DUE DILIGENCE

Problems of Due Diligence in A Global Context



Problems of Due Diligence in Global Context

Introduction

The main purpose of this paper is to discuss the problems, which an organization face when conducting due diligence in a global context. This act assists the parties in a contract to acquire information about each other in a business contract. A multitude of companies face immense challenges when they involve in the process of due diligence (Bruner, 2009, p. 56). One problem face by organizations in due diligence process is the development of funds, it is estimated that the problem funds have lowered chances of having independent pricing.

Problems with Due Diligence

Increased Cost of Credit

The challenge which the companies face in conducting due diligence is the increased cost of credit. As the cost of credit increases, the challenge becomes more intensifying. The rebounding of the global economy and credit markets can affect the due diligence, and because of this rebounding the easy, low cost financing will not be, as beneficial as it was. Conner (1998) coined the term “Due Diligence” (DD) to describe a “commitment to a serious, rigorous approach to the human side of change”. He suggested that DD should be similar to, and on the same scale as the financial diligence that companies routinely engage in prior to beginning any change process that may have financial impacts.

Rigorous Understanding

One more challenge that the companies face involves gaining understanding through rigorous investigation of the human impact of change prior to change occurring so that plans can be created to help support people through change, engage them in the change process, and regularly evaluate how people and quality are impacted during the change process. Conner emphasized that DD is not a goal in and of itself, but rather that engaging in DD will increases the organization's capacity successfully execute change.

Problems in Supply Chain

The companies that have offshore source, or have factories in other countries, face problems in conducting due diligence. The companies exercising due diligence also face the problems of supply chain management around the globe. The reason of failure in supply chain is that the cost of acquisitions increases. It occurs frequently in the course of business a company needs to find financing to meet its objectives. Some companies seeking financing to start a business, others looking to expand your business, the purchase of new infrastructure or globalize their product. Many companies, from time to time, are seeking funding for any of these or other reasons (Bourne, 1999, p. 112).

In order to obtain the financing needed to make your business successful, the company must meet the requirements of the bank or other institution that will lend you the money. To make the operation profitable for the lender, the lender should know the benefits and risks of lending money to the company. The lender will understand the benefits and risks, acting with due diligence.

When it comes to global operations, organisations suffer different problems while implementing due diligence. It is important that the organizations should understand ...