Corporate Finance and Risk Management 1

CORPORATE FINANCE AND RISK MANAGEMENT

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 Corporate Finance and Risk Management 2

Introduction 

Corporate management refers to the techniques which businesses use to reduce their

financial declines. The risk advisors, managers, and line administrators, as well as middle

managers and workers, engage in practices that help prevent the loss through various internal

control of the human capital and technologies. Multinational companies face different challenges

in their cross-border operations. The international financial decision comes as one of the

challenging activities that such companies have to manage. These financial decisions concern the

borrowing and allocation of funds required for venture decisions. The managers and the

designated officials select the source with minimal costs. The verdict involves two bases, where

the capitals can be obtained through the company’s cash or loaning from external sources as

debenture, loans, or bonds. CK Hutchison Holdings Limited is a international corporation which

faces such changes and has strategic approaches and tactics to deal with the corporate financial

management and its international financial decisions. 

CK Hutchison Holdings Limited

CK Hutchison is one of the prime companies on the core board of the Hong Kong Stock

exchange. The corporation has five core establishments. These are ports and retail facilities,

retail, infrastructure, energy, and telecommunications. CK Hutchison has roots in Hong Kong

since the 1800s and currently operates as a global business, the diverse combination of the

directors and staff imitates the diversity of the business and the reach of its processes. However,

its main establishment was created in 2015 through a merger of two holdings entities; Cheung

Kong Holdings and Hutchison Whampoa. The major CK Hutchison group members include 3

Groupe Europe, a mobile communications firm, A.S Watson Group, and Hutchison Port

Holdings, among others. 

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In 2015, the company acquired o2, the second-largest mobile service provider in Britain

the conglomerate pursues acquisitions by targeting the regulated industries and generate stable

cash flow. CK Hutchison started manufacturing plastic flowers. Li, the founder of the Cheung

Industries, developed into the real estate investment business, and in 1979, he acquired the

British trading house Hutchison Whampoa. The company is determined to uphold the highest

values of company management, transparency, and accountability. The commitment by the

company is known through the receiving of different prizes and acclamations. 

Corporate Risk Management and International Financing Decisions

CK Hutchison strives to achieve and uphold high values of corporate leadership best

suitable to the needs and benefits of the firm and its companies. The management trusts that an

active corporate management framework is key to endorsing and preserving the benefits of the

shareholders and other stakeholders as well as enhance the shareholder value as recommended

by Hashim & Koon (2017). The company adopts and applies different company governance

values and practices that emphasize the excellent board of directors, effective risk organization,

internal regulator systems, transparency, and responsibility. The company is also subject to

internal checks and balances to ensure its financials are sustainable and not vulnerable to

different financial risks. Internal auditors and corporate advisors guide the management in

making critical decisions. The company also follows different regulatory measures provided by

the securities and stock exchanges to ensure the business does not fall trap to different financial

pitfalls. Ethical procedures and processes are highly upheld in the company to ensure every

business process upholds the ethical standards and eliminate exposure to corporate risks. 

The international financing decisions at the company involves mergers and acquisition.

The company is known to have engaged in different mergers and acquisitions in its international
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developments. The mergers and acquisitions in the international arena are the key financial

decision that saw the company rising to become among the best multinational companies.

Different benefits have driven these international financial decisions (Swait, Patel & Warren,

2018). These strategies have helped the company earn significant positions in the global market

share and gain economies of scale, which influences the profitability of the company. The

merger also reduces the competition that could result in higher prices for the consumers. These

financial decisions reduce the risks for the company failing in the international markets and

enduring massive losses. It allows the company to assess the international market and valuate

sustainability before making its investment decisions.  

Corporate Value Creation

Mergers and acquisitions have often led the efforts to increase value generation elevate

the cost effectiveness, and rise the market share of the company. The tactic has resulted in a

massive increase in the value creation for CK Hutchison. The shareholder worth of the firm after

the fusion or purchase becomes superior than the amount of the shareholder values of the mother

company. Increased cost efficiency is affected by the production of mergers and acquisitions. It

is because the mergers and acquisitions result in economies of scale (Zhu & Zhu, 2016). In the

long run, it endorses cost efficiency. The umbrella firms merge to form better new companies,

which triggers an increase in the processes of the new firm. The production also increases, and

there is a chance that the costs per unit of manufacture in the company will come down. The

increase in the market share is among the reasonable benefits of mergers and acquisitions.

Because CK Hutchison is a strong company, the result is an organization with a substantial

increase in the market share. The mergers and acquisitions have helped the business to make a
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significant impact in the global markets. It also helped CK Hutchison to avail different

administration benefits. 

Recommendations 

One recommendation for corporate risk management is to create the right culture. The

culture is set to benefit from the clarity on the expectations from the management and human

labor. Clear communication on what constitutes the acceptable behaviors and how the company

operations should preside allows the company to avoid different risks (Solibakke, 2010). The

clarification of the responsibilities and rules within the company will strengthen the risk

management activities in the company. CK Hutchison will experience excellent management

with efficient responsibility, transparency, and accountability. 

The international financial decision making is a critical task for every organization. There

are no one-size-fits-all in financial decisions. Therefore, CK Hutchison should consider

exploring other avenues different from the merger and acquisition. Alternatively, the company

should be sure to review the reasons behind a company giving in to the merger of acquisition. It

is essential to find out the gaps in the management and administrative failures and mitigate them

before they count to poor international financial decisions. 

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References

Hashim, F., & Koon, L. T. (2017). Corporate risk management disclosure and corporate

sustainability: The role of diversification.  Global Business and Management

Research, 9(4), 144-158.

Solibakke, P. B. (2010). Corporate risk management in european energy markets. The Journal of

Energy Markets, 3(1), 93-131

Swait, N., Patel, A., & Warren, M. (2018). Exploring the decision to adopt international financial

reporting standards early: The case of international financial reporting standards

13.  Journal of Economic and Financial Sciences, 11(1) doi:

http://dx.doi.org/10.4102/jef.v11i1.171

Zhu, H., & Zhu, Q. (2016). Mergers and acquisitions by chinese firms: A review and comparison

with other mergers and acquisitions research in the leading journals: APJM APJM. Asia

Pacific Journal of Management, 33(4), 1107-1149. doi:

http://dx.doi.org/10.1007/s10490-016-9465-0