International Finance Essay Example | Topics and Well Written Essays - 2000 words - 5

International Finance - Essay Example Though the negative event cannot be avoided, but the impact can be reduced. There are two types of risks vis-a-vis systematic and unsystematic risk. Investors usually hedge against systematic risk which includes financial risk, operational risk, liquidity risk, financing risk, currency risk, etc. According to the authors Clark and Ghosh, large firms usually balance their hedging techniques so as to minimise the cost of hedging. Corporate managers try to identify the risks facing the company so that they can strategise a suitable hedging technique to counter the effect of those risks. Big corporations are quite concerned with the foreign exchange risk, owing to their global business exposure. The author also stated that, the large corporations have global presence and trade across nations, thus vulnerable to currency risk as they have to trade in the local currency (Clark and Ghosh, 2004). Though there are various hedging techniques like futures, forwards, options, swaps and debt, but big corporations usually trade in futures, forwards, options and debt (Homaifar, 2004). As per the author Coyle, companies enter into an agreement with other party willing to buy/ sell currency. It is in the form of an agreement, where one party agrees to buy/ sell a specified amount of the currency at an agreed price, at an agreed time, delivery method to another party. Forwards trade takes place in two ways i.e. the spot market where the delivery takes place after T+2 days and the forward market where the price and other conditions are set before the delivery. The delivery takes place at a future date. In forwards contract companies usually face the counterparty risk, where one of the party refuses to buy/sell the derivative, thus putting the hedger at risk (Coyle, 2000). X is an IT company that exports software services to Y, a company in the US. X expects a payment of $1 million after five months. Assuming the exchange rate is  £1/$, it will receive  £1 million at the

The recent developments in the business environment Essay

The recent developments in the business environment - Essay Example The main motivation for mass marketing is the huge profit prospect created economies of scale. Starting from the strategy of competing on prices, companies have shifted to the focus on adding customer value by enhancing product quality. Recognizing the uniqueness of each of the segment of market segment, niche, and individual customers companies have embarked on target marketing. As opposed to mass marketing, target marketing focuses on serving a specific and identified target market. Instead of going after everyone, customers choose the most lucrative sector to cater to and use all of its resources in order to satisfy the needs and wants of these customers. From its humble beginnings Wal-Mart has become one of the most successful and biggest retailers in the world. What is very interesting about the company is its firm adherence in mass marketing as a strategy in the attainment of its organizational goals. Since its inception, the company is stuck to the principle in competing through a low pricing strategy. Following this, the company leverages on its ability to reap huge economies of scale through the large volume of sales. However, with the evolution of a hypercompetitive business environment characterized by the presence of higher customer bargaining and more aggressive competition on product quality (Kotler & Armstrong 2001) industry experts note that Wal-mart should leave mass marketing and focus on launching specific strategies aimed at each segment that it serves including Blacks, the Affluent, Empty Nesters, Hispanics, Suburbanites, and Rural Residents. Recognizing the importance of cultivating relationship marketing and the significance of considering the unique needs of each segment, this paper strongly recommends that Wal-mart embark on a target marketing approach. It should be noted that the more competitive nature of the retail industry dictates that each player pursue a harmonious and lasting relationship with its buyers by adding the value that they require. Thus, Wal-mart should step out from serving the broad anonymous crowd and start selling to each segment (Bianco 2004). It is recommended that the company does this by utilizing market penetration and product development. Recognizing that the product offered by Wal-Mart appeals to the working and bargain hunting customers, it is deemed most appropriate if the company looks into the possibility of serving the upscale segment by offering a new set of products which appeals to this demographics. Aside from this, the company can also opt to stand out from the crowd by improvin g on the other aspects of retailing such as merchandising, add-on services, and ambiance. Wal-Mart has long appealed to Blacks, Hispanics, and Rural Residents because of its price appeal. Having the capability of charging rock bottom prices because of economies of scale, Wal-mart has become prominent to this market. However, the proliferation of retailers who are taking efforts of targeting these markets somehow hurt the sales of the giant retailer. Thus, it is recommended that Wal-mart looks into penetrating these segments by offering more beverage and food products which are culturally appealing to Blacks and Hispanics. In order to cater