Question Global, Multinational Corporations (MNCs) Q "As the world of business becomes increasingly global, multinational corporations (MNCs) are establishing their production and marketing operations in foreign countries. Consequently, MNCs face a variety of challenges. One of the challenges faced by MNCs in foreign markets is fluctuations in currency exchange rates. Movements in exchange rates can cause instability in profit margins and significant losses to an MNCs bottom line. Thus, exchange rate risk management comprises an integral part of MNC decision-making about foreign currency exposure. Measuring and managing exchange rate risk exposure are important functions in reducing MNCs vulnerability from major exchange rate movements. In order to manage currency exchange rate risks, a MNC often uses financial instruments or currency derivatives." In the light of the above statements you are required to: 1. Select two companies out of the companies listed below. a. Apple INC , b. Samsung, c. Panasonic, d. Sony INC, e. Philips, f. Nikon, g. Fujifilm, h. LG, i. Nintendo, j. Hewlett-Packard, k. Siemens, l. Intel, m. Ericsson 2. Provide a brief introduction on the internationalization strategy of the two companies you selected (use theories such as comparative advantage, product life cycle and market imperfection for your discussion appropriately) 3. Identify four countries with which the selected MNCs conduct their business. Explain briefly how those countries political, economic and financial environment have affected the international operations of those companies 4. Provide a brief review about socio-political, economic and financial environment of the countries you selected. Use the published country risk reports. 5. Identify major sources of risk (FX risk, political risk etc.) and the extent of such risk on overall business activities of two companies you selected. 6. Identify and explain the types of exchange rate risks management strategies used by each company. 7. Identify and explain the strategies used by those companies to face the economic and financial crisis in the global financial market. 8. Identify the contemporary challenges (such as transfer pricing and taxes) faced by business firms which engage in international business. What are the remedies available for such business? Are they ethical? Discuss. You are required to write an essay highlighting each of the above issues. In your essay, you need to compare and contrast the circumstances which each company face. Required financial information can be sources from published annual reports (a minimum of four recent annual reports from each company is expected). At least, five relevant recent relevant academic papers should be referred and cited in your essay. In addition, students are encouraged to use the 'Mint-Global' database for additional data. This is available in the VU library website. Students are also encouraged to use graphical and other form of presentation of data to enhance the quality of their report. Plagiarism is considered a serious offence and any assignment which exceeds 30% of the similarity index will be severely penalised.