Question

Explain the risks and obstacles for a U.S. based company doing business overseas.

Answer 1

The risks and obstacles faced by a US company when doing business overseas is :

• Foreign exchange risk: If a US company , is carrying out business operations from japan. The currency of japan, that is the Yen depreciates any Yen-denominated profits the company receives from its Japanese operations will yield fewer U.S. dollars compared to before the yen's depreciation. The currencies of stable governments are less volatile than those of less-developed countries. So, when A US company trades internationally, the currency risk is the risk it primarily suffers from.
• Regulatory risks: When a US company carries out business operations internationally. The government of the foreign country can change policies/laws which may negatively affect the ongoing operations happening between the US country and the foreign country due to the changes in the policies. Changes in the banking laws may affect the flow of money between the two countries.
• Political risks : Tariffs and quotas are imposed on the foreign companies to protect the domestic firms and to make their business flourish domestically. This also can have a huge effect on the profits of an organisation because it either cuts revenues from the result of a tax on exports or restricts the amount of revenues that can be earned. An unstable government may be ineffective in protecting the business interests.