Q1.
If their expectation is correct. The Mexican peso’s value is relatively
strong now, Packer, Inc will spend high cost to set up their subsidiary in
Mexico. In addition, if the Mexican peso’s value will weaken against the
dollar. The parent company will receive earning should be reduced from
the subsidiary. Because of Mexico peso’s will be converted to fewer U.S
dollar. Packer, Inc will influence by the fluctuation of exchange rate,
although, the project still is available.
Q2.
Ram, Inc will more efficient than Raider Chemical Co. this is because
Ram Inc factoring risks will its international business is spread across
variety of major countries. However, the Raider Chemical Co just focus
on the one international business. Its business cycle is likely to involve
more in Europe.
Q3.
The country is available due to that are unrelated to other economies.
Other country’s business cycle that exists already, would not affect
business in these countries. As a result, the overall cash flow of MNC’s
maybe more stable. However, the typical reason why these economies are
independent of other economies is the government’s restrictions on
international trade and direct foreign investment. Thus, their economic
will isolation with other countries. Which is means these countries may
be desirable for multinationals, but they are limitation for MNCs. If the
government of these countries easing restrictions. The MNCs can enter to
these countries. But these country’s economies cannot longer be isolated
with the rest of the world.
(Will not be subject to existing business cycles in other countries. Cash
flow may be more stable. Their economies insulated from other
countries)
Q4.
It is not good strategy sensible. The bronco Corp. recognized that there
have more advantage of producing these stereos in Taiwan, compare with
producing them in the United States. However, this is only an advantage
if bronco Corp. producing the product in Taiwan and sell them in U.S
Markt. All of Bronco Corp competition in the Taiwan market will be the
same as the production cost of bronco Corp’s Taiwan subsidiary. So, the
bronco Corp not possesses comparable advantages in Taiwan market.
Q5.
a). J.C. Penney was building a great trust from trust, goodwill and brand
recognition. Thus, intensives demand for its products. It also has market
expertise for each store. And also has economies of scale because it can
purchase a larger amount of products and distribute the products to stores
that require these products.
Name recognition, market expertise and economies of scale.
B）
Its risk may be reduce because it has strategy that allows it to take
advantage of its expertise, Meanwhile, relying on foreign expertise to
solve some problem that is business of foreign cultural knowledge. And it
also expends more stores in foreign market, creating more international
diversification, and making its overall performance unaffected by U.S
economic conditions.
Decrease strategies that utilities its expertise and created more
international diversification increase. Do not property apply their
knowledge of local culture while making decisions.
If it selected local business partner, may be increase the risk. And do not
properly apply their knowledge when making decisions about the types of
products that the store should carry.
C) China has high inflation rate, and difficult to exchange foreign
currencies, difficulties to distribution of products across stores. Lots of
Chinese residents lack of disposable personal income.