1) The General Manager (GM) of a car dealership is working on a three year business plan. The GM expects inflation to rise over the next three years.
How will higher inflation affect the number of vehicles the dealership can sell?
Based on the GM’s inflation expectation what type of loan should the dealership arrange with its bank in order finance its inventory of automobiles?
2) PC-World is a U.S. manufacturer of personal computers. The CEO is looking at opportunities for off-shore production. The selection of the country where PC-World will establish a production facility will depend on the following two factors: 1. The local wage in US$ terms; and 2. The rate of unemployment. According to the CEO, a low wage country will give the company a cost advantage, while a high unemployment rate will mean that there are plenty of workers available to work at the manufacturing facility. How would you advice the CEO regarding the use of these two indicators as the selection criteria?