How to manage cultural risks and other factors related to a foreign operation of a multinational business. Is cultural, business, or political risk more challenging to overcome than one of the others? Why or why not? How should American standards influence multinational businesses?
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Increased global interaction has been promoted by advanced technology in communication, ideas and culture, which largely encourages and facilitates international trading. Businesses go abroad in seeking better financial incentives, stronger networks, and markets of opportunities. But at the same time, the complexities in terms or risks involved in international operation are more than domestic firms.
How to manage cultural risks and other factors related to a foreign operation of a multinational business. Is cultural, business, or political risk more challenging to overcome than one of the others? Why or why not? How should American standards influence multinational businesses?
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- The complexity posed by differences in the cultural, political, legal, and economic environments creates a so-called “liability of foreignness.” This idea holds that foreign companies, because of their poorer familiarity with local conditions, incur additional costs. In theory, the liability of foreignness makes IB activity too expensive. In practice, companies offset this liability by capitalizing on their unique advantages as well as selecting the mode of international business that best reflects their resource profile and risk tolerance--Always in the effort toward minimizing the intrinsic higher costs of international operations. The higher costs of international operations, executives point out, are driven by things as varied as the cost of legally establishing businesses, real estate costs, customs duties, and translation costs. Managing these costs is complicated by the report that _53_______%___ of global CEOs are concerned about the impact of __bribery and…Increased global interaction has been promoted by advanced technology in communication, ideas and culture, which largely encourages and facilitates international trading. Businesses go abroad in seeking better financial incentives, stronger networks, and markets of opportunities. But at the same time, the complexities in terms or risks involved in international operation are more than domestic firms. Respond to the following in a minimum of 175 words: Discuss how to manage cultural risks and other factors related to a foreign operation of a multinational business. Is cultural, business, or political risk more challenging to overcome than one of the others? Why or why not? How should American standards influence multinational businesses?Which of the following is not a reason for U.S. firms operating in foreign markets? A.Better economic and political environment (in the U.S.) B.Less expensive labor C.Tax incentives D. To achieve international diversification
- The rise of globalization is due to the many companies that have become multinational corporations for various reasons—for example, to access better technology, to enter new markets, to obtain more raw materials, to find funding resources, to minimize production costs, or to diversify business risk. This multimarket presence exposes companies to different kinds of risk as well—for example, political risk and exchange rate risk. Several factors affect the exchange rate of a currency with another currency. Which of the following statements are true about the factors that have an impact on exchange rates? Check all that apply. If a government intends to prevent its currency’s value from falling relative to other currencies, it will purchase its currency from sellers in the market. If the demand for a currency increases, the currency’s value will increase relative to other currencies. When a government limits imports and restricts foreign exchange transactions, its currency’s value tends…Investors and MNCs exporting or importing goods and services or making foreign investments throughout the global economy are faced with an exchange rate risk,which can have severe financial consequences on firms profitability,cash flows,and their market value,if not managed appropriately. MNC's use a number of external techniques of risk(exposure)management and resort to contractual relationships outside thier companies in order to reduce (or redistribute)the risk of foreign exchange losses.What are the determinants of hedging currency risk or foreign exchange exposures which pose risks to MNC's cashflows,competitiveness,marker value and financial reporting.1. Supposed a company plans to expand its business abroad, what are the risks it might encounter? 2. What are the needed policy interventions that must be imposed upon doing business internationally?
- a. According to the OLI paradigm, foreign direct investment is explained by three conditions (ownership advantages, location advantages and internalization). Examine the factors that influence firms to locate subsidiaries close to markets. b. Managers of multinational enterprises are advised to take advantage of their home region institutions such as the European Union. Assume you are the manager of a multinational enterprise in Belgium. Why is the institutional framework created by the EU pivotal for business? c.. What is globalization? What modes of international business are used by firms that want to globalize? Briefly describe each method. 1. What is the difference between a monochronic and a polychronic culture? How do such cultural differences affect business practices for international firms? 2. What is gross national income? How is it calculated? Illustrate your answer with a specific example. 1. What are the disadvantages of import restrictions in regard to creating domestic employment opportunities? 2. What is value chain configuration? Briefly list and discuss the factors that influence value chain configuration. 1. What is the relationship between a company's international market and its production location decisions? How do firms benefit from the use of scanning techniques when making location decisions? 2. Explain how franchising agreements differ from licensing agreements. 1. Compare push and pull promotional strategies in the context of international business.…Due to globalization and liberalization, many global corporates or multi- national companies wish to pursue business in more than one nation by producing, investing and operating across the globe through engaging various business activities. Thus, they confront a high degree of exchange rate risk in their commercial transactions. To minimize their risk those companies try toemploy diversified techniques. Identify any technique available in Omani FOREX market to support those companies in hedging the exchange rate risk and explain its operating approach.
- In its quest for global expansion Lewis Fabrication must examine its rationales for wanting to expand into the foreign marketplace. Which one of the following is not a reason why this company would want to expand globally? * To maximize shareholder wealth To minimize risk of failure for the business To increase the revenues of the company To cut costs of production for the company To reduce risks associated with business cycle fluctuationsEntry modes for entering new countries vary in their degree of control. What does control mean? O The degree of risk a firm has in its foreign activities The degree of ownership a firm has in its foreign activities O The degree of profits a firm has in its foreign activities O The degree of influence a firm has in its foreign activitiesMultinational companies are exposed to complex management and allocation of their resources. A multinational company's cash management, credit management, inventory management, and so on, need to have several additional elements factored in compared with those of a purely domestic corporation. Multinational Inventory Management Decisions related to amount of investment in inventory and inventory policy need to factor in the following: * Exchange rates . Possibility of import and export quotas or tariffs Tax consequences Possibility of at-sea storage Consider this case: Streep Inc. is a U.S.-based multinational firm with a subsidiary in Switzerland. Last week, Streep created its periodic financial statements, and the subsidiary had SFr 80,000 worth of inventory on its balance sheet. Streep translated the value of inventory using the spot exchange rate at that time of $0.8153 / SFr and recorded that value on its consolidated balance sheet. However, this week the exchange rate changed…