Week 3 Discussion 2
Need 250 words Initial Post and two replies of 100 words each. No Plagiarism. Due in 24 hours. I will attached the replies later.
First Letter of my last name is A.
Based on your “Big Mac” post and using the first letter of your last name, identify a country that starts with that letter on the Big Mac Index (http://www.economist.com/node/13055650?story_id=E1_TPDVVGVD). If a country is not listed with that letter, use the second letter in your last name. In 200 to 250 words, discuss whether you should be exporting or importing Big Macs from that country. Explain your reasoning. Be sure to respond to at least two of your fellow student’s posts.
3 Sep 20203 Sep at 13:40
Our textbook states that a “letter of credit is a document in which the import’s bank essentially promises to pay the exporter if the importer does not pay (David, 2013). The document requires both parties to communicate to make sure there are no issues when creating the document. According to David (2013), there are multiple sources of discrepancies some of them being inconsistent data, the carrier not named, incorrect data, among many other reasons (pg. 239, para. 3). One way to try and prevent these discrepancies from happening is for both parties to pay attention to details. Then making sure to have multiple people look over the document to make sure there are no errors. Then making sure that all parties involved understand the terminology of the other when creating all documents needed. To me, the most important part is making sure all documents are present and accounted for based on the guidelines provided for creating a letter of credit. Also make sure to have someone always double-check what you are doing in a timely manner, that way nothing gets missed.
David, P. (2013). International logistics: The management of international trade operations (4th ed.). Retrieved from https://www.vitalsource.com/
Monday7 Sep at 16:50
Week 3/Discussion 2,
I will be using letter “I” for the discussion. Indonesia is the country that I choose. The Big Mac burger costs 19,800 Rupiah, which gives the implied PPP as 5,593.22 Rupiah per dollar, and the actual exchange rate is determined as 11,380 Rupiah per dollar (The Economist, 2009). The Big Mac is significantly undervalued in that country. From my understanding, I would say that Indonesia should export their Big Macs rather than importing their Big Macs. With the currency undervalued, the country should strive to gain a competitive advantage in the global market. If companies in Indonesia are trying to engage in business with international companies, they understand that their goods are cheaper than many other countries. Foreign countries would love to do business and get their Big Macs imported from Indonesia to save money. A country like Norway, that overvalues their Big Mac, should import its burgers because they would lose out on exports. It would not seem practical for Indonesia to pursue importing Big Macs from countries where the Big Mac is more costly than 19,800 Rupiah ($1.74). Although Indonesia will have to incur shipping and transportation costs, it would be more worthwhile than accepting imports from countries where goods are more overvalued. The McDonald would not profit from selling a burger for $1.73, but it was purchased for $4.00, for example.
The Economist. (2009, February 4). Big Mac index (Links to an external site.) (Links to an external site.). Retrieved from http://www.economist.com/node/13055650?story_id=E1_TPDVVGVD