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International Finance: Using Financial Markets to Expand

Many of the world's leading companies are multinational corporations with operations scattered throughout the world and it makes sense for them to be concerned about the international environment. But why must purely domestic firms be concerned about the international environment?

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Suppose you have invested in a baby blanket manufacturing operation and have located contracted with a production facility in Costa Rica. How might you use international financial markets to expand this operation? If you decided to move your operation elsewhere, then where might that be?

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Here you go. I hope this helps- please let me know if you have any questions.

Many of the world's leading companies are multinational corporations with operations scattered throughout the world and it makes sense for them to be concerned about the international environment? But why must purely domestic firms be concerned about the international environment?
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Multinational corporations are concerned about the international environment because their business is dependent upon exchange rates, labor rates, and market security. As the world becomes increasingly flat, it is key that multinational corporations maximize their effectiveness by ensuring they are operating in countries in which their investment is maximized. Multinational corporations have the ability to shape trade, and be shaped by world events. Purely domestic firms, however, must also be concerned about the international environment. In part, this is because domestic firms are competing with multinational corporations or organizations that may be sourcing services or products internationally. This can result in lower cost of goods, which may be difficult for the domestic company to compete with. At the same time, ...

Solution Summary

This solution discusses why a purely domestic firm must be concerned about the international environment and how a baby blanket manufacturing operation that produces in Costa Rica might you use international financial markets to expand its operation. It also discusses if the operation moved elsewhere, then where might that be?

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