Mars, Inc. investment abroad considers its foreign operations utilizing the firms overall riskiness. Foreign exchange risk of expropriation and constant government intercession are increasing the political and financial risks multinational corporations encounter when functioning in a foreign continent. Mars, Inc., U.S. Corporation vends chocolates, rice, pet products, etc. abroad (Europe). Mars, Inc. must be aware of the risks involved between the euro and the dollar changes from a daily basis. The strategic risks and financial strategy to consider for possible expansion is advanced international markets increase Mars, Inc. sales and products in existing markets is the easiest and most risk-free approach towards expanding. The role played by currency speculators, particularly, should not be underestimated, as it exerts significant influence on the market. In addition, foreign investment in equities/stock, property and bond markets can play an important role in influencing a currency. The tactic requires a bigger locality, different pricing strategies, innovative/improved marketing techniques but it will be in a customer group with whom you already have a relationship. Introduce a New product/service that have been accumulating data, consumer reaction of the newest product which would be an expansion tactic and when positioned as adding value and being responsive to consumer requirements, this can be a relatively risk-free method to expand. Possible risks of foreign currency exposure for Mars, Inc. would be the volatile exchange rates and country specific risks this can be caused by the movement or action in the exchange rate of foreign and US currency. This type of movement of the exchange adjustment in currency can alter Mars, ... ... middle of paper ... ...rospect of government guidelines while simultaneously counteracting business and societal concerns. Collaboration permits joint ventures abroad to focus on comparative advantages to increase impact of globalization, share risk, increase credibility of the efforts with other significant stakeholders. Works Cited Croushore, D. (2010). Money and Banking . Ohio: Cengage Learning. Eun, E. S., & Resnick, B. G. (2012). International Financial Management 6th Edition. Boston: McGraw - Hill Learning Solutions. Greenard, K. (2012, January 9). Diversification is key to a healthy investment portfolio. Retrieved from National Post, a division of Postmedia Network Inc: http://www.nationalpost.com Ross, Westerfield, & Jordan. (2010). Exhange Rate Risk. In Ross, Westerfield, & Jordan, Essentials of Corporate Finance (pp. 579-582). Boston: Mcgraw-Hill Learning Conpanies, Inc.
BHP Billiton is a globalized company that was formed in 2001 through a merger between Broken Hill Proprietary (BH P) and Billiton. BHP is one of the world’s largest producers of aluminum, cooper, iron, ore, silver uranium and other minerals alike. BHP also has interests in petroleum. BHP is the worlds largest mining and resource company with about 100,000 staff in more than 25 different countries. The companies headquarter resides in Melbourne, Australia and is listed on both the ASE (Australian securities exchange) and on the London Stock exchange.
Parrino, R., Kidwell, D. S., & Bates, T. W. (2011). Fundamentals of Corporate Finance. Hoboken, NJ: John Wiley & Sons. (Original work published 2009)
Given the global and competitive climate of the industries economy, Roraima must reconsider its global strategy. Considering Roraima’s cautious entry into different markets thus far, many topics must be considered before moving forward with a new strategy. These topics include currency exposure, foreign location choices or foreign direct investment (FDI), organizational structure options, supply chain management and political risks.
Adair Jr., T. A., Cornett, M. M., & Nofsinger, J., (2012). Finance: Applications and Theory, Second Edition. New York, NY.McGraw Hill.
Another type of exchange risk faced by multinational companies is transaction risk. If a company sells products to an overseas customer, it might be subject to transaction risk. Transaction risk refers to actual conversions of cash flows from one c...
Robert J. Hodrick Geert Bekaert, 2013. International Financial Management. International ed of 2nd revised ed Edition. Pearson Education Limited.
“The Benefits of diversification are clear. Portfolio theory has played a crucial role in explaining the relationship between risk and return where more than one investment is held. It also enables us to identify optimal and efficient portfolios.”
To keep up with the fast moving phase of the global business era, it is a necessity for organizations to understand the larger forces that is shaping the macroenvironment of the foreign market. Companies usually decide to expand their market to grow their revenue in an untapped market, however, before doing so, the obstacles that are not typically encountered in the domestic market should be taken into account.
Eiteman, D. K., Stonehill, A. I., & Moffett, M. H. (2010). Multinational Business Finance. (12th ed.). Boston, MA: Pearson Education, Inc.
Expanding a company into foreign markets is no easy feat. A great many companies have tried over the past decades and many have learned firsthand, that in the world of trade, one has to be prepared and cautious. It is for this reason, that many have dedicated countless hours, days, weeks, months, even years, into finding successful methods. Some have done this by simply trying, and consequently failing. Others have used the data provided by the failed attempts, and the successful ones, to r...
Foreign exchange risk is the potential loss due to change in the value of the assets or liabilities of the bank resulting from the fluctuations in exchange rate. Banks transact for their customers or for the banks’ own accounts. Any adverse movement can degrade the value of the foreign currency and causes bank’s loss.
...lders. If a person diversifies by selecting bonds that are lower risk and balancing out with more stocks that are aggressive in the portfolio, they will not lose as much money should there be a volatile downturn in the market. By investing in stocks and bonds in the long term it is smart in balancing an aggressive portfolio of investments.
Today, in a highly competitive market and the growing technological age businesses must adapt in order to sustain themselves and maintain competitiveness. With globalization increasing, there are more opportunities for cheaper resources and untapped markets. As a result, foreign markets are a natural progression for any domestic or global corporation. Growth in networks of economic, political, social, scientific, or environmental interdependence to span worldwide distances has created a more integrated world and market. These opportunities, however,
Globalization encourages worldwide business. Globalization is an efficient process by which all the nations of world will commonly try to set regular universal standards & regulations (both created & recommended) which will encourage business around different nations. Business around nations or elements crosswise over different fringes is called universal business.
Regardless of the success of your company on a national scale, to engage yourself in a successful venture outside of your borders requires several critical elements that one must acknowledge and apply with great care. One of those requirements would be to thoroughly research the cultural environment in which you wish to launch your product no matter how popular and indispensable you believe it might be. In the past, many national giants have hit the wall when introducing a foreign market or launching a new marketing campaign because of the cultural gap they encountered on the other side of their borders. Another way of preventing a flop on an international market is to carefully study the economical past of this country, which might differ quite a bit from the one the company flourished in. In addition to the previous precautions, it Would be advise to make sure that your product will blend seamlessly within the spending habits of the consumers. Overall, meticulous market studies and patience often constitute the way to success on a foreign soil.