Research Report - Running Your Own MNC - 70 Marks SUBMIT under SAFE ASSIGN. Your professor will assign your group a country. In this report you will apply the concepts to be covered in chapter 1, 2, 3, 4, 6, 8, 11. Instructions: - This is not a business plan. Once you select the country, go to WIKIS, and post your group members names and country name. I. Provide COMPLETE answers to all the questions. II. Format of the report - complete answers in sequence. A title page, introduction, conclusion of the report (3/4 page) and reference section along with intext citations (APA format only) is a must. III. Late submission is subject to a deduction of 5% marks per day for five days. You will not be allowed to submit the report after five days of due date. IV. Reports without an academic/reference section will receive a ZERO grade and will be reported as academic integrity issue. Cheating and Plagiarism: Each student should be aware of the College's policy regarding Cheating and Plagiarism. Seneca's Academic Policy will be strictly enforced. To support academic honesty at Seneca College, all work submitted by students may be reviewed for authenticity and originality, utilizing software tools and third party services. Please visit the Academic Honesty site on http://library.senecacollege.ca for further information regarding cheating and plagiarism policies and procedures. Useful websites:- Yahoo finance, google finance, Bloomberg, MarketWatch, Morningstar, Investopedia. You do not need to use any source that requires any payment or personal information. Components of the report Marks Title Page, Introduction, proper and complete intext citation and reference section APA Style And Conclusion at the end. 10 marks Answers for questions 60 marks Chapter 1 Study a country for your MNC (parent company in US and is a public company) to conduct international business. Your idea should focus on one country and one foreign currency, since many MNCs are focused in this manner when they are first created. You should assume that you will receive foreign currency when selling your product. Question 1 and 2 will help you to define your MNC idea: 1. What is the product that you plan to sell? What foreign country do you plan to target? State clear reason for targeting the country selected. 3 marks 2. How will you sell the product in that country? Is there some evidence that consumers in that country would buy this type of product? Will any expenses you incur from producing the product be in dollars or some other currency? 3 marks 3. What political risks do you observe in the country of study? Explain in detail. (Not more than one page) 3 marks 4. Study the financial risks present in the country. Go to the countrys central bank website and study the trend of inflation and interest rates. Are there any other financial risks present in the country? 3 marks 5. Do you think this trend poses (from question 4) financial risk to your business in that country? Based on the trend, would you like to reinvest the revenue generated in the country or remit it to the US? Justify the reason provided. 3 marks Chapter 2 Assessing Country Factors That Will Affect the Demand for Your Product 6. Identify the factors that can affect the balance of trade between the United States and the country that you targeted for your business. Explain any two main factors that may affect the demand for your product. 4 marks 7. Based on the country profile and risks, take a decision to establish business in the foreign location through Foreign Direct Investment Justify your answer. Justify the selection made under FDI (if you decide to establish a subsidiary, acquire a company there or start a joint venture, justify the reason) 3 marks. 8. For FDI, how would you raise capital (debt or equity). You need to find information on their existing debt and equity ratios in the balance sheet to justify your answer. You can find this information on 10 K form of the company. (Since this is a comprehensive document, read about debt and equity only and leave the rest) 5 marks. Chapter 3 Using the Foreign Exchange Market 9. Explain how you will use the spot market for your business. 2 marks 10. What bank do you plan to use to exchange the foreign currency received for dollars? What is the bid/ask spread on a recent quotation by that bank? 3 marks Accessing Recent Exchange Rates 11. Explain how the main foreign currency for your business has changed over last four years with respect to dollars. Is this trend favorable or unfavorable to the parent company? Provide a diagram/chart etc. for the trend. 4 marks 12. Using forecast formula in excel, prepare a forecast for 2023, 2024, 2025 and 2026 of foreign currency w.r.t dollar. Do you think this forecasted value of foreign currency is favorable or unfavorable? Explain. 5 marks Here is a quick video on how to use forecast function in excel Forecast Function in Excel Chapter 4 Monitoring Movements in the Foreign Currency's Value 13. Have any of the key factors (inflation and interest rate) that affect the exchange rate (discussed in chapter 4) affected the value of the foreign currency of concern over last five years? Explain. You need to find the correlation between inflation/interest rate in that country and the value of foreign currency to study this. You may use the Correlation feature in excel. 5 marks Here is a quick video on how to use correlation function in excel Correlation Function in Excel Chapter 6 Monitoring Central Bank Intervention 14. Go to Web site of the central bank in your target country. Determine whether this central bank intervenes to control its currency in the foreign exchange market. How has the central bank intervened to change the currency value during last year? 4 marks Chapter 8 International Fisher Effect and Purchasing Power Parity Theory 15. Complete the following table to find out percentage change in exchange rate using PPP and IFE. Once you calculate percentage change, explain whether this projected rate is favorable or unfavorable for your MNC. 4 marks Home country - Inflation 2019 Inflation 2020 Inflation 2021 Inflation 2022 Projected Inflation in 2023 (Ih) = Average Inflation from 2019 - 2022 Foreign Country- Inflation 2019 Inflation 2020 Inflation 2021 Inflation 2022 Projected Inflation in 2023 (If) = Average Inflation from 2019 - 2022 Percentage change in the exchange rate Using formula covered in Chapter 8 Home country - Interest rate 2019 Interest rate 2020 Interest rate 2021 Interest rate 2022 Projected Interest rate in 2023(Ih) = Average Interest rate from 2019 - 2022 Foreign Country- Interest rate 2019 Interest rate 2020 Interest rate 2021 Interest rate 2022 Projected Interest rate in 2023(If) = Average Interest rate from 2019 - 2022 Percentage change in the exchange rate using formula covered in chapter 8 Chapter 11 16. Review recent 10- K form of the parent company to study hedging techniques used by the company recently. Has this company used any hedging technique in the past? Based on the previous answers around currency value, do you think the parent company would require any hedging technique. If yes, explain the hedging technique recommended. (Note 10 K forms are very comprehensive documents, just read about hedging techniques in the document and leave the rest) 6 marks. the selected country is india and the MNC is chevrolet