I. Case Summary/Introduction The case explains unique challenge of currency exchange that vehicle manufacturers Hyundai and Kia face. Both manufacturers heavily rely on the sale of their vehicles in the United States. In 2006, when the South Korean currency’s value rose, and the U.S. dollar fell, it meant that vehicles sold in the U.S. were not worth as much when the profit was transferred back into won. Despite growing sales, in 2006 both companies recorded a loss due to this conundrum. To combat this, Hyundai and Kia opened manufacturing plants in the U.S. This allows the companies to produce vehicles in either location, and production can be shifted depending upon currency values (Hill, 2011). II. Analysis of Case Study Questions Case Study Question 1: Explain how the rise in the value of the Korean currency, the won, against the dollar impacts upon the competitiveness of Hyundai and Kia’s exports to the United States? Hyundai and Kia rely on exports for much of their sales. Consequently, they are vulnerable to shifts in exchange rates. When the won, the South Korean currency, ri...
Saputo’s business is constantly affected by changes in the exchange rate as the majority of its business takes place outside of Canada. Due to the fact products and cash flows travel internationally, the company is exposed to economic exposures. Exchange exposure affects Saputo in many ways such as the cost of production and demand for their products. Transaction exposure affects Saputo when cash flows from foreign operations into Canada. Saputo is affected by translation exposure when foreign revenue is converted into Canadian dollars for its financial statements.
The real exchange rate tells us the rate at which we can trade the goods of one country for goods from other countries. The real exchange rate some- times referred to as the terms of trade. To view the exchange rate relationship in real terms using the nominal exchange rate, can be taken samples h a goods produced in some countries, such as cars. Suppose the price of the car with 25,000 dollars, while the price of Japanese cars is 4,000,000 yen . To compare the prices of both cars , we have to transform them into a common currency. If one dollar worth of 80 yen , the price of cars Americans to 80 x 25,000, or 2,000,000 yen. By comparing the price of an American car (2,000,000 yen) and the price of Japanese cars (4,000,000 yen), it can be concluded that the price of the American car is half the price of Japanese cars . In other words, pad a price effect we can swap two American cars to get a Japanese car . Peng count can be written as
Another correlation between the management’s discussion within Fords 10-k and the financial analysis within this essay is Ford’s market expansion into the Pacific Asia Africa segment (SEC, 2015). Because ford is entering into new markets, their costs are increasing for selling and administration. The costs include hiring new salespeople and promoting their new products in new market segments. Thus causing the increase of selling and administrate costs in the horizontal income statement analysis. Furthermore, Ford’s fixed assets are also increasing because they are investing in new land and equipment to manufacture their new
The strategic planning division do see some negatives but we also see some positives that would affect us if we were to leave. Ford motor company would be leaving a country with a bigger market and a close market that wouldn’t be that costly to sell our cars to, but we wouldn’t have to worry about how much the auto decree will eat into our profits from Mexico. We would also be cutting cost for the reason of we wouldn’t have to import cars to Mexico but Ford motor company would lose all the profit from selling those cars. One thing that we could is open up a factory in Mexico to get around the auto decree because of the high tariffs on foreign imports of finished automobiles. That would mean we would have to hire more workers in the country which would bring more cost to Ford but the cost of a labor force would be cheaper than in the United States, But we would have to spend the money to make sure that these factories were up to industry standards for the reason of it could cost more if we are putting non acceptable cars out into the market. It would also bring positive effects because we would have a factory and a foot in the Mexican market. After looking at everything and taking into consideration the future of Ford motor company we would best recommend staying in the country because leaving Mexico would bring more negatives than positives. We think this way because we consider opening up a factory in Mexico to bring more positives than leaving the country like for example we would be leaving a major market which could shut us out if we leave the country to get around the auto decree. It would also stay with Fords Global strategy of expanding to meet demand across the
MLK Auto Company is looking to move their operations into an unknown territory for them. They wish to move into the competitive markets in China in order to have lower production costs. The company, stationed in the United States and produces auto parts, could have a competitive advantage when it come to the market in China. Although they have thought the move through, there are still aspects that the company is going to have to think about very clearly.
South Korea has a strong $1-trillion economy; it is the third largest market in Asia, behind Japan and China. It also has the 13th largest economy in the world. It is expected that the economy’s current upward trajectory will continue for some time to come. This makes South Korea an attractive market for foreign investment, especially as the world economy, as a whole, continues to improve.
As presented in the case study we know that Ford was losing the market to the cheap Japanese cars being produced. As a corporation that
In a capitalistic country with a free market, foreign competition is expected. This is no exception for the automobile industry where America competes with its various rivals. Competition from elsewhere encompasses that from Italy, Germany, and of course, the renowned Japan. The Japanese vehicle industry is especially competitive; according to the Automotive News Data Center, five out of the ten best selling vehicles of the year are Japanese vehicles. This data applies to the U.S. market over the first 9 months of the year. Expectedly, the automobile industry is an important and significant market. Motor vehicles are a major form of transportation as many people in the U.S. own at least one car.
The Chevrolet Cruze was Introduced in 2009, since then it has gained fame in the American automobile market by offering a sporty ride in a compact and affordable car. The Cruze is predominantly well-liked for its comfortable interior, smart technological features, and handling that opposes its small dimension.
In 1944, Kia Motors Corporation of Seoul, Korea, was founded as a manufacturer of steel and bicycle parts (Kia.com). During the early1950’s, the company changed its name officially to Kia Industries and began production of Korea’s first bicycle (Kia.com). In 1957 Kia began producing Korean’s first motor scooter, the C-100 (Kia.com). Korea’s first truck, the K-130 was introduced in 1962 (Kia.com). In 1971, the Titan, a 4-wheel cargo truck was produced (Kia.com).
American automobile industry has striven through the years with excellence and great dominance both in America and in the global market. The history of it global dominance could be attributed to many factors which include global acceptance of American cars and brand superiority. However, American automobile industry has not strived without major challenges that include: political, global competition, technological, economical, and environmental challenges.
In the world today, many mergers and acquisitions are happening as a result of financial losses, gaining an advantage on a competitor, increasing capabilities, and strengthening services by diversifying the products. There are numerous other reasons, but this paper will focus on the reasons indicated above.
Toyota Motor Corporation is one of the largest automakers in the world. At its annual conference in Tokyo on May 8, 2008, the company announced that activities through March 2008 generated a sales figure of $252.7 billion, a new record for the company. However, the company is lowering expectations for the coming year due to a stronger yen, a slowing American economy, and the rising cost of raw materials (Rowley, 2008). If Toyota is to continue increasing its revenue, it must examine its business practice and determine on a course of action to maximize its profit.
There are various ways to deal with advancement that are interested in associations. Over the-line advancements utilization broad communications techniques, this kind of advancement spotlights on promoting to a huge gathering of people. It incorporates print, online media, TV and film promoting.
Besides that, also important to consider there is the difference in shipping costs from different ports, as it will change the “landed cost” of the item, and the retail price and profit margin. Then, Problems encountered in international business larger and more complex than the problems faced in the domestic business. In example, the manager of an international organization decides to reduce costs and maximize the value-added. They must decide whether it is ethical to comply with all labor and environmental standards are found to be lower in less developed countries. In addition, they must decide which one foreign market to enter and should be avoided. The domestic business manager was not affected by this factor directly, but they will be affected by the economic downturn of international trade.