Victoria Clothing Ltd (VCL) You have been appointed as an advisor to a leading garment distributor (VCL) ( a hypothetical company) established in Australia. The company owns a well-reputed garment brands portfolio which has been protected by international patent rights law. As an expert in international finance and banking, you are required to assist VCL to expand its current operation into several overseas markets. The company currently engages in export and import activities using a well-linked international network of agents. The company distributes its product in Europe and few Asian countries using its own international retailing network operated by its subsidiaries in Paris, Shanghai and Tokyo. In addition, they also have a very good presence in the cyber market. However, the recent global health crisis has had a significant effect on both the firm's operation and the cash flow positions. Especially, the high volatility of the local currency value in the foreign exchange market has undermined the firms ability to manage its cash flow positions. On this background, the company has decided to revamp its international trade and finance strategy. The company currently uses its trading partner's country currency to invoice its export. Its foreign suppliers usually invoice in United State dollars. However, the fluctuation of other currency values against the AUD has forced the company to re-think its export invoicing policy. Since its foreign suppliers are using USD to invoice, the marketing manager of the company suggests using USD as the company trading currency. But, the production manager stressed that the invoicing of both export and import in AUD would help the company to eliminate all probable foreign exchange exposures. The company management asks you to identify the strengths and weaknesses of all these alternatives including the current. VCL is allowed four months to settle their suppliers invoices. Its' foreign buyers have been given 60 days to settle their invoices. VCL expects to expand its manufacturing operations into India and Bangladesh by forming two subsidiaries in these two countries. The company expect to use the proposed manufacturing entities to be used for supplying the growing demand in Europe. Alternatively, the marketing manager suggests to established two buying offices in these two countries and outsources the local small manufactures to produce garments for the company. He pointed out such a strategy will help the company to minimise its capital commitment on foreign investments. Currently, the company sources garment materials from China and India. A feasibility study conducted last year revealed that locating a manufacturing plant in India would bring a huge cost advantage. VCLs policy is to review the cash flow situation of all its subsidiaries every three months and remit any excess cash balances to the head office in Australia. Currently, excess cash is transferred any time whenever the foreign subsidiaries cash balances exceed the allowed limit. Consequently, the parent in Australia transferred cash to the subsidiaries when they are in short in cash. In light of the above background information, you are required to develop a management advisory report addressing the following issues. Introduction - 35 points

1) Identify the main objective of the VCL, the internationalisation objectives (the motive for internationalisation), the strategies used for internationalisation (mode of internationalisation), types of cash flows, types of foreign exchange risk exposures which the MNC is facing.

2) Apply internationalisation theories (comparative advantage, product life cycle, and imperfect market) to illustrate the possible motives for having its manufacturing operation in India and Bangaldesh.

3) Explain VCLs current international trading strategy and its pros and cons (subsidiaries in Paris (France), Shanghai (China), Tokyo (Japan) and India, export & import, and online presence).