This week, you will create an idea for your own small MNC to conduct international business. The idea should be straightforward—yet sufficiently creative enough to be potentially successful. Moreover, your idea should focus on a single country and currency and assume that exported goods will be paid for using foreign currencies subject to exchange rates and risks. Work on addressing the following questions while envisioning your small MNC:
- What is the product that you plan to sell?
- What foreign country do you plan to target?
- How will you sell the product in that country? (i.e., through a distributor? by mail?)
- Is there some evidence that consumers in that country would buy this type of product?
- Do you need to purchase supplies or to hire labor?
- Will any expenses you incur from producing the product be in dollars or some other currency?
Explain your idea based on your responses to the questions above. Afterward, take notes on the following considerations:
- Assess Country Factors That Will Affect the Demand for Your Product: Identify the factors that can affect the balance of trade between the United States and the country that you targeted for your business. Explain how each of these factors may affect the demand for your product. Which of these factors is likely to be most important in affecting the demand for your product?
- Access Trade Data: Determine whether the product you plan to sell is already one of the main exports to that country.
- Access Import Controls: Review the import controls set by that country’s government. Determine whether your business would be affected by trade regulations.
- Use the Foreign Exchange Market: Explain how you will use the spot market for your business. What bank do you plan to use to exchange the foreign currency received for dollars? What is the bid/ask spread on a recent quotation by that bank? Will you possibly need the forward market? Explain.
- Access Recent Exchange Rates: Visit https://is.gd/SKFnC2 and obtain data regarding the relevant exchange rates. Also, research the key factors likely affecting the relevant exchange rates.
Submit your idea for a small MNC using an APA formatted essay.