Role Play 3: Deciding where to invest

Introduction

You work for an international bank, and you are selecting a major new investment project. What criteria do you use to make your choice? You are not only choosing the project itself, but at the same time the country or region where the project will be realized.

1. Look at this list of possible criteria. Work with a partner, and choose what you think are the important criteria. At the same time, eliminate criteria you think are unimportant.

• political stability in the country or region concerned

• the climate

• the viability of the project

• the level of development of the country or region

• the availability of subsidies

• the return on investment

• the friendliness of the local people

• the duration of the loan

• the amount of investment you already have in the country or region

• who your partners will be

• the life expectancy of the local people

• exchange rate variations

• religious beliefs and practices

• guarantees

2. When you have eliminated the unimportant factors, number your criteria in order of importance (1 = most important).

Situation

You work for the Toshoya Bank, which has its head office in Tokyo and branches around the world. It is one of the ten biggest banks in the world. You are meeting today to discuss major investment projects. These are the projects in which you are considering investing:

• a dam for hydroelectricity

• an irrigation and water supply project

• a shipyard

• a road bridge in Canada between Ontario and Quebec

You want to choose the most suitable project. You must in particular consider:

— the political stability in the countries concerned

— the viability of the project

— the return on investment

— the duration of the loan

— who your partners will be

— exchange rate variations

— guarantees

You must decide:

• which is the most promising project for the bank

• for which project the bank should begin detailed negotiations

Projects
project	country	estimated cost in $US	estimated duration	probable partners	estimated yield
Dam for hydro-electricity	Malaysia	500 million	5 years	Malay Industrial Bank	7%
Irrigation and water supply	Senegal	290 million	1 year	World Bank, European Union	9%
Shipyard	South Korea	360 million	2 years	—	6%
Road bridge	Canada	475 million	4 years	Canadian Govt	5%

Worksheet

	Malaysia	Senegal	South Korea	Canada
political stability
viability
return on investment
duration of the loan
partners
exchange rate variations
guarantees
other criteria