Reference no: EM132453787 , Length: 2

Objective: Examine exchange rate risk and political risk, and how MNCs manage them.

Instructions

• When an organization works across country borders the complexity of business operations increases. One of the things that an international company will need to consider is the impact of exchange rates. This exercise includes the comparison of multiple currencies against the U.S. dollar. MNCs encounter some different challenges in financial management than do domestic firms. One of the primary challenges is dealing with exchange rates. Companies that operate in multiple nations must deal with different rates of exchange between those companies. It is also challenging to have differing accounting standards in numerous countries and to raise capital in other countries. In addition, political risks can be a factor in managing MNCs.

Question 1: research exchange rates between the U.S. and five other countries of your choice and create a chart that shows the exchange rate comparison.

Question 2: Include the chart as Appendix A in a 2-3 page paper that reviews the challenges that a MNC would encounter if they had operations in all five countries.

Question 3: Discuss political risk in the analysis of the MNC's risk. The MNC is headquartered in the U.S. and reports its financial statements according to U.S. GAAP, in U.S. dollars.

Question 4: Provide at least three sources. If used, citations to the dictionary will be in addition to the required three sources.