international finance
DESCRIPTION
Answer to some questions from my textbook while on exchange. Simple math, good times !TRANSCRIPT
C AS E 1
C HAPTER S 1 Q UES TIO N S
C HAPTER 2 PRO BLEMS
International FinanceGroup Presentation
Case 1: The Debate Over Outsourcing
1. What are the pros and cons of outsourcing?
PRO’s CON’s
Lower costs via cheaper labor Increase productivity Flexibility – Economies of scale Creating jobs Technology / knowledge transfer
Losing jobs in the short run (1%) Risk of IP infringement Limits quick response to market
changes Loss of control
Case 1: The Debate Over Outsourcing
2. How does outsourcing affect US producers and consumers?
Consumers: Cheaper goods and servicesLanguage Barrier/CommunicationQuality discrepancies (inconsistency)
Case 1: The Debate Over Outsourcing
2. (cont.)
Producers:Lowers costFocus on your core competenciesImprove productivity Improves competitiveness (cheaper product
cost)Innovation/TechnologyLoss of control
Case 1: The Debate Over Outsourcing
3. What is the likely long-term impact of outsourcing on American jobs?
• Retraining/Further Education• Investing in continuing education will lead to a more educated
and capable workforce in key strategic industries
• Improves the standard of living
• Increases productivity
Case 1: The Debate Over Outsourcing
4. Several states are contemplating legislation to ban outsourcing of government work to foreign firms. What would be the likely consequences of such legislation?
• Higher cost of providing services• Inefficient allocation of taxpayer funds• Jobs “saved” – short run• Losing focus on core competencies
Case 1: The Debate Over Outsourcing
Conclusion: Is Outsourcing Good ?
While there are pro’s and con’s to outsourcing, outsourcing clearly benefits domestic and multinational firms in terms of productivity and competitiveness.
In the long run, improves the global economy and standard of living world wide by focusing a country on industries with a comparative advantage.
QUESTION 3 ,4
Chapter 1 :Introduction – The Multinational
Enterprise and Financial Management
Chapter 1 Questions
3. Elaborate on the benefits of a proactive approach to globalization and global competition.
Predict the future consumer taste.More choices/variety for customersFirst mover advantageEconomies of scale; increased productivityEfficient allocation of resources Countries can predict employment trends.
Chapter 1 Questions
“ Companies today operate within a global market place and can ignore this fact only at their peril”
- Jack Welch
i.e. Survival of the Fittest
Chapter 1 Questions
4. What are the various reasons for the emergence of multinational firms?
Market seeking- (new markets/gain market share)Cost minimization- (economies of scale, cheap
labor)Knowledge seeking – (new technology/processes) Keeping domestic customers – (follow customers)Exploiting financial market imperfectionsDiversificationCloser to raw materials
PROBLEM 2 , 3
Chapter 2 : The Determination of Exchange
Rates
Chapter 2 Problems
2. In 2002, one dollar bought ¥125. In 2006 it bought about ¥115.
a) What was the dollar value of the yen in 2002? 1 ¥ = $0.008 (or 0.8 ¢) US
What was the yen’s dollar value in 2006? 1 ¥ = $0.008696 (or 0.87 ¢) US
Chapter 2 Problems
b) By what percent has the yen risen in value between 2002 and 2006?
8.7% increase in value
c) By what percent has the dollar fallen in value between 2002 and 2006?
8% decrease in value
Chapter 2 Problems
3. On February 1, the euro is worth 1.2966. By May 1st it has moved to $1.3634.
a) By what percent has the euro appreciated or depreciated against the dollar during this period? 5.15 % appreciation in the value of the euro
b) By what percent has the dollar appreciated or depreciated against the euro during this period?
4.9% depreciation in the value of the dollar
QUESTIONS -OR- COMMENTS
Thank You