The firm manufactures a global positioning system (GPS) that sells for $2,000, with cost of goods sold (hardware 30% and software 70%) of 55% of sales.
Compared to the United States, China offers a 7% cost reduction in electronics manufacturing hardware and a 45% reduction in software programming. India offers a 32% reduction in software programming costs. So far, you have been unable to determine whether India has the facilities to undertake the hardware manufacturing.
The firm has to invest $300 million. As far as China is concerned, you can send hardware and software manufacturing to China or India. You have been asked to lead a team to study and create a report for the executive team on both countries as business opportunities. As a group, study both China and India to make your calculations and recommendations as follows.
Group Deliverable
I heve been assigned 4 slides with in depth presenter notes,excluding title and reference slides) to answer the 3 bullet point below
• Risk is a significant factor. Identify each of the risk factors for each country (political stability, exposures of transaction, interest rate, operating, and translation); currency exchange rates; currency controls; skilled labor; facilities; infrastructure; each country's track record in using foreign direct investment (FDI); and any history of political corruption and roadblocks to establishing a going concern business.
• Explore the expected GDP growth of each country and the forecast exchange rates to the U.S. dollar. Based on the forecast exchange rate with the U.S. dollar in 1 and 2 years, should the $300 million investments be paid for immediately, hedged, or paid 50% ($150 million) in 1 year and 50% in 2 years?
• What is the projected savings for the firm? What is the new cost of goods sold percent of sales for each of the countries?
Assume the following:
Using the current spot rate for the yuan exchange rate, the 12 -month forward rate is showing a 1.5% weaker U.S. dollar, and the 24-month forward rate of exchange is showing a 2.4% weaker U.S. dollar. Using the current spot rate for the rupee exchange rate, the 12 -month forward rate is showing a 1.0% weaker U.S. dollar and the 24-month forward rate of exchange is showing a 2.0% weaker U.S. dollar. Include in-text citations as well as a list of references using APA style. Please add your file. Your assignment will be graded in accordance with the following criteria.
Individual Deliverable- 1 page
Investigate and back up your decision on the question of whether or not it would be more ethical to invest the money in the U.S