Module Four Assignment Guidelines and Rubric
INT‐220‐J7483 Global Dimensions in Business 23EW3 MA
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Overview
Foreign exchange impacts the profitability of transac�ons in interna�onal markets. It can turn a profitable business into one that loses money and can turn an unprofitable business into one that makes money.
In this assignment, you will analyze the impact of foreign exchange on different business scenarios and present your findings in a short business memo.
Scenario
You manage the interna�onal business for a manufacturing company. You are responsible for the overall profitability of your business unit. Your company ships your products to Malaysia. The retail stores that buy your
products there pay you in their local currency, the Malaysian ringgit (MYR). All sales for the first quarter are paid on April 1st and use the exchange rate at the close of business on April 1st or the first business day a�er
April 1st if it falls on a Saturday or Sunday. The company has sales contracts with different vendors that determine the number of units sold well in advance. The company is contractually obligated to sell 4,000 units for
exactly 1.25 million MYR for the first quarter. The break‐even point for each unit is $90 in U.S. dollars. Use the following foreign exchange rates:
• On January 1, the daily spot rate is 3.13 MYR, and the forward rate is 0.317 U.S. dollars/MYR for April 1st of the same year.
• On April 1, the daily spot rate is 3.52 MYR.
Prompt
Using the informa�on above, create a short business memo that explains the profitability, viability, and importance of considering foreign exchange on the basis of the scenarios below.
Scenario 1: The company uses the spot rate on April 1st to convert its sales revenue in MYR to U.S. dollars.
Scenario 2: On January 1st, the company uses that day’s forward rate today to lock in a foreign exchange rate for its expected 1.25 million MYR in sales. This means the company agreed to exchange 1.25 million MYR
using the forward rate on January 1st when April 1 arrives.
Scenario 3: Another op�on for the company is to spend the foreign currency and avoid any currency exchange. Because it is a manufacturing company, raw materials are always needed.
Specifically, you must address the following rubric criteria:
• Foreign Exchange Calcula�ons: Determine the profitability of the interna�onal business by using foreign exchange calcula�ons for the first and second scenarios.
• Spend or Save: Discuss what you would need to consider when determining if the company should buy raw materials with the foreign currency in an effort to avoid foreign exchange risk and whether this is a
viable op�on for the company.
• Conclusion: A�er determining the result for each scenario, explain the importance to a company’s financial results of considering foreign exchange risk.
Guidelines for Submission
Submit this assignment as a 250‐ to 300‐word Microso� Word document. Sources should be cited according to APA style.
Module Four Assignment Rubric
Criteria Exemplary (100%) Proficient (85%) Needs Improvement (55%) Not Evident (0%) Value
Foreign Exchange Calcula�ons Exceeds proficiency in an
excep�onally clear, insigh�ul,
sophis�cated, or crea�ve manner
Determines the profitability of
the interna�onal business by
using foreign exchange
calcula�ons
Shows progress toward
proficiency, but with errors or
omissions; areas for
improvement may include
performing foreign exchange
calcula�ons correctly
Does not a�empt criterion 40
Spend or Save Exceeds proficiency in an
excep�onally clear, insigh�ul,
sophis�cated, or crea�ve manner
Analyzes the viability of
spending the foreign currency
instead of exchanging it
Shows progress toward
proficiency, but with errors or
omissions; areas for
improvement may include
iden�fying more elements that
can complicate the process of
ge�ng raw materials to the
company’s factories
Does not a�empt criterion 20
Conclusion Exceeds proficiency in an
excep�onally clear, insigh�ul,
sophis�cated, or crea�ve manner
Makes conclusions about the
importance to a company’s
financial results of foreign
Shows progress toward
proficiency, but with errors or
omissions; areas for
Does not a�empt criterion 20
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sophis�cated, or crea�ve manner financial results of foreign
exchange risk
omissions; areas for
improvement may include
making conclusions that align
with foreign exchange
calcula�ons and using the break‐
even point in analysis
Ar�cula�on of Response Exceeds proficiency in an
excep�onally clear, insigh�ul,
sophis�cated, or crea�ve manner
Clearly conveys meaning with
correct grammar, sentence
structure, and spelling,
demonstra�ng an understanding
of audience and purpose
Shows progress toward
proficiency, but with errors in
grammar, sentence structure,
and spelling, nega�vely
impac�ng readability
Submission has cri�cal errors in
grammar, sentence structure,
and spelling, preven�ng
understanding of ideas
10
Cita�ons and A�ribu�ons Uses cita�ons for ideas requiring
a�ribu�on, with few or no minor
errors
Uses cita�ons for ideas requiring
a�ribu�on, with consistent
minor errors
Uses cita�ons for ideas requiring
a�ribu�on, with major errors
Does not use cita�ons for ideas
requiring a�ribu�on
10
Total: 100%
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