Internationally - Draft

Michelle Charlotte D. Catipon

IBM – Final Exam

PART 1

1. A Canadian company, CanCo, is facing anti dumping duties on its export of widgets from Canada to United States. The U.S. department of commerce has issued a preliminary finding that CanCo is selling widgets below normal value. The best strategy for CanCo is to exit the U.S. market.

Answer: The statement contains an UNCERTAIN statement because there are several strategies for this situation to be implemented. The first strategy is exiting, one of the four strategy. The other strategies are conceding or settling by raising the price, fighting the preliminary ruling and lastly by circumventing the investment in the U.S. and producing there. Conceding is also a good idea if the company should have higher prices. However, if it needs to charge low prices in the U.S. market for some reason, it makes sense to contest the ruling. While circumvention is also possible but whether it is desirable depends on many other considerations.

2. When agreeing on the terms for an export to an unfamiliar foreign buyer, the exporter should insist that the deal is carried out on “open account,” and that the price should be quoted in home (export country) currency.

Answer: The statement contains a FALSE statement because being unfamiliar is obliged to have either a letter of credit or payment in advance. The letter of credit is better because it protects buyer as well, that means greater willingness to pay from the buyer. Referencing or quoting in home currency reduces exchange risk but may be unattractive to the buyer and force them to use forward contracts to minimize loss risk.

If the person access to such contracts is good it may give them a competitive advantage to quote in the buyer’s local currency.

2. Elucidate the importance of technology as one of the factors that can vary significantly, depending on the purpose of foreign investment and how important it is for technology to be standardized across...