Chapter 13, Problem 15QA

The top management of your company, a manufacturer and marketer of a wireless devices, has decided to pursue a international expansion opportunities in africa. In order to achieve some economic scale, your strategy is aiming for a strategy of minimum local adoptation. Focusing an african country of your choice, prepare an executive summary that features aspects of the product that cannot be standardized and that must be adopted to local conditions

The XYZ company is a US based MNC & deals with various financial instruments as its core business activity. Among its various courses of action, the firm deals with financial derivatives (like forward, future, options etc) & acts as hedger, arbitrager and speculator as well. To be competitive in the market, it has to observe and analyze different economic scenarios in different places/countries and formulate the strategy accordingly to nurture the available business opportunity. With this reference, assuming your team is one of the core business teams of the XYZ Company & based on your understanding of subject matter that you have learned in this course, kindly respond & answer to following different scenarios: Scenario 1: How can currency futures be used by the XYZ Company as an arbitrageur & as a speculator? Scenario 2: Forward versus Currency Option Contracts 1) What are the advantages and disadvantages to the XYZ Company if it uses currency options on euros…

Businesspeople need to understand international culture and corporate practices to successfully transfer their business activities to foreign countries. Compare and contrast US culture and corporate practices with India’s and identify challenges as a result for a US based company to operate its activities in India. Identify at least three risks associated with doing transactions by the US based company operating in India and what can be done to mitigate such risks. Note that operations are in India but majority of the products are sold in US. Include tangible examples for better clarity. Include currency exchange risk among those mentioned above, and explain ways to mitigate this risk. Explain in detail.

One of the ways to analyze a company’s financial performance is to compare its performance with those of Multiple Choice foreign governments. manufacturers producing their products. its competitors. the U.S. government.

Which one of these represents the most basic level of international participation by a business entity? Multiple choice question. Operating a single retail store in a singe foreign country Producing a single product in a foreign-built facility Importing and exporting goods and services Operating multiple facilities in various countries to spread risk

McDonald’s conducts operations worldwide and is managed in three primary geographic segments: U.S., International Lead Markets (including Australia, Canada, France, Germany, and the UK), and High Growth Markets (including China, Italy, Korea, Poland, Russia, Spain, Switzerland, and the Netherlands). A hybrid geographic/corporate segment, Foundational Markets & Corporate, reports on the results of all other countries as well as any unallocated amounts. McDonald’s allocates resources to, and evaluates the performance of, its segments based on operating income. The asset totals disclosed by geography are directly managed by those regions and include accounts receivable, inventory, certain fixed assets, and certain other assets. Corporate assets primarily include cash and cash equivalents, investments, deferred tax assets, and other assets. Refer to the following geographic segment data (in millions) from the 2017 annual report of McDonald’s Corp.:

As the executive of a manufacturing firm that receives supplies from 18 different countries and sells products to 24 countries, your success and failure is determined by exchange rates, which cause frequent fluctuations in the price of supplies and the sale price of manufactured goods. Considering both the pros and cons of currency hedging and strategic hedging, which strategy would you opt for? How would you justify this decision to other executives and to shareholders?

DeltaTel a subsidiary of a multinational company supplies phone services to a mid-sized community in Ghana. John, the CEO attended a trade exhibition, ‘Automated Emigrate’ in Japan. As a result, John is concerned about  DeltaTel’s ability to maintain its competitive position in the Ghanaian market. Owing to deregulation in the industry, and aggressive competition, a significant number of DeltaTel’s customers have switched. John feels that if DeltaTel were to invest fully in a new state–of–the–art fiber-optics technology as well as upgrade the latest computer equipment, the loss of market share may be arrested and operating efficiency may be improved. He contacted a leading vendor of fiber-optics systems and associated computer equipment to obtain information on operating characteristics and costs. This vendor would provide the necessary fiber-optic equipment, all associated installation costs, computer hardware, and initial software support for a total cost of GHS30,000,000. Although…

BSF Limited is an Indian multinational company. It ships pre-packaged snacks to Hong Kong, the United Kingdom, and the United States, where sales affiliates resell these snacks. BSF, as the parent company, engages in numerous intrafirm transactions with its affiliates. Since the outbreak of COVID-19, BSF is concerned about the funds that it has in its Hong Kong affiliate. Therefore, BSF has decided that it should re-examine its transfer pricing policy with its Hong Kong affiliate to reposition funds from Hong Kong to India. The corporation tax rate in Hong Kong is 35%, whereas it is 21% in India. At present, BSF charges Hong Kong affiliate a transfer price of $100 for a Box of Snacks. Since transfer pricing is a well-known tax avoidance method or fund repositioning, Hong Kong tax authority has been vigilant in tackling such incidences. Answer the following questions related to the transfer pricing:   A. What do you recommend that BSF should do for repositioning funds from Hong Kong to…