Posted: May 13th, 2018

Multinational corporate environment Assignment-INT 610

INT 6101- 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 = 755- A firm is considering to entry into a particular country for the first time. While thesenior 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?RankingCountry 1RankingCountry 2WeightEconomic growth869Political Stability487Low Labor Cost865Attractive Tax structure676Similarity to home country7987- 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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