Scenario or background: You are a manufacturing company based in the U.S. Your c

Question

Scenario or background: You are a manufacturing company based in the U.S. Your customer base is located domestically, as is your entire supply and distribution chain. While working on your Degree you have repeatedly been reading about the trend toward the globalized economy, and am wondering in what form, you should recommend to your CEO that your company “open up” it's domestic-only thinking.

Questions to answer:

Identify at least 3 possible initiatives your firm could embark on, dealing with global opportunities

For EACH possible initiative identify the pros and the cons of that idea

Find the current exchange rate for the US dollar with the Chinese Yuan, and with the Mexican Peso[cite your source].

Ignoring any import/export taxes, duties, shipping costs….

Given those rates, would it be better to SELL your products into China or Mexico; why?

Given those rates would it be better to BUY raw material from China or Mexico; why?

Repeat question 3 assuming that the $ has strengthened against the Yuan, but weakened against the Peso

Explanation / Answer

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Question- Identify at least 3 possible initiatives your firm could embark on, dealing with global opportunities and for each possible initiative identify the pros and the cons of that idea.

Answer-3 initiatives are with pros and cons

Cons- this step might result into dilution of resources and over concentration of resources in the market, which can be out of the reach of the company.

Pros- this will help the company gain foreign market dominance and also attach with new partners. Cons- this may also result into conflict of resources among partners and it may also result into losses for the company.

Pros- this can create a brand image and goodwill of the company in the market and earn revenues for the company.

Cons- this might result into losses as well if the market specific vehicles do not perform and fail.

Question -Find the current exchange rate for the US dollar with the Chinese Yuan, and with the Mexican Peso.

Answer- The current exchange rate is as below-

US to Yuan= 1Dollar= 6.88 peso

US to Peso= 1Dollar= 18.87 peso

Question - Ignoring any import/export taxes, duties, shipping cost, given those rates, would it be better to SELL your products into China or Mexico; why?

Answer- it would be better to sell the products to Mexico because the Dollar is stronger there and each dollar is going to earn a higher peso in Mexico as compared to China.

This applies the principal of stronger currency in the dominant market, which is the US, and the currency stronger here is dollar.

Question- Given those rates would it be better to BUY raw material from China or Mexico; why?

Answer- Buying raw material means the company is now spending money in the foreign nation and hence it will want less money to be spent and hence it will go to Mexico which has a higher Dollar value and will churn more value for every dollar being spent in the foreign market.

Question- Repeat question 3 assuming that the $ has strengthened against the Yuan, but weakened against the Peso

Answer- In this case the dollar has weakened against Peso means it will now be earning less money as compared to previous case but it has strengthen against the Yuan. Therefore it will be better for the US to import raw material from China, as each dollar will be of higher value there.

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