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Manufacturing Operations for India or Brazil

The purpose of this paper is to provide a detailed report for Levi Strauss & Company so that the firm can make an informed decision regarding expansion of its overseas manufacturing operations into either India or Brazil. Select the optimal financing/investment strategy for your selected scenario

I need assistance with information regarding:

Conduct a sensitivity analysis, based on the following "what if" scenarios:
1) What if funds are blocked? How does this affect the parent company?
2) From the perspective of the subsidiary, what if the subsidiary provided the funds?
3) How does the source of capital affect the subsidiary and the parent company?
4) What source(s) of capital would minimize the cost of capital to the subsidiary?

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Manufacturing operations for India or Brazil.

The purpose of this paper is to provide a detailed report for Levi Strauss & Company so that the firm can make an informed decision regarding expansion of its overseas manufacturing operations into either India or Brazil. Select the optimal financing/investment strategy for your selected scenario

I need assistance with information regarding:

Conduct a sensitivity analysis, based on the following "what if" scenarios:
1) What if funds are blocked? How does this affect the parent company?
2) From the perspective of the subsidiary, what if the subsidiary provided the funds?
3) How does the source of capital affect the subsidiary and the parent company?
4) What source(s) of capital would minimize the cost of capital to the subsidiary?

I have taken the case of India
Profile of India
First, India is located in south Asia. It is one of the fastest developing countries in the world. Our business can be profitable here as its GDP is growing more than 8% last quarter (http://www.rbi.org.in/scripts/BS_SpeechesView.aspx?Id=310) this growth proves to be a large opportunity for Levis as our product sales with the proper marketing and target market could increase with this population.
However, the country is comprised of multiple ethnicities therefore; several languages and religious beliefs are recognized. India has democratic political system. It has got independent judicial system. Here free elections take place as it is one of the largest democracies of the world. Right now government is involved in the economy, but there are major reforms going on. Compared to the past the intervention has reduced drastically due to the liberalization policies.
Yes legal system is effective and impartial, though there are certain limitations like it is complex and it takes time to get justice.
It is a superb market as it is the largest democracy and having independent judiciary.

Disposable incomes remain concentrated in urban areas, "well-off" and affluent classes and the growing number of double-income households. However, the report reveals that the sheer size and potential of the rural segment has been underestimated.

Rated the fifth most attractive emerging retail market, India is being seen as a potential goldmine. It has been ranked second in a Global Retail Development Index of 30 developing countries drawn up by AT Kearney. The list was developed as a response to requests from retail chains facing saturated demand in most western markets.

* AT Kearney has estimated India's total retail market at US$ 202.6 billion which is expected to grow at a compounded 30 per cent over the next five years.
* With the organised retail segment growing at the rate of 25-30 per cent per annum, revenues from the sector are expected to triple from the current US$ 7.7 billion to US$ 24 billion by 2010.

http://www.ibef.org/industry/retail.aspx as retrieved on 2 Nov 2006 17:47:32 GMT.
http://www.rbi.org.in/scripts/BS_SpeechesView.aspx?Id=310
Economic Analysis
India's GDP growth rate:
Year GDP growth rate
1990-91 5.81
1995-96 7.52
2000-01 3.94
2001-02 5.13
2002-03 4.11
2003-04 8.61
2004-05 7.09
Average 5.72

(ficci.com)
? High GDP growth and it is increasing as you see in the recent years the growth is very high, as discussed in the previous slide giving greater potential for the economy.

? India among top 3 Asian investment destinations in "The 2005 World Investment Report" - UNCTAD
? Foreign portfolio investment of more than US $ 8 billion in the Years 2005
? One of the best performing among ...

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