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Nodal Logistic and Custo Brasil

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Nodal Logistic and Custo Brasil
Instituto Tecnológico de Estudios Superiores de Monterrey

Campus Laguna

Laura Patricia Sarmiento Covarrubias
A01230630
LIN

International Finance
Case: Nodal Logistic and Custo Brasil

Torreón Coah.

PROBLEM:
After approval from the company’s executive board, John Penman knew that Nodal Logistics Corporation could invest in a $45 million industrial property of 800,000 square feet in Sao Paulo, Brazil. This represented an important long-term opportunity because the company’s global position could be greatly improved. However, the problem appear when Nodal Logistics’ legal department received a notification from their Sao Paulo based associate saying that, under Brazilian Law, all commercial real estate contracts must be denominated in Brazilian Reals.

ANALYSIS
Nodal Logistics Company is interested in entering the Brazilian market, because it is an emerging market, as it has important factors as population, skilled labor, and especially the geographical strategic point on partnerships in the Mercosur also is a great disadvantage that the exchange rate will face the American company with the Brazilian currency, the real. This is because the law marks all trade and investment has to be in its national currency and seek a return of less investment in five years, but with this action investment real an estimated 12 years would and also a devaluation risk in the Brazilian currency. He also hired an investment company which issued the following requirements must have the new American enterprise.

*Register at the Central Bank of Brazil
*Ask to remit funds from a non-Brazilian company as dividends and fees. *Not required to pay double taxation of dividends.
*Build your estate 150 miles offshore.
*All port terminals are privatized.
*It is by law required that foreign companies have strategic alliances joint ventures with local partners. All these key pieces made decisions that the property would be in Las Campinas, near Sao Paulo place will also be


References: Moffet, Micheal (2008) Nodal Logistics and Custo Brasil. Thunderbird. School of Global Management. Investopedia (2013) Transaction Exposure. Investopedia. Recovered at 19 of February at: http://www.investopedia.com/terms/t/transactionexposure.asp
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