What Are the Major Advantages and Disadvantages of the Four

question 10

Essay

What are the major advantages and disadvantages of the four types of entry strategies for international expansion?

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Definitions:

Translation Exposure

The potential risk of value change in a company's financial statements due to the conversion of foreign currencies into the domestic currency in consolidation.

Exchange Rate Risk

The potential for investors or companies to experience losses due to fluctuations in the exchange rates between currencies.

Net Present Value

A calculation that compares the value of a dollar today to the value of that same dollar in the future, taking inflation and returns into account; used in capital budgeting to analyze the profitability of an investment or project.

Forward Exchange Rate

The exchange rate at which two parties agree to exchange currencies at a future date.