Dr. P.V. Viswanath

pviswanath@pace.edu

FIN 649: International Corporate Finance
Assignments, Fall 2005

Assignments must be typed and submitted before the start of class on the due date.

Assignment 1 (Individual or Group)

Rivoli, Pietra. 2005. "The Travels of a T-shirt in the Global Economy: An Economist Examines the Markets, Power, and Politics of World Trade," John Wiley and Co., Hoboken, N.J.

Answer the following questions:

1. Is garment manufacturing labor intensive or capital intensive? Does your answer depend on the location and the time-period involved? If so, identify different time-place combinations and explain, illustratively, which are labor and which are capital intensive.
2. Which time-place combinations prove (i.e. illustrate) the Hecksher-Ohlin theory? Which disprove it?
3. In class, we discussed the Leontief Paradox. Does the export of used clothes from the US to Africa provide another example of the Leontief Paradox? Support your position.
4. Which multinational firms does the book discuss? Are there other MNCs in the garment industry (any part of it – manufacturing, distribution, retailing)? How have these MNCs adapted to the regulatory barriers erected by various countries, primarily the US?
5. In his book, “The Competitive Advantage of Nations,” Michael Porter talks about how governments of countries can influence the comparative advantage that those countries have (see http://www.valuebasedmanagement.net/methods_porter_diamond_model.html for an overview). Where is this illustrated in Pietra Rivoli’s book?
   

Assignment 2 (Group)

Choose any company with an international presence and discuss how it has dealt with accounting, transaction and economic exposure. You can focus on any one or more of these three areas. Your write-up need not be more than three or four pages. You may (and should) use publicly available information. However, you should not copy somebody else's analysis without attribution. You may cite, with attribution, any published analyses of your company's foreign exchange exposure management; you should, in any case, have your own original analysis, as well.

Your report should have an introduction section describing the exposure of the firm to currency risk, followed by a discussion of its strategies to hedge against that risk -- what it does, whether the strategies are approrpiate, and how successful it has been and will be in its hedging.

Example from Fall 2004 (No implication as to how you should or should not write your own report. Keep in mind, however, that plagiarizing from existing reports is bad, and can be cause for a failing grade in the course.)

Assignment 3 (Individual)

Find an article from the Wall Street Journal or The Economist (or similar publication) that addresses issues pertaining to one of the following topics:

• International Trade and Multinational Corporations (turn in on the date of Exam 1)
  Update: Use the articles on The Great Thrift Shift from the Economist, Sep 22nd 2005.
• Hedging of Exchange Exposure by Multinational and Domestic Firms (turn in on the date of Exam 2)

For your article, do the following:

• Summarize the article briefly
• Create two or three questions that show the connection between the subject matter of the article and the issues raised in the textbook/classroom.
• Provide answers for the questions.