Financial Management in International Business

Create a hypothetical global corporation and answer the five basic questions that deal with production:

• Where should production be located and should it be concentrated or dispersed?
• What should be the long-term strategic role of foreign productions sites?  Should the firm abandon a foreign site if factor costs change, or is there value to maintaining an operation at a given location even if economic conditions change?
• Should the firm own foreign production or should production be outsourced?
• How should a globally-dispersed supply chain be managed?
• Should the firm manage the logistics or outsource their management?

Imagine you are the marketing manager for a U.S. manufacturer of disposable diapers. Your firm is considering entering the Brazilian market. Your CEO believes the advertising message that has been effective in the United States will suffice in Brazil. Your CEO also believes that the pricing decisions in Brazil can be left to the local managers.

Detail the possible objections to both beliefs and support your answer with examples.

Select a foreign market that you will be entering and explain how the foreign investment will be financed and how the financial structure of the foreign affiliate should be configured.

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