Parker Co., a US information technology firm, has a subsidiary in Mexico, where political risk has recently increased. Parker's estimation of its future peso cash flows to be received has not changed. However, its valuation has declined as a result of the increase in political risk. In addition, Parker wants to expand its business into Brazil and is considering different international business methods such as exporting, licensing, and establishing a new subsidiary.

Please discuss the following:

Explain why Parker's valuation declined while political risk in Mexico increased? Describe the tradeoffs involved in each methods (e.g., exporting, licensing, and establishing a new subsidiary) that Parker is considering to penetrate the Brazilian market. Which method would you recommend for Parker Co.? Justify your recommendation.