Country risk and global capital budegeting strategy

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Reference no: EM13201185

Country Risk and Global Capital Budegeting Strategy:

Your corporation has an opportunity to make a major investment in China of $100 million to develop an offshore manufacturing facility. When this plant is fully developed and becomes operational  in two years the corporation can close down its current manufacturing facility in the United States and shift operations to China. At present, the expected annual savings in labor and benefit cost is expected to be $20 million.  You are asked to develop a proposal to identify the potential risk of this proposal and 'advantages' and 'problems' of this opportunity.  Explain how you would proceed.

i. What are the inherent risks in this opportunity?

ii. What  economic data would you need for your  analysis? Why (How would you use them)?

iii. What potential factors that affect exchange rates between China and US ? How would you protect against that risk?

iv. What other strategies do you recommend before your corporation implements this proposal?

Reference no: EM13201185

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