1. Impact of a Weak Currency on Feasibility of DFI. Packer, Inc., a U.S. producer of computer disks, plans to establish a subsidiary in Mexico in order to penetrate the Mexican market. Packer's executives believe that the Mexican peso's value is relatively strong and will weaken against the dollar over time. If their expectations about the peso value are correct, how will this affect the feasibility of the project? Explain.
2. Opportunities in Less Developed Countries. Offer your opinion on why economies of some less developed countries with strict restrictions on international trade and DFI are somewhat independent from economies of other countries. Why would MNCs desire to enter such countries? If these countries relaxed their restrictions, would their economies continue to be independent of other economies? Explain.
3.Disney's DFI Motives. What potential benefits do you think were most important in the decision of the Walt Disney Co. to build a theme park in France?
4. DFI Strategy. JCPenney has recognized numerous opportunities to expand in foreign countries and has assessed many foreign markets, including Brazil, Greece, Mexico, Portugal, Singapore, and Thailand. It has opened new stores in Europe, Asia, and Latin America. In each case, the firm was aware that it did not have sufficient understanding of the culture of each country that it had targeted. Consequently, it engaged in joint ventures with local partners who knew the preference of the local customers.
a. What comparative advantage does JCPenney have when establishing a store in a foreign country, relative to an independent variety store?
b. Why might the overall risk of JCPenney decrease or increase as a result of its recent global expansion?
c. JCPenney has been more cautious about entering China. Explain the potential obstacles associated with entering China.