Just as each country has its own composition of languages, each also has its own specific culture or mix of cultures. Culture consists of holidays, arts, traditions, food, and social norms that a particular group of people follow. It is important and rewarding to learn more about the cultures of the countries where you will be doing business. Customs will then verify the information associated with your export certificate. It is better to know all the rules that govern you in global trade than to face obstacles at a later stage. This will help you run your business without any problems once you put down your roots. Several developing countries have certain exchange control regulations that are related to the flow of money to and from their countries. You need to determine if these regulations are effective in the country you want to trade with. Indeed, they can delay your payments. Here`s an introduction to international trade, some common challenges to consider, and suggestions on how to prepare. Issues such as ill-defined or unstable policies and corrupt practices can be extremely problematic in emerging markets. Changes in government can result in changes in policies, regulations and interest rates that can be detrimental to businesses and foreign investment. This usually affects accounts payable and receivable for contracts that are in effect or will be in effect soon.
Exchange rates are constantly changing. As a result, companies would be forced to convert funds generated abroad at lower rates than budgeted. At Hult, our goal is to prepare our students to become the next generation of global leaders and seize the opportunities and challenges of international business. As the global marketplace becomes increasingly interconnected and accessible, the risks associated with doing business abroad should not be taken lightly. Other considerations to consider based on your company`s products and target markets include tariffs, storage need and cost, and local distribution methods. In addition, there are country-specific regulations and shipping requirements that need to be considered. To quickly verify costs and compliance, UPS International has developed an online tool called TradeAbility to help businesses and individuals manage shipments overseas. In October 2015, the UK passed the Modern Slavery Act in response to this often hidden human rights violation. A recent study conducted by a partnership between Hult International Business School and the Ethical Trading Initiative found that 77% of companies believe modern slavery exists in their supply chains at some point. Currency risk (also known as financial risk) refers to the risk of adverse exchange rate fluctuations. Fluctuation is common for exchange rates or the value of one currency against another.
Currency risk arises because international transactions are often settled in more than one local currency. When Graceland Fruit, Inc., a fruit processor based in Frankfurt, Michigan, exports dried cherries to confectionery in Japan, they are usually paid in Japanese yen. However, when currencies fluctuate wildly, the value of the company`s assets, profits and operating income may be reduced. The cost of importing parts or components used in the manufacture of finished goods can increase significantly if the value of the currency in which imports are denominated increases sharply. Inflation and other adverse economic conditions occurring in a country can have a direct impact on exchange rates due to the growing interdependence of economies. (Cavusgil, Rammal and Freeman, 2011, p.11) Cybersecurity ranks second in the GEF report. As technology becomes more and more central to business growth, it is essential to ensure the protection of servers and systems. Before expanding into foreign markets, companies need to study and evaluate security, as not all international infrastructures offer the same level of cybersecurity. Japan and Singapore are Asia`s outliers in terms of cybersecurity. To raise awareness and help local and international companies respond more effectively to this issue, their published research report presents case studies of companies that have adopted practices at the forefront of the fight against modern slavery.