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Discussions have risen since we have been in business, which established here in the United States but talks of becoming a Multi-National Company (MNC) has started. The biggest reason is where in the nation will we work, which I always believe one of the best places to work is in the European Union (EU). The EU, although their monetary system has not been the greatest since the early 1990’s, they have had some major changes to have the entire EU within the same currency. The only issue I see can be the fact that the European Union is failing soon because of current factors playing against them with the current war that has been on going. However, there are plenty of methods to calculate and ensure you do not go under when calculating those future exchange rates. As we continue to focus on the expansion of the business, we can use one of the four translation methods to figure out our costs using our current assets and liabilities and the historical data from previous balance sheets for cost methods. The reason for this is to understand the monetary system within another country and translating their monetary to ours within the United States. Then as we move closer to expanding our business, we must choose an international bank, which we will receive many benefits from that. Some benefits are Low Marginal Cost, Knowledge advantage (this is a major benefit since we are dealing with foreign subsidiary, wo it will assist us in location and where the money grows), Prestige, regulation advantage Growth, risk reduction and many more benefits to list. An international bank will give us the boost needed to be the greatest MNC within the business we provide.
Reference:
Eun, C. (2020). International Financial Management (9th ed.). McGraw-Hill Higher Education (US). https://aiu.vitalsource.com/books/9781260788860