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.
Implications of doing business abroad
Negative impact of currency risk on an MNC
Currency risk affects the financial transactions of the MNC and it leads to various currency exposure. Advance locking in of exchange rate, charging customers in local currency etc can be considered to mitigate the currency risk. Derivatives like forward contracts, future contracts and Options are available to hedge against the currency risk. MNCs must be careful about the currency risk. Failure to consider currency risk can have the following impacts: