that the sales are according to expectations in Boston, Dallas and San Francisco districts while above expectations in Chicago district.

Botswana retailers reported that sales were above the plan in July but it had a sudden declined in August but they are happy because it is increasing gradually in the following years and is much better than previous years. Their future expectations were to boost up their retail sales in the weak areas by promoting value in retail items which attracts the consumer to spend and in response retailers meet their expectations. New York inventories are satisfactory but there are trying to boost up their retail sales and they may discontinue an idea of more discounts.

Country risk of Managerial Finance Resource

There are many income passing factors are there that makes the economy of the country stronger day by day. The main thing is that the factors that support the country encompassing factors are the population that effects on any business work in Botswana the range or capacity of people to buy the products makes the companies grow in the economy. The economy of Botswana is quite stable so the population has the best capacity to earn and buy their required products that makes their purchase great and that makes the selling of the companies also better and improved. The Wal-Mart is the renowned grocery store and it has all the necessary items that make its growth increased and this allows their customers to buy more from it as their quality is magnificent and they do not compromise on their quality at all. Several other things are also considered by Botswana's economy which Wal-Mart is taking care about is the way with which they use to deal with the customers and their effect on the economy as well (Barclay, 2008).

            The studies related to food include a different group of people and their market demands. The demand related to food buy different people and their demand according to their requirement must be fulfilling related to their food and taste. Now after becoming the change agent, in the industry of food belongs to many different changes which include new and innovative taste and their presentation way, their cooking way and how to present food in front of customers are very important factors related to changes of food in its industry. In bakery items like the cake or all baked items can be produced with different taste and its presentation style attract the different customers like all desserts are presented in most attractive and innovative ways and people now try more and more items due to their attractive and unique looks.

People want the new taste and new method of presentation in all kinds of food and for this, they try new and innovative places of food and taste the food of different places. At their different occasions, now people want new and innovative and most unique ideas present the food and also explain their attachment with their event in the most unique manner.  Human nature is like the change in every sector and especially in the food, they want tastiest and innovative food items which they use in their routine and they enjoy their food with full of fun. So good taste and unique style of presentation of food like every type of people and increase the demand for food

Financial concepts according to country condition

The financial condition of Wal-Mart is very good as they are doing and performing the best to serve people by providing them with the best and high-quality food and other consumer goods. This is the report of Wal-Mart and this reported is disseminated by the management of the company, its board of directors and chairman, and this report is prepared for providing a true picture of the company to all shareholders, customers and investors.

Company's management, its board of directors and chairman always keep a copy of the report to analyze the past data from the current and future data. It also helps in keeping the record at the executive level. This report shows how much company focus on its corporate governance and its risk management areas, its structure and progress of the business, the company's overall financial performance, its strategies and its prospects. This report provides a piece of detailed knowledge about the company and its strategies, this report shows every detail of company related to all risk factors, costs and all relevant and necessary information which tell about every key area of the company. So this report prepares in detail format which provides all financial information in detail and also all relevant information (Wilson, 2017).

Proper basic for consolidation is required in the report. Full consolidation is mention related to the date of acquisition, obtaining control by AMP and explain till the control cease. the market price for any instrument is going to be used in measuring the fair value but in reality, no market value is going to exist in actual. Instead, valuation techniques are going to used according to the judgment of management. The report is clear as it provides complete detail information about the financial performance and position of the company in great details and explains every element used in the company.

Currency fluctuation risk of Managerial Finance Resource

Pula is the Botswana currency which is divided into 100 subdivided thebe. It is the strongest and the most powerful currency in the list of strong currencies of strong economic countries in the world. Its strength makes the economy of Botswana stronger. Wal-Mart's interest in working in Botswana is going to affect positively better due to the string currency Pula in Botswana.

In the floating exchange rate system, the currency fluctuations are the natural outcomes. These are the major norms of the economy. Many different factors influence the currency rate according to one currency to another. These factors include technical support and resistance level, capital flow, interest rate differentials, the outlook for inflation, economic performance and supply and demand of two countries. Expect all these factors the currency value of the country may fluctuate at any time due to any reasons. In the economy, the punctuation of currency shows major and vast impacts. The economic effect is far-reaching due to impact of currency's gyrations. When the business is conducted in the domestic currency then the companies pay no extra attention to the exchange rate. 

For such business, the exchange rate is considering important when they use overseas remittance, import payments, foreign travel with occasional transactions or activities. Over the long term as entire industries are rendered noncompetitive and thousands of people lost their jobs, and unduly strong currency can exert a significant drag on the underlying economy. A weak currency can result in more economic benefits while the consumer may disdain a weaker domestic currency. It also shows lots of impact on the economy as enhance the performance of the economy and show major changes.

Substantial importers have belonged to the devalued currency that creates inflation for import in the country. In setting the monetary policy, the currency rate also affects because it affects the dealing of money through banks and interest rate also differ according to changing the monetary policy of the country. So the currency changes may affect many areas of the trading and economy of the country. It also affects the export and import of products and also the investment opportunities because of high expenses and manage the issue of the economy by fluctuating the currency in a positive direction.

Question 2:

IMPACT OF FOREIGN CURRENCY RISK ON BOTSWANA COMPANIES WISHING TO INVEST OVERSEAS/IN A FOREIGN COUNTRY

Exchange rate risk of Managerial Finance Resource

The economic exposure is caused by the unexpected and unavoidable currency fluctuation effects in the cash flow, and market value of the company. This exposure is long term according to its dealing. This exposure impact on the strategic decision related to long term effects and show in the manufacturing company according to the requirements of the company. This exposure promotes the better inflow of cash and manages the market value according to the new requirement of the company. Companies determine this exposure according to their investment decision that shows their results in the long term and manages the issues fir making the strategies in the most effective way (Jr, 2015),

Translation exposure is the conversion of financial statements of the company that include a balance sheet, income statement from its local currency to its foreign subsidiary that has a liability to report to its parents according to changing currency. This exposure increases because the parent company is also liable to answerable to shareholders and investors of the parent company. In this, all the financial statements and consolidated accounts provide to shareholders and regulators to reporting currency related to its subsidiary. Sometimes the change appears due to change in the exchange rate and the overall performances more to the danger zone for the parents who rely on the performance and progress of the subsidiary company. The financial statements must be prepared according to all the change to show what is the actual rate of the currency used in the parents and what used in subsidiary and how to manage them according to parents requirement and how much the exchange rate change affect the profitability of both the companies (Hitchcock, 2013).

Transaction exposure means that any change in the exchange rate appears due to dealing with business in foreign currency. In this exposure the difference arises due to small reasons like time differences, actual payment and receipts, placing an order of purchase with change time and settlement of invoices. This effects very much on the New businesses as there are many of the things that expose during workings and this makes the overall impact very much positive and effective. Several things are there that effects the exposure on businesses to work in Botswana (GERGIS, 1999).

Prediction of Managerial Finance Resource

There is a certain prediction happen in the business to manage the change rate risk and currency fluctuation risk at national and international level. These predictions include Purchasing power parity, interest rate parity, and fisher effect.

Purchasing power parity of Managerial Finance Resource

The purchasing power of the buyer impacts very directly on the success of the business. The Botswana economy is no doubt the highest economy and the people’s purchasing power is also strong there. If we talk about consumer spending, then in the overall scenario it is founded that the consumer spending in most of the districts is changing a little bit. The auto sales show a decline but it remains at higher levels. Consumer spending on Food/Beverages shows no change in its level but it above from the earlier years. The capital that is available for the working of the company is more than enough for its working as there are many of the times happens that once you invested an amount in the company you have to take it continuously by keeping it highly invested among the company for better and improved working. The capital amount is in millions as the profit they use to earn is in millions as well. Choppies are the best in providing all type of consumer goods to people having any type of need is fulfilled here.

Purchasing power parity is a metric to compare the standards of living and economic productivity in macroeconomics. This is an economic theory that discusses the "basket of goods" in the comparison of currencies of countries. Purchasing power parity is an effective theory that explains that when the purchasing power is the same in the two countries than their exchange rate between their currencies also fall at the equilibrium position. The exchange rate between two countries should be the same at the same level according to the level of price in both countries. To return to PPP, when a country ‘s domestic price level is increasing then its exchange rate must be depreciated. Law of one price is the basis of purchasing power parity. This must be implemented in the companies that want to work in overseas according to changing requirements (Paul, 2008).

Interest rate parity of Managerial Finance Resource

In businesses in foreign countries Interest rate causes a lot as the rate of interest on the currency and economy makes the businesses very well growth and it makes the power of purchasing of buyers also groomed as they can buy more by impacting less on their budgets. Interest rate parity theory is used in the counties that explain the strong relationship between the movement of currency values and interest rate of the country. By looking at the difference in the interest rate in two countries, you can predict what a future exchange rate will be in facts (D.Ahmed, 2014).

This theory related to the relationship between the expected spot rate or forward exchange rate of two countries and also the spot exchange rate depends on the interest rate. This theory explains that the forward exchange rate must be level to the spot currency exchange rate times the interest rate of the home country that divide with the foreign country interest rate. The equation of this theory can be explained by rearranging different elements to draw different inferences in the company.  By borrowing money, exchanging its back to your home currency at a later date and exchanging it into foreign currency then it should be able to create a profit if IRP holds (Taylor, 2013). Fisher effect of Managerial Finance Resource

The fisher effect is a kind of hypothesis that deal at the finance of international level. It reflects expected changes in the spot exchange rate between countries as it suggests differences in the nominal interest rates. The currency of the country with the higher nominal interest rate is expected to depreciate against the currency of the country with the lower nominal interest rates as the higher nominal interest rate reflects an expectation of inflation, this hypothesis also explains that a spot exchange rate is expected to change equally in the opposite direction of the interest rate differential. In other words, the fisher effects are known as economic theory that explains expected disparity between the exchange rate of two different countries which is almost equal to the difference between the nominal interest rate of countries. The analysis of the interest rate related to present and future risk-free investment according to fisher effects (Molomo, 2008).

Floating of Managerial Finance Resource

Floating exchange rate system implement in the countries to related to the value of a currency with other currencies of the other countries. These currencies floating freely without any restriction of trade limit. Floating means a regular fluctuation in the exchange rate without any limitation of restriction. Change may occur due to tourism, speculation, trade flows, political stability, inflation and interest rates with the continuous movement of the currencies. Companies that trade in foreign countries have to follow the floating exchange rate and manage the transaction and translation risk for generating profit for the company (Molebatsi, 2016).

Pegged of Managerial Finance Resource

The pegged exchange rate is a kind of exchange rate that fixed the value of a currency against the value of some other currency or another measure of value like gold or some precious item. A pegged exchange rate belongs to the currency of other country and in this regard, the central bank must maintain a high level to reserve the currency of the countries. Between the two countries with the pegged currencies, this rate is beneficial to facilitate the trade and investment at a large scale. This is also beneficial for small countries that want to expand their international trade (Gavriilidis, 2016).

Managed of Managerial Finance Resource

A managed floating exchange rate is a kind of regime that helps the central bank for issuing the intervene regularly in the foreign exchange market to diverts the direction of float currency and shore up its balance of payment with a volatile period. this regime is also known as a dirty float. Normally, government and central banks have a large range for the tools to manage the exchange rate according to monetary policy to straight forward intervention in the market of currency. In the world, many countries use the managed exchange rate policy to manage their transaction and run its business functions without any hurdle.

Factors Influencing Corporate social responsibility Decisions:

Ø  Corporate Social Responsibility (CSR), sometimes termed Corporate Social Investment has gained popularity in the corporate world owing to issues of business sustainability, corporate citizenry and a rising need for businesses to earn their license to operate in the territories they are based in. To earn this license, large and small businesses, including multinational organizations now find themselves under a microscope. Confronted with a host of challenges from environmental impact to accounting practices, individual companies have been forced to adopt strategies to cope with this multitude of issues (John & Samuel, 2013).

Ø  Therefore, organizations have upped the ante in their participation in programmes that actively demonstrate their commitment to giving back. That said, there are several varying perspectives about the impact of CSR on various aspects of business such as but not limited to profitability, shareholder value and measurement of return on investment. The main impact of CSR on organizations working in foreign countries is that they make the responsibilities socially positive and the CSR makes the things highlighted and innovative ion terms of making the working of the organization stronger and it makes the business more growth of the organization.

CSR Impact and Return on Investment

Ø  Erhemjamts, Li, and Venkateswaran, (2013) note that key to the CSR debate is what constitutes success for a corporation considering that other matrices other than profitability have come into play. CSR can be viewed as a form of investment or differentiation strategy with participation in it used as a response to stakeholder interests which include customer demands, employees. Investors and the community (Erhemjamts, Li, & Venkateswaran, 2013).

Ø  To satisfy these demands, firms commit resources. The ideal level of CSR is determined by cost-benefit analysis. Therefore, public listed companies would offer the level of CSR, which is commensurate to increased revenue, as a result, meeting the demands of stakeholders as well as delivering shareholder value in terms of profit. That said, there is often a challenge of measuring social performance consistently due to the complexity of establishing criteria and judging whether it has been met. Many empirical studies investigate the relationship between social and financial performance. According to (Scholtens, 2008), "the liberal view suggests a negative link as social responsibility involves costs and therefore worsens a firm's competitive position. Related is the view that social constraints on firms and socially responsible behaviour may conflict with value maximization." The negative link may also come from managers who push their agendas through company CSR in contradiction to shareholder and stakeholder objectives (Campbell, 2010).

 

Internal external stakeholders, their influence and their duties:

The stakeholders whether they are internal or external as they use to invest in the businesses. Wal-Mart is already a renowned and successful business so stakeholders rea very much interesting to invest in Botswana’s branch as the economy of Botswana is well maintained and very much successful as well (Opio, 2005).

