Global Finance Environment

Paper Summary:

This paper discusses the inherent risks to global investing, particularly regarding cultural sensitivities and ethics. The paper looks at several of the factors that drive globalization and discusses how it is an ever-increasing trend. The paper also looks at the pitfalls of globalization as well as discuss how globalization presents plenty of potential to increase standards of living to all parties involved.

Outline:
Drivers
Risks Associated With Global Investing
Conclusion

From the Paper:

"Various risks are present in the global investing process, some of which include foreign currency exchange rates, political complications, and language and cultural differences. These risks and others may pose a significant threat to international operations, depending on the nations involved. As always though, careful planning can often help to mitigate or eliminate some of these threats.
"Exchange rates can have a significant impact on a firm's potential profits. Depending on the existing rate, a firm may find that its host nation currency stretches much further elsewhere and may choose to conduct certain aspects of its operations in a nation where costs can be minimized. However, a weakening rate could have the opposite effect and increase the costs associated with operations. Of the many threats to globalization, exchange rates are more than likely the easier aspects to plan for in terms of analyzing operations."

Sample of Sources Used:

• Shapiro, A.C. (2005). Foundations of Multinational Financial Management (5th ed.). New Jersey: John Wiley & Sons, Inc.
• Crum, R.L., Brigham, E.F., & Houston, J.F. (2005). Fundamentals of International Finance (1st ed.). Ohio: Thomson/South-Western.
• Eun, C.S. & Resnick, B.G. (2004). International Financial Management (3rd ed.). New York: McGraw-Hill Irwin.
• Madura, J. (2006). International Financial Management (8th ed.). Ohio: Thomson/South- Western.

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