“Dorchester Ltd. is an old-line confectioner specializing in high-quality chocolates. Through its facilities in the United Kingdom, Dorchester manufactures candies that it sells throughout Western Europe and North America (United States and Canada). With its current manufacturing facilities, Dorchester has been unable to supply the U.S. market with more than 225,000 pounds of candy per year. This supply has allowed its sales affiliate, located in Boston, to be able to penetrate the U.S. market no farther west than St. Louis and only as far south as Atlanta. Dorchester believes that a separate manufacturing facility located in the United States would allow it to supply the entire U.S. market and Canada (which presently accounts for 65,000 pounds per year). Dorchester currently estimates initial demand in the North American market at 390,000 pounds, with growth at a 5 percent annual rate. A separate manufacturing facility would, obviously, free up the amount currently shipped to the United States and Canada. But Dorchester believes that this is only a short-run problem. They believe the economic development taking place in Eastern Europe will allow it to sell there the full amount presently shipped to North America within a period of five years. Dorchester presently realizes 3.00 per pound on its North American exports. Once the U.S. manufacturing facility is operating, Dorchester expects that it will be able to initially price its product at $7.70 per pound. This price would represent an operating profit of $4.40 per pound. Both sales price and operating costs are expected to keep track with the U.S. price level; U.S. inflation is forecast at a rate of 3 percent for the next several years. In the U.K., long-run inflation is expected to be in the 4 to 5 percent range, depending on which economic service one follows. The current spot exchange rate is $1.50/1.00. Dorchester explicitly believes in PPP as the best means to forecast future exchange rates. The manufacturing facility is expected to cost $7,000,000. Dorchester plans to finance this amount by a combination of equity capital and debt. The plant will increase Dorchester’s borrowing capacity by 2,000,000, and it plans only to borrow that amount. The local community in which Dorchester has decided to build will provide $1,500,000 of debt financing for a period of seven years at 7.75 percent. The principal is to be repaid in equal installments over the life of the loan. At this point, Dorchester is uncertain whether to raise the remaining debt it desires through a domestic bond issue or a Eurodollar bond issue. It believes it can borrow pounds sterling at 10.75 percent per annum and dollars at 9.5 percent. Dorchester estimates its all-equity cost of capital to be 15 percent. The U.S. Internal Revenue Service will allow Dorchester to depreciate the new facility over a seven year period. After that time the confectionery equipment, which accounts for the bulk of the investment, is expected to have substantial market value. Dorchester does not expect to receive any special tax concessions. Further, because the corporate tax rates in the two countries are the same–35 percent in the U.K. and in the U.S.–transfer pricing strategies are ruled out. An economic assessment of the country chosen, A risk mitigation plan, A financing plan on how to finance the acquisition, and A concluding recommendation using supporting rationale derived from the above mentioned items.

I will pay for the following essay ASSESSMENT 2. The essay is to be 10 pages with three to five sources, with in-text citations and a reference page.

This demonstrates the interdependence that exists between the managerial decisions made by the two firms and this affects the pricing and output in the market.

Monopolistic market structure is characterized by the presence of multiple of firms that sell similar but non-identical products to equally informed consumers. Consumers are thus presented with an opportunity of picking either product from any of the consumers, as they are substitutes of each other and thus serve the same purpose. Edward Chamberlin and Joan Robinson first described the monopolistic market structures in the 1930s and generated the characteristics of such a market. Duopoly and monopolistic market structures differ significantly in the number of producers, type of goods and the government influence that is exerted in each situation. This paper seeks to highlight the differences between the two market structures and this affects the performances of the firms involved. The paper also seeks to provide a case study of firms in the united states that operate under the two different market structures and how their success and failure has been influenced by this market structure (Weron and Weron, 438).

The first obvious characteristic of duopoly market is the presence of only two firms, sellers or produces whose actions or lack of it affects the managerial decisions of the other. For long, a number of firms in the United States have operated under a duopoly market structure but has since changed due innovation and technological advancement. Pepsi and Coca-Cola are the major soft drink manufacturers in the United States and they literally control the market and its dynamics. Visa and MasterCard have also remained as the major plastic money providers not just in the United States but also in major economies around the world (Weron and Weron, 439).

In a duopoly market structure, the decisions made by one of