MKT 564 Global Marketing
Question #1 (50 points)
XCF Company wants to raise $9 million with debt financing to finance the entry into a foreign market. These funds are needed to finance working capital, and XCF will repay them with interest in one year. The company is considering three options:
a) Borrowing U.S. dollars from a U.S. bank at 8% interest rate
A= $9,000,000 x 1.09 Total Payment @1yr = $9,810,000 USD
b) Borrowing British pounds from the Royal Bank of London at 10% interest rate
A=$9,000,000/2 = $4,500,000 GBP =$4,500,000 x 1.1 =$4,950,000 GBP
GBP has depreciated by 10% ………..1 GBP = 2 x .90 = 1.80 USD =4,950,000 x 1.80 Total Payment @1yr…show more content… The company is considering the following options:
a) Manufacture the product at home and let foreign agents handle marketing and sales
b) Manufacture the product at home and set up a wholly owned subsidiary in Europe to handle marketing and sales
c) Enter an alliance with a major European pharmaceutical firm. The product will be manufactured in Europe by the 50/50 joint venture and marketed by the European firm.
List all the information you would need to know before deciding which option is the best.
• What are the cost and risk associated with opening a foreign market through a joint venture
• Transportation Cost/Cost of shipping
• Exchange rates
• Mode of entry
• How much control will we have over technology?
• Trade Barriers to exporting
• Mode of Entry
• Political and economic risks
• Details on local Market agents
• Firm Strategy
• Manufacturing cost
• How will we share the developmental cost?
• Which markets to enter, when to enter those markets, on what scale
• What are the general risks?
Local marketing Agents
Question #3 (75 points)
Italy is one of the few European countries that Starbucks has not entered yet. Part of the reason is that Italians are the inventors of espresso coffee and that they have a lot of small neighborhood coffee places with strong local identities.
Assuming that Starbucks hired you to organize an advertising campaign to enter the Italian market, how would you promote it? Specifically, describe