Small And Medium Sized Enterprises, Assignments of Financial Market

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THESIS

SME’S, CHALLENGES

FACED BY SME’S AND

NOWERGIAN SME’S

FRONT MATTER

ABSTRACT:

Small and medium sized enterprises are a focal point in shaping enterprise policy in the European Union. The European Commission considers SMEs and entrepreneurship as key to ensuring economic growth. Kistefos is a private investment company wholly-owned by Christen Sveaas. The group is engaged in various business in various countries and are exposed to a number of different laws and regulations. The Group is exposed to risk as to compliance with such regulations and to changes in regulations or in how they are applied and to general political risks associated with international investments.

INTRODUCTION:

Small and Medium Sized Enterprises can currently only be identified by employment size as enterprises with fewer than 250 persons employed. Politics whether internal or external greatly affect the business. SMEs largely contributes in the economy of the country.

INTRODUCTION AND PROBLEM

STATEMENT:

Kistefos is a private investment company of Total Property of Christen Sveaas. The creation of value is achieved through active participation through the representation of the Board to develop the companies where Kistefos has substantial property interests. The investment portfolio includes Norwegian and foreign companies within segments on the coast, shipping, financial services, telecommunications, real estate, as well as financial investments.

THE COMPANY IN BRIEF:

Kistefos as established in 1998 when Mr. Christen Sveaas merged the various investments vehicles of him in a single company. The Investment Portfolio of Kistefos is focused mainly towards Europe, and is managed by Oslo, Norway. Kistefos has great investments in  Finance  Services  Telecommunications

 IT

 Commercial  Real Estate Development  Logistics  Offshore Services and various financial investments. The creation of value is achieved through financial and Industrial experience in central and active sectors. Owner: Chirsten Sveeas Founder: Chirsten Sveeas Founded: 1998 Headquarters: Oslo, Norway Number of employees: 18 Revenue: 1,579.42 (MIL USD) Subsidiaries: Viking Supply Ships, Western Bulk, Kistefos Eiendom AS, Waterfront Shipping, Odin Viking SPV AS

PROPERTY:

Investments range from home posts up Mature companies and investment mandate. It is flexible with respect to the horizon and the asset.

PROBLEM STATEMENT:

Every company faces many risk factors, political risk factors include political instability, legal and regulatory constraints, local product safety and environmental laws, tax regulations, local labor laws, trade policies, and currency regulations. Kistefos As is a multinational company and faces many political challenges here is a brief discussion of challenges faced related to political point of view.

REGULATORY AND POLITICAL RISKS:

 Political risk is the risk that the yields of an investment could suffer as a result of political changes or instability in a country. The instability that affects investment yields could be derived from a change in government, legislative agencies, other foreign policy makers or military control. Political risk is also known as "geopolitical risk", and becomes more than one factor as the investment horizon increases. A type of risk of jurisdiction is considered. The Group participates in several businesses in several countries and is exposed to a series of different laws and regulations. The group is exposed to risk as Compliance with these regulations and for changes in regulations or in the manner in which the general political risks associated with international are applied. Investments

Commercial barriers, such as rates, can reduce margins or make it impossible to compete in a foreign market. In many cases, commercial barriers are the results of local politics or commercial wars between nations.

 Taxes

Changes in taxes can reduce the profitability of a business and affect the price of assets, such as stocks. Complex fiscal rules can also be a burden for small businesses that may need to invest limited resources to understand and comply with new rules.

 Legislation

The new CA legislation results in compliance costs, since companies may need to make changes in operations, products or business processes

 Administration

Political agitation may result in administrative delays. For example, a government can begin to delay approvals critical business, such as construction permits

 Political instability

Political instability, such as terrorism, riots, blows, civil war and insurrection, can completely interrupt commercial operations in a country for long periods of time.

