A very brief account of certain important types of transactions conducted in the foreign exchange market is given below Spot and Forward Exchanges Spot Market: The term spot exchange refers to the class of foreign exchange transaction which requires the immediate delivery or exchange of currencies on the spot. In practice the settlement takes place within two days in most markets. The rate of exchange effective for the spot transaction is known as the spot rate and the market for such transactions is known as the spot market. Forward Market: The forward transactions is an agreement between two parties, requiring the delivery at some specified future date of a specified amount of foreign currency by one of the parties, against payment in domestic currency be the other party, at the price agreed upon in the contract. The rate of exchange applicable to the forward contract is called the forward exchange Continue reading
International Business
International Business Management deals with the maintenance and development of a multinational operation across national borders, whose manager has the knowledge and the skills to manage and handle cross-cultural processes, stakeholders and business environments in a right way.
Hofstede’s Cultural Dimensions
Dr. Greet Hofsted had conducted a comprehensive study and explained how culture influences the values at the work place. He worked as a psychologist in IBM from 1967 to 1973. In the time of working in IBM he has collected the analyzed data from aver 100000 individual from more than forty different countries. To the above study he made some additions and he developed four dimensions and later on he added fifth dimension that is long term outlook. Geert Hofstede’s dimensions investigation can support the trade individual in enhance understanding the intercultural variance within regions. “Culture is more often a source of conflict than of synergy. Cultural differences are a nuisance at best and often a disaster.” – Dr. Geert Hofstede The different dimensions of the Geert hofstede are explained below they are Power distance index (PDI) Individualism (IDV) Masculinity (MAS) Uncertainty avoidance index (UAI) Long term orientation (LTO) Power Continue reading
Human Resource Management (HRM) in a Global Environment
As the organizations continue to grow globally at a rapid pace, nations are increasingly permeable to the international exchange of knowledge, capital, goods and services, giving rise to more complexities and uncertainties. Intensified rate of globalization is evident from the changing trends in foreign direct investment which is increasingly indicating a shift toward developing economies like China and India. Growing internationalization is breaking down organizational and geographical boundaries with business processes and structures undergoing complete transformation. This has brought the role of human resources to the fore as the competitiveness of these organizations is contingent on their ability to adapt and design human resource strategies that can sustain global nuances and dynamics. International human resource management (IHRM) from an organization’s perspective is defined as the effective management of human resources in global markets for multinational companies(MNCs), in order to gain a key source of competitive advantage and to be globally Continue reading
Country Risk Analysis
Country Risk Analysis is the evaluation of possible risks and rewards from business experiences in a country. It is used to survey countries where the firm is engaged in international business, and avoids countries with excessive risk. With globalization, country risk analysis has become essential for the international creditors and investors. Country risk analysis identifies imbalances that increase the risks in a cross-border investments. Country risk analysis represents the potentially adverse impact of a country’s environment on the multinational corporation’s cash flows and is the probability of loss due to exposure to the political, economic, and social upheavals in a foreign country. All business dealings involve risks. An increasing number of companies involving in external trade indicate huge business opportunities and promising markets. When business transactions occur across international borders, they bring additional risks compared to those in domestic transactions. These additional risks are called country risks which include risks Continue reading
Internationalization Strategy Selection
Choice of the strategy does not consist merely of a collection of isolated decisions on products, markets, channels, partners and operation modes. These decisions are also core issues of a competitive strategy. Therefore, the choice of a strategy is all about choosing an appropriate framework for the growth and internationalization strategy for the company‘s competitive success. That is, the choice of strategy must be understood within the context of strategic planning. The strategy of the firm is concerned with matching a firm‘s resources and capabilities to the opportunities and challenges arising from the external environment. This could just as easily be restated as, €•The choice of the growth and internationalization strategy is concerned with matching a firm‘s resources and capabilities to the opportunities and challenges arising from the external environment. According to the view adopted here: “The central task of strategic planning is defining, building, utilizing, maintaining, and developing a Continue reading
Emergence of New Structural Designs of MNE’s
As companies grow in size, product lines, and dependence on foreign operations, complications of communication, responsibility and control become more complex. So, new structures continue to evolve to deal with this complexity. Proctor & Gamble (P&G) restructured its operations in 1999. P&G formed a unique concept of ‘Global business Product Units’ (GBUs) and 5 such units were established. With the 5 GBUs P&G wants to build its global brand equity as part of its ‘global strategic thinking’. At the same time 7 Market Development Organizations along the lines of major regions of the world were made to facilitate flexibility in the sphere of local actions. Thus it ‘thinks global, acts local’. There are numerous cases like this. But few general forms are alone dealt here. Network Organizations Network-based organization models have been characterized as reflecting an integrated worldwide strategy through globally distributed but interdependent resources and activities. The world is Continue reading