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Discuss the monetary environment of America and how if affects businesses that are or want to operate internationally.

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Introduction

´╗┐Unit39-P4_Monetary INTRODUCTION For this assignment I will be discussing the monetary environment of America and how if affects businesses that are or want to operate internationally. I will be relating the information to America and how businesses are affected by international trade affiliated with America. Common currency has substantial benefits to international trade. Countries with the same currency find it much easier to trade between each other. For example recently the liberal government in the UK wanted to change our currency from Pounds to the Euro. By doing this we would increase the international trade between the UK and the A high majority of Europe. This occurs because of Europe being a free trade area. Throughout the United States of America they use the same currency of the US dollar, giving all the common currency benefits. International businesses see it as an incentive because it makes trade less complicated and there is no risk of losing money. In South America only Ecuador use the US dollar, so the benefit or incentive of common currency does not apply in this area. The minimum wage LIQUIDITY Liquidity can determine whether a business decides to operate internationally. ...read more.

Middle

Factors will credit check your customers and can help your business trade with better quality customers and improved debtor spread. HEDGING Using two investment strategies to minimize any loss caused by price fluctuations is known as hedging. Hedging is used by businesses to protect them from sudden and unexpected increases in the cost of raw materials as well as raises in interest rates inflation or currency fluctuations. Businesses in risky markets therefore hedging can help avoid future issues by safeguarding prices. For example, airlines can choose to hedge against fuel prices. This is the best way to insure and protect against business risks. A way in which hedging is used is future contracts. This contract agrees a set price for supplies, if the price goes up the business only has to pay the agreed price but if the price falls it would be a costly decision. Hedging is a technique whereas factoring is carried out between the business and the factoring company. INCENTIVES Free trade areas are areas in which there are minimal or no taxation on trade within the boundaries of that area. Some good examples would be trade in the Americas or in Europe. ...read more.

Conclusion

Restricting international trade can be a good thing if it is directed at particular materials. If it is not then it is just creating a deficit in there?re own country?s economy. This is a common technique used if there is too much of a certain material or if there is a sufficient amount being made in the country. A great way to restrict trade of particular products is to tax or in some cases increase tax on the product to be brought in from another country. Another way to do this is impose laws on the specific materials which limit the amount that can be trade at one time. More transactions results in more money for the country, if not that then less of the selected materials. Even though it is very rare ? If a country wants to restrict all trade they can increase the trade taxations to discourage the trade to and from that country. When a country is trying to reduce trade, they impose barriers which restrict trade. To conclude companies would always consider the incentives of entering a new market before doing so. America have many reasons why and why not to operate there. America mainly attract new national originated, businesses that export not import their products or services. ...read more.

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