Political and economic concerns in global expansion of the firm Essay

political and economic concerns in global expansion of the firm - Essay ExampleFor example, these domestic forces are highly powerful in advance / developed nations unlike in developing nations where enterprises are blatantly refer in employing child labor, use of unethical practices and irresponsible production methods to maximize their wealth and rate of return.The origin major factor that have to be taken into account by strategic planners and top executives of a business entity when going global is accurate analysis of international business environment. Indeed, economic recession and fermentation fol embarrasseded by credit crunch also hampers growth and expansion of forces nations economy. For instance, the host nation is also dependent on other developing and advance world economies for foreign flip however, lower aggregate consumption and output reduces trade and commerce activities in such nations that later adversely impacts chosen host countrys markets. In simple wor ds, the recession results in unemployment, poverty and low purchasing power that aggravates business scenario in chosen markets. (Daft, 2009)The second major factor is exchange rate fluctuations of host nations currency. Indeed, the frequent undervaluation or overvaluation of currency due to lack of let foreign reserves from foreign trade may lead to exchange losses at the quantify of conversion. For example, if currency of Japan is undervalued against home countrys (USA) currency at the time of investment ($1 = 90 Yen), it is beneficial for a foreign nation to invest in an economy because more fiscal units are received from exchange. Nevertheless, after the formation of business subsidiary if currency undervalues further ($1 = 95 Yen), it would lead to exchange losses when subsidiary firm allow opt to transfer profits endure to USA. In contrast, if Japanese Yen appreciates and become stronger ($1 = 80 Yen) then US firm will be advantaged