An American company named Tasukete Inc. (Hypothetical name) is considering investing in Japan as a provider of Help Alert. The product is aimed at the senior population of that country. The product allows seniors to get medical help (i.e. ambulance) at the touch of a button in their home.
1. What considerations should be taken for the capital budget analysis?
2. What is the significance of NPV and IRR in entering the Japanese market?
3. What is the importance of the above in establishing a marketing plan for Japan?
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Capital budgeting for foreign investment analysis should incorporate three important factors:
Political risks: The Company's exposure to political risk is a function of government actions in Japan and the impact of those actions on company's cash flows.
Inflation: The effect of inflation on cash flows must be estimated
Exchange rate changes: The impact of exchange rate on cash flows must be estimated.
The investment should also ...
The solution discusses global business management.