QUESTION 1 MINICASE - S&S Air Goes International Mark Sexton and Todd Story, the owners of S&S Air, have been in discussions with a light aircraft dealer in Monaco about selling the companys planes in Europe. Jarek Jacho-wicz, the dealer, wants to add S&S Air to his current retail line. Jarek has told Mark and Todd that he feels the retail sales will be approximately 5 million per month. All sales will bemade in euros, and Jarek will retain 5 percent of retail sales as a commission, which will be paid in euros. Because the planes will be customized to order, the f rst sales will take place in one month. Jarek will pay S&S Air for the order 90 days after it is filled. This payment schedule will continue for the length of the contract between the two companies. Mark and Todd are conf dent the company can handle the extra volume with its existing facilities, but they are unsure about the potential fi nancial risks of selling their planes in Europe. In their discussion with Jarek, they found that the current exchange rate is $1.35y. At the current exchange rate, the company would spend 80 percent of the sales on production costs. This number does not reflect the sales commission paid to Jarek. Mark and Todd have decided to ask Chris Guthrie, the companys f nancial analyst, to prepare an analysis of the proposed international sales. Specifcally, they ask Chris to answer the following questions. 1. What kind of international business issues might S&S Air face when doing business in Europe in regards to cultural differences, political, government and economic issues that might impact current and future business success? 2. What kind of international business issues might S&S Air face in regards to legal requirements and operational issues as it sells airplanes within the European market? 3. If the exchange rate changes from $1.45/1 Euro to $1.30/1 Euro, how will that impact S&S Air's financial profitability in general?