Multinational Company Operations

Multinational Company Operations

Suppose a U.S. wood-products company has facilities and employees in Canada providing its raw materials (wood), but has most of its sales in the United States.

(1) What are the most important operational and financial risks in this arrangement? (2) How can the company pay its Canadian employees, who presumably want Canadian dollars, when its U.S. customers are paying in U.S. dollars? Furthermore, how can it calculate its profit if revenue is in U.S. currency and most of its costs are in Canadian currency?

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The operational risk the company can face is moving the goods from where they are produced to the consumer, especially if they are using road transportation there can be traffic delays and breakdown thus can lead to not delivering the goods to the consumer on time. The other risk is the goods can be damaged when they are to be transported a long…

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