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International Businesses and Exchange Rate Systems

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1. Describe the ways in which international business has changed during the last 50 years. Include the concept of an MNC and the different types of foreign investment.

2. After World War II, the United States was the world's dominant economic power. We're still the largest economy, but the rest of the world has caught up significantly. In some areas, we've lost the lead. The production of consumer electronic equipment, for example, is largely done in the Far East. Is this trend good or bad for Americans? Explain.

3. Describe the difference between a floating and a fixed exchange rate system.

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1. The ways in which international business has changed during the last 50 years is that business has become more impersonal. Businesses 50 years ago were more localized and the businesses used to know their customers personally. Businesses have now moved their operations to out of town industrial parks. Women play a larger role in business. Furthermore, business has become globalized now. Moreover, businesses of all sizes trade in the global marketplace. Information technology, computerization, and automation enable conducting customer service from a different country. Finally, business employees and persons are required to interact with persons of different culture. A multinational company is a ...

Solution Summary

The answer to this problem explains three questions relating to international business. The references related to the answer are also included.

See Also This Related BrainMass Solution

International Financial Management: Exporting to the Netherlands

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.

1. What methods do you think would be best to manage this risk under your circumstances?

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.

2. 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?

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.

3. Would you tell your boss that you expect the value of the currency in this country will increase or decrease?

4.The currency of The Netherlands. Is it stable? Does The Netherlands have fixed or floating exchange rates? Does the exchange rate fluctuate a lot?

5. The banking system in The Netherlands. How safe is this system? Any recent banking crisis in The Netherlands?

6. Overall does the financial system in The Netherlands make it easy or difficult to do business?

7. What kind of steps would you recommend for a company doing business in The Netherlands to hedge or minimize their financial risks?

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