You are the director of international operations for North and South America for Lenovo. In 2015 you developed a five-year marketing plan to aggressively market personal computers in Canada, Mexico and Brazil. A key element of your plan called for meeting the competitive prices of HP and local manufacturers every step of the way. In addition you planned to spend heavily on marketing. Your yearly budget for marketing in the major target markets was set as follows:

Canada C$. 2,000,000

Mexico Pesos 5,000,000

Brazil Reals 1,000,000

Your 2015 price set in U.S.$ for your top selling laptop was $2,000 in each market. Market prices have declined 20% on a U.S$ basis over the years.

1. What do your marketing budgets look like in 2015 and today in US$?

2. What do the computer prices look like in local currencies in 2015 and today?

3. What actions would you plan to take in each market to fulfill your goals while

addressing current conditions? (Hint: look at the marketing expenditures and the prices together).

CURRENCY PROBLEM 2

You are the director of U.S. operations for Nissan. In 2015, you developed plans for a new sports truck model, the Nissan Minimax to be sold at $30,000. This model can be made in both the U.S. and Japan. Gross margin (meaning margin after all direct costs) is approximately 50%.

1. What is the cost of the Minimax to Nissan if it is made in

Japan vs. made in the U.S. in 2015 and 2020, assuming

no inflation?

2. What actions would you recommend to the home office in

Tokyo to address the current situation?

SPOT RATES FOR CURRENCY EXERCISE

Country Spot Rates (3-11-15) Spot Rates (3-11-20)

Canada C$ 0.7683 0.7282

Mexico pesos 0.0646 0.0474

Brazil reals 0.3315 0.2133

Japan yen 0.0083 0.0095