Company ABC plans to ship the processing module from the US and to purchase and assemble the less sophisticated components in a facility near Bangalore. The company will train Indian physicians and imaging specialists on how to give an initial scan of the results, but the data will be transmitted back to the US for incorporation in the scan library.

1) The processing modules will cost $2,500 each FOB. Freight and insurance will add an additional $500 each. The duty is 20% based on the CIF price. Calculate the landed cost in dollars. What is the price in rupees if the exchange rate is 65 rupees/$?

2) The locally added content is estimated at 1 million rupees. In addition, Company ABC policy is that the final price reflects a 200% to 400% markup to cover overhead and profits. What would be the range for the price of a unit which would be sold to a hospital?

3) Company ABC would charge 6,500 rupees for the data analysis. That includes 3,000 rupees for the interpretation of the scan done by Indian professionals and $30 for the data transmission, analysis and storage which will invoiced back to the US parent in $. The rest covers overhead and profit. How would the income stream be affected if the exchange rate fell to 75 rupees/ $?

4) The competition is as follows: Company Product List Price (rupees) Industry Quality Rating Alpha PET Scan (no analytics) 2.5 million C Beta x-ray (no analytics) 2 million D Gamma PET SCAN (w/ analytics) 3million B Delta Advanced imaging (w/analytics) 3.5 million D- What should Company ABC's competitive market-entry strategy be in this market? What would be an appropriate sales price in rupees?

5) How can Company ABC protect itself against foreign exchange risk?

6) In selling to the National Urban Health Mission, a government official says that Delta company has been successful, despite its poor quality rating, because it engages a well-known politician to make facilitation payments to the selection committee. The official offers his services to you and notes that without the payments, it is unlikely that Company ABC would make sales to the National Urban Health Mission. What would you recommend to the US headquarters?

7) What would you recommend for the top executives at the newly acquired Indian subsidiary:

Retain current Indian CEO or bring in an American or third country national for CEO?

Retain current Indian CFO or bring in an American or third country national for CFO?

Retain current Indian production quality control manager or bring in an American or third country national quality control manager?