The financial report has been prepared according to the Corporation Act 2001, Australian accounting standards which include accounting interpretation according to AASB and International financial reporting standards issued by IASB. The statutory measure of performance present in the report like statutory earnings per share, annual dividend and profit after tax attributed to shareholders. The overall position of the company going to improve and increase after every year as it makes its strong position in the market and shareholders also build a strong interest in the company. so the company is going to increase its earning or profit every year (Keitumetse, 2011).

Wal-Mart uses accrual accounting to keep record and all transactions happen within the company. IAS 12 income tax implemented in making balance sheet method to determine the current and future tax consequences related to any asset and liabilities. The difference between carrying amounts, tax-based assets and carried forward tax losses and credits are considering as deferred tax liabilities or assets. So the amount of income tax payable in future periods with a taxable temporary difference is known as deferred tax. Deferred tax measurements are expected to apply when liabilities are going to settled or assets are going to recover. Deferred tax assets and liabilities include the investment contract amount and life insurance contract which are not discounted to present value. These are recognized at the deductible temporary difference and unused tax losses (Kiyanga, 2016).

Presenting the financial condition and its progress in a single view. Different type of charts shows its yearly performance and presents how much company going upward or downward according to its financial condition. It is not compulsory to use charts or diagrams but it may attract the readers and give a quick view of the financial position of the company. different financial statements are going to prepare in any company which tell different information about the financial condition of the company. The income statement is preparing which show that sales and expenses of the company and also present its net profit at the end of the period. The comprehensive income statement shows the company 'investment earnings that give benefit to the company, balance sheet show that annual position of all assets, liabilities and equity of the company and cash flow statement shows that how much actual cash come and move outside the company. Sometimes a change in equity statement also prepares which show any change occurs in the equity to any issuance of share or dividend or retain earning (Vogel, 2007).

Financial resources of Managerial Finance Resource

Financial resources are those resources that are meant to be utilized by making things in a system smoother and attractive. They are concerned with investing finance in the business and this makes the workings innovative and better in the organization. Wal-Mart working as a Grocery store as a merchandise retailer has the best financing services and making the things to be more active and more established allowing the betterment of the services towards customers. Several things are going to get concerned with this that allows the workings to be more proactive and more established allowing the things to be very much effective for the terms to get the workings maintained properly and effectively. Wal-Mart has to invest a lot of money in their business as they are going to get the exact idea about how they are going to do in this regard and what sort of workings they can do to invest higher and appropriate in their business. Wal-Mart is not only strong but it also helps to get the business of the company higher than its competitors. Wal-Mart is going to get the workings and fame at an advance level as the thing is that people are going to get trust in the products and services provided by Wal-Mart to consumer goods.

Wal-Mart has a strategy to work with the best possible outcome to help people in terms of providing them with a healthy and original kind of food products. Several things are going to get concerned about this regarding the fact that they are providing people with the way they work with the quality and timely delivery of the products they are using. Several things are going to get involved in this regard that makes the workings to be more appropriate and allowing the facts that how much each strategy implemented is working or how much they are going to get out of the facts that the way you are going to work with the strategies you have implemented in your company the more appropriately you can be able to manage the things. Various things will get worried about this that permits the functions to be progressively proactive and increasingly settled permitting the things to be a lot of viable for the terms to get the activities kept up appropriately and adequately. Wal-Mart needs to put a great deal of cash in their business as they will get the specific idea about how they will do in such manner and what kind of activities they can do to put higher and fitting in their business. Wal-Mart isn't just solid but on the other hand, it's assistance to get the matter of the organization higher than its rivals. 

 Government Social Strategy of Managerial Finance Resource

            The overall strength is that Wal-Mart economic activity is expanding at a moderate pace in the overall situation. Consumer credit demand is increasing at a medium pace in most of the districts but their agriculture products are not carrying pace at all and labour market conditions are very tight in some districts. Botswana economy shows higher demand for consumer credit and commercial real estate markets are expanded further. But there are weakening signs of consumer spending and residential real estate. This report contains information about current economic conditions and is published in advance of meetings of the Food/Beverages open market committee. The current conditions are gathered up by each Botswana in a particular district with the branch and bank directors consolidated interviews from the market experts, business contracts, and economists.

Company Strategy of Managerial Finance Resource

Wal-Mart is working very much intellectually in the food industry as they are performing well by providing high-quality foodstuff to people and they are going to provide the people all the necessary things they needed in consumer need in the food department. The company is producing and distributing top 200 products in bulk to the people having a proper distribution channel that distributes this thing to further their stores for people. The interest rate on which they are distributing the products to the customers is according to the need they have and according to the rules set by higher authorities in making the things to become more efficient for people.