Sign In
Not register? Register Now!
Essay Available:
Pages:
5 pages/≈1375 words
Sources:
3 Sources
Style:
APA
Subject:
Business & Marketing
Type:
Essay
Language:
English (U.S.)
Document:
MS Word
Date:
Total cost:
$ 21.6
Topic:

Business and Marketing Case

Essay Instructions:

Before starting the case, make sure to go through the required reading material carefully. Review the concepts of exchange rates, currency hedging, and other methods of dealing with exchange rate risk. The topic of this module is difficult, so make sure you go carefully through all of the required tutorials and book chapters. When you have finished reviewing the background materials, apply your knowledge of the material to answer the following questions a five page paper:
1.Suppose you are running a very small business that exports all of its products to Europe, and
100% of your revenue comes from Euros. You have a family to support and a drop in the value of the Euro could be devastating to your personal financial situation. What methods do you think would be best to manage this risk under your circumstances? Refer to at least one of the required readings from the background materials in your answer.
2.Consider a large multinational consumer product company with operations in all major advanced and emerging economies. Now suppose the value of Indonesian and South African currencies drops dramatically and the value of the Chinese RMB increases dramatically. What kind of strategic changes in marketing and/or location of production facilities do you think this company should take given these new exchange rates? Explain your reasoning, and make references to Avadhani (2010) and Shackman (2015) in your answer.
3.Suppose you are a financial manager stationed in a foreign country, and your boss at headquarters in New York asks you to make a prediction about the future exchange rates in the country you are currently in. You see that the economy in the country you are in has started to grow more rapidly with a lot of new foreign investment. You also see that prices are much lower in this country than they are back in the U.S. For example, you see that the price of a Big Mac at McDonalds is half of what it costs you at home. Would you tell your boss that you expect the value of the currency in this country will increase or decrease? Explain your reasoning, and make references to Agarwal (2009) in your answer.

Essay Sample Content Preview:

Business and Marketing
Student’s Name
Institutional Affiliation
Business and Marketing
A business is an organization involved in providing goods and/or services with an aim of making profit. It is also referred to a firm or an enterprise. In business, there are risks that an entrepreneur has to consider for effective management of the business thus avoiding unnecessary losses. Proper risk management strategies therefore need to be put in place. Small businesses are at a higher risk of incurring losses due to improper risk management. However, a proper risk management and internal control help the small businesses understand the risks they are exposed to and deal with them appropriately. The aim of the paper is to answer various questions related to both small and large businesses and risk management methods. The paper also outlines various impacts of currency fluctuations in various nations.
Question 1
In our case, the assumption is that I run a very small business that exports all of its products to Europe. In addition to that, 100% of my revenue comes from Euros. Given that I have a family to support, a drop in the value of Euro could be quite devastating to my personal financial situation (Avadhani, 2010). In this case, I think there are various methods of risk management I can employ to avoid this devastation. A drop in the value will obvious cut down the net income from the small business. Therefore, the risk management methods should be such that they cater for both potential and calculated risk.
To start with, insurance is one of the most important ways of protecting a small business against risk. This entails carrying sufficient insurance. In our case, as the owner of the small business; I could consider insuring the business against the losses caused by inflation. This simply means insuring the business against the stock loss. This will provide a potential security just in case of a drop in the value of the Euro (Avadhani, 2010). In addition to this, I could consider extending the insurance cover such that it ensures that the ongoing expenses are met. It should also ensure that the anticipated net profit is maintained. This will maintain the business’ stability in case of a drop of the value of the Euro.
Secondly, I could consider coming up with a risk management program. This program should include the budgeting and the reaction towards the drop of value of the Euro. The program should also outline the prices of the products in an event when the value of Euro drops. This may include passing the information to the customers in Europe stating that there will be changes in the prices in case of a drop of the value of Euro. The difference in prices should not be so wide to avoid interfering with the demand (Avadhani, 2010). This will ensure the business continuity as well as avoiding any personal devastation that can be caused by the drop of the value of Euro.
In addition to these, I could consider maintaining less liquid cash. This can be achieved by ensuring that most of the cash obtained is directly transferred to purchase of the current assets. In case of the drop of the value of the Euro, the business will not be affected much. Nevertheless, my personal financial situation...
Updated on
Get the Whole Paper!
Not exactly what you need?
Do you need a custom essay? Order right now:
Order

👀 Other Visitors are Viewing These APA Essay Samples:

HIRE A WRITER FROM $11.95 / PAGE
ORDER WITH 15% DISCOUNT!
Order Now