The facility later because the cost advantage dissipates

Assignment Help Financial Management

Reference no: EM131315786

Some MNCs establish a manufacturing facility where there is a relatively low cost of labor, but they sometimes close the facility later because the cost advantage dissipates. Why do you think the relative cost advantage of these countries is reduced over time? (Ignore possible exchange rate effects.)

Reference no: EM131315786

Questions Cloud

Premium bond making semiannual payments : Bond X is a premium bond making semiannual payments. The bond pays a 7 percent coupon, has a YTM of 5 percent, and has 19 years to maturity. Bond Y is a discount bond making semiannual payments. What is the price of each bond today?

What is the present value of the payments : Suppose you are going to receive $10,000 per year for five years. The appropriate interest rate is 10 percent. What is the present value of the payments if they are in the form of an ordinary annuity? Suppose you plan to invest the payments for five ..

What are the potential benefits for this firm : Starter Corp. of New Haven, Connecticut, produces sportswear that is licensed by professional sports teams. It recently decided to expand in Europe. What are the potential benefits for this firm from using DFI?

Economies continue to be independent of other economies : Offer your opinion on why economies of some less developed countries with strict restrictions on international trade and DFI are somewhat independent from economies of other countries. Why would MNCs desire to enter such countries? If these countries..

The facility later because the cost advantage dissipates : Some MNCs establish a manufacturing facility where there is a relatively low cost of labor, but they sometimes close the facility later because the cost advantage dissipates. Why do you think the relative cost advantage of these countries is reduced ..

Which firm is more likely to benefit from economies of scale : Bear Co. and Viking, Inc., are automobile manufacturers that desire to benefit from economies of scale. Bear Co. has decided to establish distributorship subsidiaries in various countries, while Viking, Inc., has decided to establish manufacturing s..

Explain some limitations when it hedges translation exposure : Bartunek Co. is a U.S.-based MNC that has European subsidiaries and wants to hedge its translation exposure to fluctuations in the euro’s value. Explain some limitations when it hedges translation exposure.

Economic exposure to exchange rate fluctuations : UVA Co. is a U.S.-based MNC that obtains 40 percent of its foreign supplies from Thailand. It also borrows Thailand’s currency (the baht) from Thai banks and converts the baht to dollars to support U.S. operations. Explain how UVA Co. can reduce its ..

Economic exposure to exchange rate fluctuations in the euro : Baltimore, Inc., is a U.S.-based MNC that obtains 10 percent of its supplies from European manufacturers. Sixty percent of its revenues are due to exports to Europe, where its product is invoiced in euros. Explain how Baltimore can attempt to reduce ..

User Account

All Pages