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GPS in business

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Solution contains detailed description of how GPS can be used in businessess to increase their effectiveness and organisational performance.

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Solution contains detailed description of how GPS can be used in businessess to increase their effectiveness and organisational performance.

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Outsourcing GPS manufacturing to Indian or China

THE FIRST PART IS THE INFORMATION YOU WILL NEED:
The firm manufactures a global positioning system (GPS) that sells for $2,000 with cost of goods sold (hardware 30% and software 70%) of 55% of sales. Compared to the United States, China offers a 7% cost reduction in electronics manufacturing hardware and a 45% reduction in software programming. India offers a 32% reduction in software programming costs. Thus far, you have been unable to determine if India has the facilities to undertake the hardware manufacturing. The firm has to invest U$300 million. As far as China is concerned, you can send hardware and software manufacturing to China, or either one of the two.

You have been asked to lead a team to study and create a report for the executive team on both countries as business opportunities. As a group, study both China and India to make your calculations and recommendations as follows.

Risk is a significant factor. Identify each of the risk factors for each country (political stability, exposures of transaction, interest rate, operating, and translation); currency exchange rates; currency controls; skilled labor; facilities; infrastructure; each country's track record in using foreign direct investment (FDI), and political corruption and roadblocks to establishing a going concern" business.

Explore the expected GDP growth of each country and the forecasted exchange rates to the U.S. dollar. Based on the forecasted exchange rate with the U.S. dollar in 1 and 2 years, should the US$300 million investments be paid for immediately, hedged, or paid 50% ($150 million) in 1 year and 50% in 2 years? What is the projected savings for the firm? What is the new cost of goods sold percent of sales for each of the countries? What are your recommendations on choice of country? How can your firm arrange the business to be most profitable? Assume the following: Using the current spot rate for the Yuan exchange rate, the 12 -month forward rate is showing a 1.5% weaker US dollar and the 24-month forward rate of exchange is showing a 2.4% weaker US dollar. Using the current spot rate for the rupee exchange rate, the 12 -month forward rate is showing a 1.0% weaker US dollar and the 24-month forward rate of exchange is showing a 2.0% weaker US dollar.

Investigate and back up your decision on the question of whether or not it would be more ethical to invest the money in the U.S.

THIS IS THE PART I NEED:
What is the projected savings for the firm? What is the new cost of goods sold percent of sales for each of the countries?
Conclude the report with final recommendations and provide the reasons why we chose that country.

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