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Essay / Research Paper Abstract
This 3 page paper looks at a range of influences that a business would have to consider when looking at expanding internationally. These include currency exchange rates, culture and language as well as different ways of expanding, such as exporting or franchising. The bibliography cites 2 sources.
Page Count:
3 pages (~225 words per page)
File: TS14_TEinexpan.rtf
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Unformatted sample text from the term paper:
also present potential advantages. In looking at some of these issues we can also consider the way in which a company may choose to deal with the influences. At
a practical level there will be the need to start dealing with different currencies. This presents a range of issues. The first is the risk that is presented due to
the way that currency exchange rates fluctuate. Many buyers will want to sign contracts in their local currency, so although there is
the potential to reduce the risk by having contract process in dollars, this is unlikely to help increase sales. This means the exchange rate risk is passed onto the company
selling the goods. There are ways that the company may choose to deal with this. The currency maybe kept in the country where the goods were sold and then transferred
back to the US when they believe the exchange rate is favourable. However this can also tie up capital, especially if there are not any operations in that country and
the opportunity cost can be high (Nellis and Parker, 2004). An alterative strategy is to use hedging, the agreement to purchase dollars
art a set rate in advance, or the sale of a contract to sell the local currency at a set rate in advance. In each case there is an increased
level of security as there is known the price that will be paid for the conversion but these contracts cost money. If there is a loss on the sale of
a contract to sell the currency this can then be offset against the price that was gained for the sale of the contract (Nellis and Parker, 2004).
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