 Economics

In many cases, politics can influence economic management, such as interest rates decisions that affect the prices of assets and commercial costs. A series of risk factors can negatively affect kistefos as (the "company") and its subsidiaries (the "group"). Below is a brief summary of Some of the relevant risk factors for the group. Some of the following risks could cause the negotiation price or the underlying value of the values issued by the Group to decrease, and all or part of an investment that is being lost. The risks described below are not, and are not intended to be, exhaustive and other risks

Start-up and early-stage businesses very rarely pay dividends because its highly likely that any profit that are made are re- invested into the business to build the shareholder value. Even for a successful business, dividends are unlikely to occur foe a number of years until the company is in a position where they don’t have to continue to re-invest. Businesses have no obligations to pay dividends.

 Dilution

Any investment you make through the growth funders platform is likely to be subject to dilution. This means that if business goes for additional funding at later stage, more shareholders will come on board, reducing your percentage of the investee company. Another reason for dilution in a business would be due to grant of options available to employees of the investee company or to other service providers closely linked to the business. It is therefore, important to

continue to reinvest in the business, increasing your shareholder percentage.

 Diversification

Investing in start-ups and early-stage businesses is always going to be high risk. Therefore, it would be in the investors’ best interest to diversify their investment portfolio by investing smaller amounts in different companies in a range of sectors, rather than investing large amounts in one small company. Kistefos is involved in several unlisted companies. Such investments are by their illiquid nature, and the company may not be able to carry out a Successful output of, or performs the underlying values in, such companies. In addition, many of the investments of Kistefos are in companies that are not 100%. Property of Kistefos, and consequently, disagreements or disputes with other shareholders or administration in such companies may have a material adverse effect In investments or the ability of kistefos to increase the cash of such investments

Economic risk, also known as a prognostic risk, is the risk that the market value of a company is affected by an inevitable exposure to the fluctuations of the exchange rate. This type of risk is generally created by macroeconomic conditions, such as geopolitical instability and / or government regulations.

 Translation risk

The risk of translation, also known as exposure to translation, refers to the risk faced by a home-based company, but carrying out a business in a foreign jurisdiction, and from which the financial performance of the company is denoted in its National currency. The risk of translation is greater when a company has a greater part of its assets, liabilities or actions in a foreign currency. Some of the group companies operate in international markets that lead to various types of exposure to currency and fluctuations of

exchange rate that can Affect the results of the Group's operations. The risks of the currency arise through ordinary, future, active and capital transactions in capital letters, and when such Transactions involve cash flows in a currency other than the respective company's functional currency. In addition, the risk of currency may arise from Investments in foreign subsidiaries or other investments. Operational risk management is mainly carried out in the underlying operational companies with Established coverage policies to reduce exposure and fluctuations in foreign currencies.

 Financial risk and exposure

oMarket risk

The market risk involves the risk of changing the conditions in the specific market in which a company competes for business. An example of market risk is the growing trend of consumers to buy online. This aspect of market risk has presented important challenges for traditional retail companies.

risk of fraud, personnel problems and business model risk, which is the risk that models of marketing plans and growth of a company can be inaccurate or inadequate. The Company is exposed to several types of financial risk, especially the risks of liquidity and interest rate. The liquidity risk is associated with the company being Unable to fulfill its financial obligations as they overcome. The risk of interest rate of Kistefos arises from loans and accounts receivable in the long-term Accounts receivable issued in variable rates expose the company to the risk of cash flow interest rate.

 Risk associated to guarantees

 Strategic risk

As your company tries to achieve its strategic objectives, internal and external events can dissuade it or prevent it from performing it. This is known as a strategic risk. You can define strategic risks such as:

The potential impact of strategic decisions, or a defective or inappropriate strategy. Lack of response to industry changes. Risks related to future plans, for example, entering new markets, expanding existing services, etc.

 Regulatory risk

Regulatory risk is the effect of a change in laws and regulations that could cause losses to your business, sector or market. The regulatory risks could, for example: Increase costs to execute a business, for example, costs to achieve compliance. Change competitive landscape, for example, maybe invalidating your business model Make illegal business practices, for example, new law exchange rules on marketing Reduce the attractiveness of an investment.

 Financial risk