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Medi Darussalam and Sihat Begawan are Brunei-based companies with subsidiaries located in Singapore. Both companies distribute medical supplies (produced in Brunei) to customers throughout South

Medi Darussalam and Sihat Begawan are Brunei-based companies with subsidiaries located in Singapore. Both companies distribute medical supplies (produced in Brunei) to customers throughout South East Asia. Both subsidiaries purchase the products at cost and sell the products at 90 percent markup. The other operating costs of the subsidiaries are very low. Medi Darussalam has a research and development center in Brunei that focuses on improving its medical technology. Sihat Begawan has a similar center based in Singapore. The parent of each firm subsidizes its respective research and development center on an annual basis. Which company is subject to a higher degree of economic exposure? Justify your answer with thorough explanation on both companies.

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