Select one MNC that does not currently do business in China
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Select one MNC that does not currently do business in China. Next, consider the steps that the company should consider in determining the feasibility of entering the Chinese market and establishing a market for its products or services there.
Use the Strayer University Library and the following links to conduct a country risk assessment (CRA) on China:
Bureau of Economic Analysis (BEA).
Corruption Perceptions Index 2013.
Ease of Doing Business Rankings – Economy Rankings.
International Monetary Fund – Homepage.
Country Risk Classification.
World Trade Organization- Home page – Global trade
Compare Countries.
Focus on areas such as corruption, political stability, exchange rate stability, regulatory oversight, freedom of the press, and rule of law. Research other factors that you believe you should evaluate. Additionally, consider the importance of culture in evaluating risk.
Instructions
Write an 8-10 page paper in which you:
Summarize the business that you selected and provide a two to three-paragraph justification as to why China would be a viable market for the selected business.
Examine the exchange rate of the U.S. dollar and the Chinese yuan for the last 24 months. Explain the major overall changes that have occurred and speculate on the key economic variables that most likely have influenced the exchange rate movements. Provide a rationale for your response.
Analyze the major challenges in international arbitrage and interest rate parity associated with transaction and translation exposure within the Chinese market. Based on what you have gleaned from your analysis, predict the major changes that you believe will occur in the next 24 months. Justify your response.
Recommend key steps that the chosen MNC could take to mitigate or eliminate exposure to international economic conditions. Suggest one method that the MNC in question could use with derivatives in order to mitigate or eliminate such risks. Provide a rationale for your response.
Recommend one hedging technique geared toward managing the economic, transaction, and translation exposure in the Chinese market. Justify your response.
Conduct a country risk assessment to ascertain whether management should support the proposal for your chosen MNC to enter the Chinese market. Based on Geert Hofstede’s six dimensions of culture, predict three likely problems posed by the cultural differences between the chosen MNC’s culture and the Chinese culture. Provide a rationale for your response.
Use at least six quality references, with at least two from peer-reviewed journal articles.
This course requires the use of Strayer Writing Standards (SWS). The library is your home for SWS assistance, including citations and formatting. Please refer to the Library site for all support. Check with your professor for any additional instructions.
The specific course learning outcome associated with this assignment is:
Determine whether an MNC should enter into a foreign market, including: whether the market is viable, exchange rate favorability, challenges related to international arbitrage and interest rate parity, ways to mitigate exposure to international economic conditions, an appropriate hedging technique, a country risk assessment and likely problems posed by cultural differences.
Week 8 Assignment – MNC Enters China
