Suppose you are leading decision making of an Australian MNE. The company plans to expand in Japan and wants to develop a mobile app, specific to the Japanese consumers, to promote its business. It further plans to hire a market research firm to assess the Japanese market's demand for its products.

a)App Development The company has two choices that meet their app development needs.

Choice 1 A US based app design company which has already developed similar apps for other companies doing business in Japan. The quoted price for designing the system is $72,000.

Choice 2 An Australian app design company which has not developed any app for the Japanese market, however has the capacity to do so. The quoted price for designing the system is A$90,000.

b) Market Research The company has two choices for market research also.

Choice 1 A US based market research company which has presence in Japan. The quoted price for conducting the market research is $60,000.

Choice 2 A Japanese market research company which has quoted 8,000,000 as the cost for conducting the market research.

"You are further given the following exchange rate information:

spot exchange rate for Japanese Yen against the US dollar is 134/$

spot exchange rate for Australian Dollar against the US dollar is A$1.55/$"

i. Which combination of app development company and market research company will you choose if your choice is solely based on the required total Australian dollar cash outlay?