P4
Describe how the monetary environment affects businesses that operate
internationally
Describe how the monetary environment affects businesses that operate internationally.
What can you say about how the monetary environment affect the international trade of an
international business? Include methods of protection against exchange rate fluctuations, the
influence of international banks, trade support and government agencies in your response.
What is a monetary environment?
A monetary policy (environment) ‘is the actions a central bank takes to influence a country’s
money supply and the overall economy’, this money supply includes, credit, cash, checks
and money market mutual funds. One of the most important forms is credit, credit involves,
loans, bonds and mortgages. For example, the US federal reserve which is located in 12
different locations within the us, establishes the monetary environment. They are doing this
to have a control on the money production, with this they neither try to make sure the money
supply doesn’t grow to quickly, causing excessive inflations or to slowly, which can lead into
obstructing the economic growth.
How does this monetary
environment affect businesses
that operate internationally?
Both domestic and foreign monetary environments do affect businesses that operate
internationally. Because of the monetary environments businesses will need to adapt to the
environment of the country they operate in, this means that a company need to be up to date
before it can be successful in doing business in that country.
Apart from the benefits that come with international trade, there are also a lot of challenges.
For example, keeping up with the changing demand and economy in several countries. Also,
when a company such as apple opens a new facility in China, they will need new employees.
The Chinese monetary environment has a very big impact on this, which means that if there
is a low inflation, the wages of the employees will rise, this will of course result in higher
expenses.
Describe how the monetary environment affects businesses that operate
internationally
Describe how the monetary environment affects businesses that operate internationally.
What can you say about how the monetary environment affect the international trade of an
international business? Include methods of protection against exchange rate fluctuations, the
influence of international banks, trade support and government agencies in your response.
What is a monetary environment?
A monetary policy (environment) ‘is the actions a central bank takes to influence a country’s
money supply and the overall economy’, this money supply includes, credit, cash, checks
and money market mutual funds. One of the most important forms is credit, credit involves,
loans, bonds and mortgages. For example, the US federal reserve which is located in 12
different locations within the us, establishes the monetary environment. They are doing this
to have a control on the money production, with this they neither try to make sure the money
supply doesn’t grow to quickly, causing excessive inflations or to slowly, which can lead into
obstructing the economic growth.
How does this monetary
environment affect businesses
that operate internationally?
Both domestic and foreign monetary environments do affect businesses that operate
internationally. Because of the monetary environments businesses will need to adapt to the
environment of the country they operate in, this means that a company need to be up to date
before it can be successful in doing business in that country.
Apart from the benefits that come with international trade, there are also a lot of challenges.
For example, keeping up with the changing demand and economy in several countries. Also,
when a company such as apple opens a new facility in China, they will need new employees.
The Chinese monetary environment has a very big impact on this, which means that if there
is a low inflation, the wages of the employees will rise, this will of course result in higher
expenses.
