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C1-8; motives of an MNC. Describe constraints that interfere with an MNC's objective

C1-20;Assessing Motives for international Business. Forth Worth, Inc., specializes in manufacturing some basic parts for sport utility vehicles that are produced and sold in the United States . its main advantage in the United States is that the production is efficient and less costly than that of some other unionized manufacturers. It has a substantial market share in the United States. Its manufacturing process is labor intensive. It pats relatively low wages, compared to U.S. competitors, but has guaranteed, the local workers that their job positions will not be eliminated for the next 30 years. It hired a consultant to determine whether it should set up a subsidiary in Mexico, where the parts would be produced. The consultant suggested that Fort Worth should expand for the following reasons. Offer your opinion on whether the consultant's reasons are logical
a. Theory of Competitive Advantage: There are not many SUVs sold in Mexico so Fort Worth Inc., would not have to face much competition there.
b. Imperfect Markets Theory: Fort Worth cannot easily transfer workers to Mexico, but it can establish a subsidiary there in order to penetrate a new market
c. Product Cycle Theory: Fort Worth has been successful in the United States. It has limited growth opportunities because it already controls much of the U.S. market for the parts it produces. Thus, the natural next step is to conduct the same business in a foreign country.
d. Exchange Rate Risk: The exchange rate of the peso has weakened recently, so this would allow Fort Worth to build a plant at a very low cost (by exchanging dollars for the cheap pesos to build the plant).
e. Political Risk: The political conditions in Mexico have stabilized in the last few months, so Fort Worth should attempt to penetrate the Mexican market now.

C2-1; Balance of Payments
a. What is the current account generally composed of?

b. What is the capital account generally composed of?

C3-6; Bid/Ask Spread. Utah Bank's bid price for Canadian dollars is $.7938 and its ask price $.81. What is the bid/ask percentage spread?

C3-10; Indirect Exchange Rate. If the direct change rate of the euro is worth $1.25, what is the indirect rate of the euro? That is, what is the value of a dollar in euros?

C3-11; Cross Exchange Rate. Assume Poland's currency (the zloty) is worth $.17 and the Japanese yen is worth $.008. What is the cross rate of the zloty with respect to yen? That is, how many yen equal a zloty?

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C1-8; motives of an MNC. Describe constraints that interfere with an MNC's objective

C1-20;Assessing Motives for international Business. Forth Worth, Inc., specializes in manufacturing some basic parts for sport utility vehicles that are produced and sold in the United States . its main advantage in the United States is that the production is efficient and less costly than that of some other unionized manufacturers. It has a substantial market share in the United States. Its manufacturing process is labor intensive. It pats relatively low wages, compared to U.S. competitors, but has guaranteed, the local workers that their job positions will not be eliminated for the next 30 years. It hired a consultant to determine whether it should set up a subsidiary in Mexico, where the parts would be produced. The consultant suggested that Fort Worth should expand for the following reasons. Offer your opinion on whether the consultant's reasons are ...

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