SUMMARYMultiquimica do Brasil (MB) is the wholly birthed Brazilian subordinate word of Multichemical substance Industries, Inc, of the United States formed in 1993 with the initial purpose of establishing manufacturing facilities for rustic chemical, industrial chemical, and pharmaceutical products in Brazil. Multichemical Industries, Inc sold 75 varied products in over 50 countries during 1998. The company?s fountainhead product groups were: pharmaceuticals, industrial chemicals, agricultural chemicals, and petrochemicals. Multichemical?s overseas subsidiaries accounted for 35% of sales in 1998, with the majority of the activity taking authority in Europe.
MB is responsible for all-Brazilian manufacturing and sales of Multichemicals principal chemical and pharmaceutical products in Brazil. As management reviewed preliminary 1998 results in early January 1999 of the foreign operations of the pharmaceutical group of Multichemical Industries, Inc, precaution was growing about their position in Brazil. They were concerned that Multichemicals own pricing, billing, and performance measurement policies were contributing to falling profits and foodstuff share of MBs primary pharmaceutical product, in the Brazilian marketplace. twain local and foreign producers were hurting their pharmaceutical products and their foreign counterchange policies may well be to blame.
CASE QUESTIONS1. What is Multichemical Industries trying to pass on with the ?Dollar Linkage Billing? arrangement between Multiquimica do Brasil and the domestic subsidiary?
Within the Brazilian domestic market, MB?s reported profit in dollar toll was affected by the more or less continual change in the nourish of the real. Due to competition MB was forced to offer 90-day payment terms to their customers, which proved to be a major problem. Since the real was being devalued by a small amount on a round-the-clock basis, any domestic subsidiary with terms of 90 days was faced with a currency vent?translation loss?whenever its books were translated back into dollar terms. This translation loss resulted from the dollar value of the original real denominated...
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