Share
Explore BrainMass

Primary cost of exchanging funds

What is the primary cost of exchanging funds in the global exchange market?
What are the characteristics of a free trade area?
What is an advantage of a geographical organizational structure?
The occurrence of a political coup in a foreign country should trigger what kind of decisions by the domestic headquarters management?
Explain a disadvantage of the speculative exchange rate.
What do you see is the consequence of the penetration of imports more deeply into the world's industrial nation?
When would be the appropriate time to decentralize your production if you were a manufacture of consumer foods?
How would you classify the economy of a country when private ownership has the predominate control of the economy?
Explain 3 beliefs of proponents of globalization.
Identify and explain each of Hofstede's culture dimensions.
Explain why foreign direct investment trends are up in recent years.

Solution Preview

What is the primary cost of exchanging funds in the global exchange market?

The funds exchanged in the global market are subject to constant fluctuations in exchange rates. Thus, the fluctuation in the exchange rates makes it difficult to estimate the exact receipt or payment of funds. If the movements are on the adverse side, such fluctuations can be very costly for the parties involved in the exchange of funds.

What are the characteristics of a free trade area?

A free trade area is a designated group of countries that have agreed to eliminate tariffs, quotas and preferences on most (if not all) goods between them.

Thus, the primary characteristic of a free trade area such as EU or NAFTA is that there is absence of tariff, duties or trade restrictions between the member nations and free movement of goods and services is allowed in most of the circumstances. The members get preferential treatment in trade with each other. Free trade areas also protect themselves via common set of policies from outside competition, such as those from companies belonging to non member nations. EU which is a major free trade area even has a unified currency.

What is an advantage of a geographical organizational structure?

The geographical organizational structure is usually adopted by organizations that operate in diverse geographic markets.

Advantages

structure can help tailor strategy to geographic market
delegates profit/loss responsibility to the lowest meaningful strategic level
improves functional coordination in the target geographic market
takes advantages of economies of local operations
provides excellent training for future higher level general managers

source: http://planningskills.com/passwordzone/lecturenotes/unit16.html

The occurrence of a political coup in a foreign country should trigger what kind of decisions by the domestic headquarters management?

Such events can really spell trouble for the operations of a global company in that country and thus, domestic headquarters management should stop all expansion plans and prepare themselves and be ready for any serious threat. In other words, they should be prepared for the worse in advance and even be ready for winding up the operations.

Explain a disadvantage of the speculative exchange rate.

If the exchange rates are speculative in nature and are constantly fluctuating, it makes life difficult for exporters and importers who are trading in such currencies as it is difficult to hedge positions in such currencies. It makes the prediction of accurate receipts and payments difficult for exporters and importers.

What do you see is the consequence of the penetration of imports more deeply into the world's industrial nation?

The penetration of imports from developing nations that have ...

Solution Summary

What is the primary cost of exchanging funds in the global exchange market?

$2.19