Essay about Clearwater Seafoods

Words: 2234
Pages: 9
Open Document
Introduction:
Clearwater Seafoods (CS) is a seafood exporting firm based in Canada. The firm is suffering value declining from international trade due to the appreciation of Canadian dollars. Hence, the company’s value declined for 35% that fails to distribute dividends under income trust since 2002. The company has to hold a conference for shareholders to establish an appropriate strategy to address the value declining problem and change its unit holder’s pessimistic shareholding sentiment.
This report will initially identify the root of foreign exchange risk that Clearwater Seafoods is encountering. After then, it will also discuss about the business risks that the firm needs to overcome. Further, we will try to find out relevant …show more content…
Referring to this case, as seafood harvesting is an extremely competitive business which require fishing in fast pace and good quality. This is hard for a firm as CS to keep in a leading role among the industry and the firm can be fall behind its peer firms due to mistakes and less advanced facilities for fishing. Besides, as local government created TAC to limit the firm’s volume to catch raw material for trading which may limit the total revenue the firm can earn. Thirdly, the seafood is seasonal that the transaction is more frequent in the second half year that will further constrain the company to generate revenue all the round. In addition, the company entered into the income trust contract with unit holder since which indicated the company is promised to pay its shareholders regularly each month and the company’s income that is taxed twice. This will aggravate the pressure that company to generate higher income and create reserves for further operational development such as fishing asset investment, acquisition conducting and expanding quota rights.
The next is the hazard risk which comes from unexpected nature events that adversely affect firm’s business. In this case, CS’s business is conducted by exploiting ocean resources. This would be affected from the ocean pollution and over fish catching that impede the
Show More

Related Documents: Essay about Clearwater Seafoods

Case Week 5 26173042 Essay

Case week 5: CLEARWATER SEAFOODS Overview Clearwater Seadfoods Income Fund (Clearwater), which is a Canadian income trust, was the largest publicly traded shellfish in North America. Clearwater involved in catching, packing and selling a variety of shellfish to Canada and international markets such as America, Europe and Asia. During 2003 to 2005, unexpected change in foreign exchange rate caused Clearwater to face with the decline in revenue that led to the suspension of paying distribution to…

Words 965 - Pages 4

Foreign Exchange Risk Case Study

The company had thus received, on conversion of export sales into Canadian dollars, cdn$ 17.6$ million less than what would have accrued for the year 2005 had there been no appreciation in the Canadian dollar. This decrease would have been more if Clearwater did not have an active foreign exchange risk management program. Therefore, innovation, vertical integration and diversity of species and markets were applied as the strategy for meeting the foreign exchange risk. In terms of innovation, this is…

Words 611 - Pages 3