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
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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