Posted: May 13th, 2018

INT 610 Multinational corporate environment Assignment

INT 610

1- Should there be higher
business relation between U.S. and Canada or U.S. and Indonesia based on:

– Theory of comparative advantage?

– Country similarity (psychic distance) theory?
Explain your answer clearly.

2- Discuss product life cycle
theory of international trade and investment.

3- Using factor price equalization theory to show the impact of
international trade on wage structure of emerging economy (make sure you
explain process of adjustment)?

4- You are sent to manage
subsidiary of a MNE in Argentina. Looking at Hofested’s cultural attribute you
find the following information relative to U.S. Using this information what
adjustment do you make in your management style?

– Power distance:

US =31, Argentina =41
– Individualism:
US= 100 Argentina= 47
– Masculinity:
US= 63
Argentina = 63
– Uncertainty Avoidance: US= 37
Argentina = 75

5- A firm is considering to entry into a
particular country for the first time. While the
senior management thinks that there is great
potential for expansion and profit in the country, they are concern with the
risk and their own ability to function in that unfamiliar business environment.
There are two options available to the firm. One is joint venture and the other
wholly owned subsidiary. Which of the two choices do you recommend and why?

6- In attempting to choose a
country for investment, firm ABC decides, to use a matrix for
country selection. It decides to look at the following factors: 1- economics
2-political risk, 3- cost of labor, 3- tax structure, and 4- country similarity
to home country. On the scale of 1 to 10 (1 being very unattractive and 10
being very attractive) management has ranked each factor and has decided
importance of each one (again 1 unimportant and 10 very important) for the
company. Below is table showing management’s assessment. Company only chooses a
location if its weighted average is 7 or higher. Would company ABC select
country 1 or country 2?

Ranking
Country
1

Ranking
Country
2

Weight

Economic
growth

8

6

9

Political
Stability

4

8

7

Low
Labor Cost

8

6

5

Attractive
Tax structure

6

7

6

Similarity
to home country

7

9

8

7- Discuss how equilibrium is reached in a foreign exchange market if
a country has balance of payment deficit in the case of fixed and floating
(flexible) exchange rate system?

8- If the exchange rate between dollar and Euro is 1.35 $/Euro and
inflation rate in US is 3% and Europe 5% forecast expected exchange rate in one
year using relative purchasing power parity.

9- What would happen to capital flow between two countries if the
real interest rate (rate adjusted for inflation) between the two countries is
not equal and why?

10-Considering the Integration Responsiveness
Strategy Grid, what is the recommended strategy for a firm with low pressure
for national responsiveness and high pressure for global responsiveness,
(explain your answer).

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