International Financial Management Assignment Example | Topics and Well Written Essays - 750 words

International Financial Management - Assignment Example S. dollar. If the same mobile phone cost 1000 dollars in U.S., American consumers would buy it from India. When large volumes of such mobile phones were purchased from India by American customers, the price of rupee will go up until one dollar equals 25 Indian rupees. Purchasing power parity (PPP) theory can be divided into two different categories; absolute PPP and relative PPP. Absolute PPP is based on the belief that without international barriers, consumers will shift their demand to wherever prices are lower whereas relative PPP is based on the notion that market imperfections (tariffs, transportation costs, etc), prices of the same products need not be same in different countries when measured in a common currency Madura, 2009, p. 214-215) In economics inflation refers to the rise of prices of all the goods except the money. The values of the currencies of countries with higher inflation would be less compared to the values of countries with lower inflation as the purchasing power of the consumers will be lessened by the increase in prices in countries with higher inflation. The rationale behind PPP theory is that when inflation occurs at a higher level in a particular country, foreign demand for goods from that country would be decreased whereas demand for foreign goods from that country should increase and subsequently, the home currency of that country will weaken. The currency depreciation will continue till the foreign country’s goods are no more attractive than the domestic goods (Relationships Among Inflation, Interest Rates, and Exchange Rates, n. d, p.107) In order to check whether PPP exists, it is better to choose two countries and compare the differences in inflation and the exchange rate change different periods. If the exchange rate changes are in accordance with the PPP theory, then we can safely conclude that PPP exists. The major limitation in testing PPP is that based on the periods chosen, results can vary. The periods

Business project Coursework Example | Topics and Well Written Essays - 500 words

Business project - Coursework Example As competitors move to produce more efficient vehicles, by producing electric cars Toyota will be tapping into the profitable unexploited market. By diversifying the range of products it offers by introducing electric cars, will further increase its market base since it will be appealing to the different tastes and preferences of various consumers. Over the years, Toyota has penetrated the automobile market in various parts of the world. Its presence in different regions and countries provides it with an added advantage in the event it launches a new product. By manufacturing quality, dependable and reliable products, it has created faith among the users of these products. The reputation it has created of production of quality products is likely to spur the sales of the electric cars since it has an already established global presence. Toyota is an established brand and by producing electric cars, it shall be remaining relevant, flexible and dynamic so that it’s able to cope with the changing business demands and environment. There are two types of business environmental factors that are likely to affect the business. They may either be micro; internal factors or macro, those outside the business. One of the internal factors has been product quality features and safety. Between November 2009 and April 2010, the company recalled over 8 million different car and truck models that had been manufactured by Toyota company in U.S.A. the models were discovered as to having a defective brake and acceleration system. For this, it received a USD $16.37 million fine by the U.S government (Toyota Website). A major strength of the company is the ability to offer quality innovative products that suit the tastes of various consumers. This is reflected in the winning of the award of being the number one car manufacturer in the year 2007, a title it also retained in 2008 (Toyota