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Manufacturing Based on Exchange Rates and Hourly Compensation

From the US perspective:

Discuss the future of the exchange rates for each of these countries, China, Mexico and India, and whether they are expected to appreciate or depreciate with respect to the US dollar.

Based on what we know about current about hourly compensation costs for manufacturing workers, outline your recommendation for a manufacturing firm that hopes to sell its product worldwide.

1. Will you manufacture in-house or will you outsource your manufacturing to an independent supplier located in one or more of the countries you have researched. Explain why.

2. If you decide to outsource, which country or countries will you locate your manufacturing operations. Explain why.

Solution Preview

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All three currencies, the Chinese Yuan, the Mexican Nuevo Peso, and the Indian Rupee are expected to appreciate relative to the dollar in coming months, so there is no clear advantage in terms of currency. The appreciation of the Yuan will be very slight, due to the ...

Solution Summary

This solution discusses the decision to manufacture based on exchange rates and hourly compensation.

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