Question

The decision to expand a business enterprise beyond its domestic shores is a massive effort involving a significant number of additional issues that one does not have to consider when staying “at home”. Please provide a discussion of the numerous implications of doing business abroad and how these issues impact and organization. Then provide a detailed discussion of how doing business in countries with different currencies can be particularly challenging and how failure to consider currency risk can have significant negative impact on an MNC.

Answer 1

While deciding to expand a business entrepise beyond its domestic shores, an enterprise has to consider multiple issues viz.:

1. Domestic laws applicable in the country

2. Market Sizing and Target Customers

3. Habits and preferences of the customers and domestic competition

4. Ease of Doing Business

5. Tax Laws

These decision influence the organization's decision-making as they affect all the business operations such as Marketing, R&D, Operations, Finance & Accounts, etc. If the companies doesn't take in account these issues, then they may run into opperational difficulties.

Apart from the business issues, currency fluctuations may also influence business decisions. Due to advers currency fluctuation, the company may be making profits in the international currency, but when the same is coverted in the currency of the enterprise's currency type, there might be a loss.