Economics for the Global Manager
While multinational companies generate huge revenues through foreign investments, these opportunities carry with them risks, one of them being currency exchange rate risk. This will be the focus of my research project, which will aim at identifying the various ways through which multinational companies hedge against risks associated with exchange rates. To successfully conduct my research, I have developed a plan, which will guide me in achieving the objectives of my project. Below is the process:
- Identify the Multinational company to study
The first step will be to select a U.S Multinational company, which will represent all other companies with operations in foreign countries. The company under consideration will be preferably the type of company with several business lines in order to understand the different ways through which the company mitigates the currency exchange risk for the various lines.
- Research on the company’s international operations
After identifying the company of study, I will research on the company’s foreign operations, through establishing the foreign countries it operates. This will be achieved through intensive research both online and from physical records. Equally important will be to establish the collaboration practices between the parent company and its foreign operations that have enabled the company grow in resources. Moreover, I will research on the revenues and profits the different branches of the company generate, to establish the most profitable foreign operations.
- Establish the company’s pricing methods
Different companies employ different pricing methods, which usually has an impact on profits. As such, I will establish the methods used to price both revenues and profits of the company’s foreign operations. This will assist in identifying how the foreign operations translates their costs and revenues to the parent company.
- Explore the ways through which the company hedges against currency exchange risk.
Multinational companies are likely to incur losses associated with exchange rates. Therefore, I will research on the various ways through which the company hedges against the risk of incurring losses when translating the revenues and costs made by foreign operations. This will help me understand the international monetary system through learning the various foreign exchange derivatives that protect multinationals from this risk.
Organization of the Project
- Title Page
This will give the title of the project and the name of the author.
The abstract will entail a summary of the contents of my research, mainly focusing on the findings of my study.
- The Body
The body will contain the major contents of my research, which will be attained through including an introduction part and a peer review. The introduction part will introduce the research topic and explain the rationale behind the study. Moreover, it will introduce the company of study and explain in detail the company’s operations both locally and internationally. The peer review on the other hand will review previous literature written on the subject matter both on the company’s operations and on managing currency risk.
- Findings and Conclusion
The findings of my research will be explained in detail in the body of my paper specifically in the findings section, where I will discuss the various ways through which my company of focus has managed to protect itself from the currency exchange risk. In the conclusion section, I will summarize the findings of the research, which will include how the company of study translates the revenues and costs of its foreign operations.