An Introduction to Financial Environments and Foreign Trade

Successful multinational corporations understand that there is no one-size-fits-all approach when it comes to strategies for doing business in different countries. This course will offer you a comprehensive review of why professionals who understand the effects of economic environments and exchange rates on international businesses are in high demand. You will explore the different cultural dimensions representing the collective programming of the mind to distinguish one group or category of people from others. Discover that ‘uncertainty avoidance’ refers to the extent to which the members belonging to society can cope with future uncertainty without going through stress. You will find out that the ‘power distance index dimension’ expresses the degree to which the less powerful members of a society accept and expect that power distribution is not equal. ‘Indulgence’ is explained, which is a concept that allows free gratification for fun and entertainment, which are natural human drives in the community.

At first, the course will introduce you to the balance of payment, a statement that records all the monetary transactions made between residents of a country and the rest of the world within a particular time period. Then you will discuss the concept of open economies. They encourage the open exchange of goods and services between producers and consumers in which individuals, rather than the government, make the majority of economic decisions. Explore the reasons why a higher rate of inflation will make a country’s currency less attractive because of the loss of real value and countries with consistently high inflation rates tend to have lower currency values. Gain insight into the fact that the transfer function of the foreign exchange market performs through credit instruments such as bank drafts, bills of exchange and telephone transfers. We will clarify that the balance of trade is the difference between the monetary value of a nation’s exports and imports over a specific time.

Next, you will learn that the current account on the balance of payments measures the inflow and outflow of goods, services, investment incomes and unilateral transfer payments. You will increase your acumen of economic systems, which is a set of structures and processes that guide the allocation of resources. They also shape the operation of business activities in a country. You will then understand that exchange rates are allowed to move freely daily in the ‘managed float exchange rate’ system and no official boundaries exist. However, governments may intervene to prevent the rates from moving too much in a particular direction. Learn that in a ‘fixed exchange rate’ environment, multinational companies may engage in international trade, direct foreign investments and international finance without worrying about the future exchange rate since it is simple and straightforward. Finally, you will study the purchasing power parity theory, the ‘Fisher Effect’, foreign exchange exposure and operating exposure. This course will be of interest to students studying business degrees or finance. Those professionals in foreign trade will find this course particularly useful. Why wait? Start this course today and become an expert in international finance and foreign trade.