Itsu Food Berhad, a Malaysian company based in Johor, manufactures frozen halal food which enjoys a large consumer base in many parts of the United States. In order to be closer to its
U.S. market, the company is considering an investment of USD 6 million to establish a new manufacturing operation in California. The proposed factory would begin production in 2022
and have the following attributes. 

Attributes                                             Value
Sales price per unit in 2022 USD 6.60
Yearly change in sales price (forecasted) 3.00%
Units of Production 1,000,000
Yearly change in production units (forecasted) 10.00%
Cost of production per unit in 2022 USD 3.85
Yearly change in production costs (forecasted) 4.00%
Administrative and General Expenses USD 100,000
Rate of Depreciation 10.00%
WACC of Itsu Berhad 16.00%
Terminal Value 20.00%
The investment is assumed to be made on December 31, 2021, and cash flows will occur on December 31 of each succeeding year. The operations in California will pay three-quarters of its accounting profit to the parent company as an annual cash dividend. The corporate tax rate in the United States is 25% compared to 30% in Malaysia. The Company’s treasury department has indicated that the year ending rate for 2022 is MYR/USD 4.20 and MYR subsequently strengthens by 1.2% yearly for the next three years 2023, 2024, and 2025. 

Required:
(a) Determine whether Itsu Food Berhad should undertake the proposed investment in the United States, showing all necessary calculations.
(b) In deciding to invest in the United States, Itsu Food Berhad must determine if it has a sustainable competitive advantage to compete in the global market. Critically discuss any FOUR (4) characteristics of competitive advantage to support the firms’ business decisions.