Module 3 Complete the following review and discussion questions before this module closes. Please use complete sentences and include supporting details (Cite at least two sources to support your work).
1. Whose interests should be the paramount concern of government trade policy – the interests of producers (businesses and their employees) or those of consumers?
2. In 2008, inward FDI accounted for some 63.7 percent of gross capital formation in Ireland, but only 4.1 percent in Japan (gross capital formation refers to investments in fixed assets such as factories, warehouses, and retail stores). What do you think explains this difference in FDI inflows into the two countries?
3. You are the international manager of a U.S. business that has just invented a revolutionary new personal computer that can perform the same functions as PCs, but costs only half as much to manufacture. Your CEO has asked you to decide how to expand into the European Union market. Your options are (a) to export from the United States, (b) to license a European firm to manufacture and market the computer in Europe, and (c) to set up a wholly owned subsidiary in Europe. Evaluate the pros and cons of each alternative and suggest a course of action to your CEO.
4. NAFTA has produced benefits and drawbacks for the Canadian, Mexican, and U.S. economy. Discuss.
5. What are the economic and political arguments for regional economic integration? Given these arguments, why don’t we see more substantial examples of integration in the world economy?
6. What are the pros and cons of the Trans Pacific Partnership? What is your opinion on it. Should the US reconsider becoming a member of this regional economic agreement?
Complete the following review and discussion questions before this module closes. Please use complete sentences and include supporting details (cite at least two sources to support your work).
1. You are CFO of a U.S. firm whose wholly owned subsidiary in Mexico manufactures component parts for your U.S. assembly operations. The subsidiary has been financed by bank borrowings in the United States. One of your analysts told you that the Mexican peso is expected to depreciate by 30 percent against the dollar on the foreign exchange markets over the next year. What actions, if any, should you take?
2. Debate the relative merits of fixed and floating exchange rate regimes. From the perspective of an international business, what are the most important criteria in a choice between the systems? Which system is the more desirable for an international business?
3. In what kind of industries does a localization strategy make sense? When does a global standardization strategy make most sense?
Midterm is 1 hr and 15 min