Foreign Exchange Risk Analysis Essay Example | Topics and Well Written Essays - 2000 words

Foreign Exchange Risk Analysis - Essay Example The policies in china resulted in a successful market economy and indigenous private sector. This resulted increase of foreign trade and inward investments. The high growth recorded in China regarding economic activity and manufacturing, prompted many companies to export to establish manufacturing units in China.1 The exchange rate in the international market is dominated by US dollar. The imbalance in the system can be considered as a reason for instability. The foreign exchange policy by any state should have a long term agenda to appreciate it along with the increasing exports, which is a difficult thing. As per now the USD is international currency and Euro and Yen are trying to replace it. For this purpose the currency should fulfill the classical money functions. This makes the countries like china to have US currency up to some extent and this leads to appreciation of that currency resulting in increasing the import costs. If any country wants to appreciate its currency, it must be accepted by lot of people and countries in the world. This increases demand for that particular currency and can be appreciated. 2 The reason for the change in the foreign economic relations and exchange of Yuan with other currencies is due to opening of its economy to the outer world. The private foreign capital was used to increase the economic development. As China absorbed the new capitals, the currency was being appreciated. The increase of manufacturing sector simultaneously provided the foreign exchange to china to import the requirements. As it followed the self reliance the imports are kept at a limitation and this resulted in appreciation of its currency over the international currencies. As a result 1USD can fetch only 7 Yuan and this is due to the acceptance of the Yuan by different countries like the members of ASEAN and other countries. The self reliance and control of imports also made Chinese currency appreciate gradually over USD in the course of time. As per Nike company is considered it can export its goods into china. One reason is that there are very less currencies like Yuan that are very close to the value of US. This makes the company to make more profit in China than the countries like India, which have 1USD = more than 40 Indian rupees. So, instead of exporting the products to the countries like in India, it is better to export to country like China for Nike. Though it results in decrease of foreign investment, this resulted in healthy competition and growth of economy. 3 From the hardened stand in 1949-50 the US policy has been liberalized from then on China. UK along with US favored China and both of them relied heavily on china. The policies of US and UK made china to implement the economic reforms. 4 After the end of China's Civil war both other parts of the world and China recognized the importance of China and the openness of the economies. After Europe, Britain considered the China to be important according to American influence. Out of its large investments in the world, the British and Americans have substantial investments in China. China, which was ranked below Hong Kong and Malays by US in the preferential treatment emerged as the front runner in the economic refo

Global Management and Leadership Essay Example | Topics and Well Written Essays - 750 words

Global Management and Leadership - Essay Example There are various functional departments such as finance, operations, Human Resources, Wholesale, Direct Sales, Information Technology, Marketing, Merchandise, Property, Sales, Supply Chain and Design. The heads of all these departments report to the CEO. The CEO along with other directors forms the board of directors which takes crucial organizational decisions. Such an organizational structure suits a company like Pumpkin Patch whose lines of business are quite few. This organizational structure enables appropriate designation of responsibilities (Organizational Chart Pumpkin patch, 2010). Pumpkin patch has been following an aggressive growth strategy which is not constrained by geographical boundaries. The company has retail stores in 4 countries as well as wholesale association in 16 countries. 80% of company’s revenues come from outside New Zealand. The company is listed on the New Zealand stock exchange and has more than 200 stores worldwide. It has strong financial stat ements and cash flows. A large part of the company’s sales comes through online sales. This indicates its adaptability to modern technologies, tastes and lifestyles. 2. Weaknesses As Pumpkin Patch grows, relying on a simple organizational structure as present could be risky. There would be a need to include structural components based on geography and lines of business. For example, there could be geographical heads for 4 prime geographical regions the company caters to (Organizational Chart Pumpkin patch, 2010). Pumpkin Patch’s turnover is still a fraction of the top retailers in United States and has a long way to go in spite of its recent scalability. 3. Opportunities Pumpkin Patch has a number of opportunities in all 3 channels of sales it uses i.e. Retail, Wholesale and Direct (Internet). In retail segment, the company has been relying solely on margins rather than volumes. Pumpkin Patch needs to scale up even faster to gain a significant market share in the crowd ed U.S. market. For this, the company can make use of franchise model. In the wholesale segment, the company needs to have strategic collaborations with top multi-brand retail chains such as Spencer’s and Wal-mart. Internet market is the best opportunity Pumpkin Patch can make use of. This is a relatively new sales channel and Pumpkin already has a significant presence there. It has not been exploited to its potential by competitors. This should be treated as a priority. The aim should be to generate at least half of the sales from this channel in coming years (Pumpkin patch Limited, 2007). 4. Threats Pumpkin has a significant mind space among the customers. However, U.S. children’s clothing market is highly crowded. There are well known reputed brands such as Gap, Next, Mango, Zara, Billabong, Gymboore and others (Pumpkin patch Limited, 2007). Scaling up in wake of this intense competition would be a difficult task and involve marketing and infrastructure spends. With huge store opening costs, the company may not be able to realize economies of scale with small stores. References Organizational Chart Pumpkin patch. (2010). Retrieved online January 18, 2012 from Pumpkin patch Limited. (2007). Macquarie Securities Data Related Information from PART 2 Relevance of Core Competencies Core competency is the unique capability of a firm that cannot be easily imitated and provides it a unique competitive edge. Core competencies