International Business A Common Trend - 1152 Words

International business is vastly growing into a common trend, which initiates accounting issues related to financial reporting among parent companies and its subsidiaries. International business is profitable, but includes its risks such as foreign exchange exposure. Foreign currency exchange exposure relates to the risks involved in translating different foreign currencies. Multinational corporations are affected by foreign exchange exposure by the constant fluctuation of foreign exchange rates. International business are faced by different types of foreign exchange exposure, accounting issues that relate to gains or losses from foreign currency and alternatives of foreign currency translation methods to mitigate the risks. Foreign currency exchange is a common procedure when conducting business abroad. An entity must convert foreign currency into its domestic currency considered as a foreign exchange transaction. An entity must report profits or losses according to its binding domestic currency. The foreign exchange transaction initiates a risk in the foreign exchange transaction depending upon the dominating currency that may produce a profit or loss. For example, a currency that is exchanged for a currency that has a higher value converts into a profit and vice versa. Foreign exchange transactions include spot transactions, forward contracts, swaps and options. These foreign exchange transactions allow international business to mitigate risk according to theShow MoreRelatedChallenges of International Business Management1037 Words   |  5 PagesCHALLENGES OF INTERNATIONAL BUSINESS MANAGEMENT What are the challenges of International Business Management? International business management is a term that is used collectively to describe all commercial transactions which include; †¢ Private †¢ Governmental †¢ Sales †¢ Investments †¢ Transportation The above take place between two or more nations. It involves all business activities which partake in cross border activities of goods, services and resources between nations. PrivateRead MoreAn Analysis of the Factors That Work to Bind and Separate North Central and South America1601 Words   |  6 Pagesfactors that divide the region up. Some of the factors that work to unite the region are the trend of globalization which is fueled by free trade as well as cultural items such as religion. The main division between North and South America seems to be fueled primarily by political divides as well as other various barriers such as language and communication barriers. 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By the social environment we mean the consumption trends of groups and individuals. The main factors that come under the category of social environment are demographic and cultural trends. These two factors mainly control the social environment for marketing. Economic environment consists of the relationship between the production of goods and their purchase in a particular