Scenario - Lewis Fabrication Lewis Fabrication Was Founded in 2001

question 21

Multiple Choice

Scenario - Lewis Fabrication Lewis Fabrication was founded in 2001 and is based in Maryland, USA.  This company manufactures custom designed motorcycle parts and currently has over two thousand U.S. customers.  Due to the growing number of inquiries received from foreign countries such as Japan, Canada, China, and Indonesia, Lewis Fabrication has decided to begin operations on a global scale. The owners realize there is much to learn before undertaking this monumental step.  However, financial projections indicate about $1 million in profit is very likely in the first year of going global.  The owners are very excited and looking forward to the business expansion. While Lewis Fabrication has decided to begin operations on a global scale, it realizes there is still much to learn. One of the fundamental things it must have knowledge on is the manner in which it can begin operations globally. Which one of the following would not be considered a choice for starting international business operations for this company?  

• A)Begin as an export-import business
• B)License a foreign business partner to produce and sell the company's products
• C)Open wholly owned subsidiaries of the company in the Midwest
• D)Sell franchises of the business to foreign buyers
• E)Form a strategic alliance with a foreign firm

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Definitions:

Operating Cash Flow

Cash generated by a company’s normal business operations.

Fixed Costs

Fixed outgoings that are unaffected by production or sales volumes, such as renting costs, salary payments, and insurance expenses.

Depreciation

The systematic allocation of the cost of a tangible asset over its useful life, reflecting its consumption, wear and tear, or obsolescence.

Scenario Analysis

This method involves evaluating potential future scenarios to understand how varying conditions can influence business operations or investment outcomes.