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Explain What Challenges in New Current Business in International Business?

Essay by   •  March 15, 2018  •  Essay  •  265 Words (2 Pages)  •  611 Views

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  1. Explain what challenges in new current business in international business?

The challenges in new current business in international business have four perspectives for the field of international management. First, whether they follow from a course of action integrating in a very evolving context, new diagnostic and decision making logic's. Secondly, whether they originate from the acceleration of the international openness and the de-compartmentalization between economics territories and between activities. Thirdly, whether they question power relationship between them and the increasing diversity of actors taking part in them. Lastly, whether they lead to attach more importance diversity of cultures and relationship that are intensified by the development of international activities. Other than this, currency rate fluctuation is one of the most challenging international business problems. Example is  if company is paying suppliers and production costs in U.S. dollars, but selling in markets with a weaker or more unpredictable currency, company could end up with a much smaller margin — or even a loss.

2. How to face the challenges? Discuss

One way to face against large fluctuations in currency is to pay suppliers and production costs in the same currency as the one we selling in. This may mean switching to more local production where possible in order to better balance your outgoings and sales revenue.

Another option for mitigating the risk of unpredictable currency rates can be setting up a forward contract and agreeing a price in advance for future sales. This potentially means missing out on greater profit should rates shift in your favor. However, it can protect sales from the risk presented by unstable currency.

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