Business in Action Study Set 2

Business

Quiz 18 :
Financial Management

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Quiz 18 :
Financial Management

Executives might use scenario planning in the budget process to prepare for the two different scenarios surrounding the IPO in this case, the possible success and failure of the IPO. To be more specific, Visa should have started the year with the more optimistic forecast assuming the IPO will be successful. If the IPO did not have had gone well, Visa could immediately have adopted a second more conservative budget and reduce spending accordingly.

Short-term debt financing will be difficult because of the credit crunch. Long-term financing may have been easy depending how quickly the credit market can recover.

Visa executives should consider the following: • Visa's strength is in payment processing rather than lending. • By issuing cards itself, Visa may alienate existing card issuers, which include the banks that make up the primary ownership group within the Visa association. In any case, if VISA has to expand, it should account that its own customers would be lost in the process. They should have a strong plan in that case.