10 Nov Cash is KingYou are the manager of a Korean subsid
Cash is KingYou are the manager of a Korean subsidiary of a U.S.-based MNC. Your subsidiary has been operating quite profitably during the last year, and you have excess cash to invest. You expect to use this cash to strengthen your subsidiary’s position in Korea and ultimately to make your performance look exceptionally good. Your subsidiary buys raw materials from other Pacific Rim subsidiaries of the U.S.-based parent to manufacture its product. You also have had permission to buy these parts from the competition if you can get a better price. Lately, you have been buying from the competition. This morning, you had the following conversation with headquarters:HQ: We need cash transferred into France, and your Korean subsidiary has excess cash at the moment. We want you to facilitate the movement of these funds by Friday.You: You know that today is Monday?HQ: Yes, we know that it is Monday.You: How do you propose that I accomplish your request, considering the fact that my government has just stopped all movement of excess cash out of the country?HQ: That could be a problem. You know your country’s system. Work around it. France needs the cash by Friday.Questions:1. How could you facilitate the flow of cash from Korea to France, given the pre- sent restrictions in Korea?2. If you are unsuccessful in transferring funds to France, how else could the parent facilitate this flow?3. Why is your subsidiary allowed to operate so independently (i.e., investing its own excess cash where it chooses and buying raw materials from the least ex- pensive source)?4. What is meant by the phrase, ‘You know the system’?