Global Financial Management

American InterContinental University

Global Financial Management

06/15/2013

As a part of our international expansion program, Acme is currently in the planning stages of establishing an industrial development facility overseas. In this proposal, I will be speaking about the advantages and disadvantages of doing business in Italy as well as the advantages and disadvantages of doing business in Japan. I will be sure to include their trade policies, their differences in currency, and cultural variables that may affect operations of profitability in either country.

Globalization is taking over in the business world and it’s time for Acme to jump on board. One of the main advantages of globalization is the people connection. With a better understanding of different cultures there is a decrease in the possibility of war and environmental concerns become a worldwide issue. Also, the great advantage is that companies investing in some economically developing countries, they have the opportunity for capital investments from global investors. One main disadvantage could be breaking down many cultural barriers that currently exist, as well as communication barriers. There are always policy issues to consider and ethical issues that come into play as well. (AIU Online multimedia course text, 2013)

Companies in the U.S. as well as other countries also invest internationally in an effort to enhance their businesses. There are many advantages to investing internationally, especially when it comes to enhancing and expanding their business ventures. Advantages can consist of revenue diversification, growth enhancement, contribution to the net income, and also have and gain a competitive advantage. Some disadvantages could include exchange rate exposure, which is influenced by the exchange rate movements on the value of a firm or sector of the economy while exposure is measured as the mutual relation of a firm or the industries stock returns and exchange rate changes in the context of a market model. (Exchange rate exposure, 2013)

With conducting business internationally there is always a concern about their political views and legal policies and procedures the can possibly be deemed as disadvantages. Lastly, one must consider the economics of a foreign region before building and investing internationally. Not investing smart business venues in locations where they can prosper could be a disadvantage and cause a firm or company to lose revenue and possibly monetary value.

Japan

Japan and the U.S. are the two major economic powers, although over the past two decades Japan has experienced an economic slowdown. This