Which of the following poses a problem for international businesses in the long run?
A)using exchange rate instruments like the forward market and swaps
B)volatility of the global exchange rate regime
C)anti-inflationary monetary policies
D)maintaining strategic flexibility by dispersing production to different locations
E)a policy of reduction in government spending

Question

Quizplus · Accepted Answer

The volatility of the global exchange rate regime poses a problem for international businesses in the long run as it creates uncertainty and unpredictability in their financial planning and decision-making processes. Changes in exchange rates can significantly impact their profits, costs, competitiveness, and investment plans, and they may also face foreign exchange risk exposure, hedging costs, and transactional complexities. This can make it challenging to maintain stable and sustainable operations and growth in different markets and regions. Therefore, international businesses need to closely monitor and manage the exchange rate risks and adopt appropriate strategies like diversification, localization, or hedging to mitigate the negative effects of exchange rate fluctuations.

Which of the Following Poses a Problem for International Businesses