Foreign Exchange Rate Risk.

When a company begins a transaction in a foreign currency, it accepts an economic risk due to fluctuating exchange rates. The globalization of the world economy and the devaluation of the U.S. dollar have allowed more American companies to enter the export/import markets. Additionally, many managers who previously avoided these markets are finding that international transactions can make their companies more competitive in marketing products and procuring parts and materials. As new companies …

…must recognize the effects of exchange gains and losses on income and profit margins. The success of any of these strategies depends on management's sensitivity to the foreign exchange markets and the needs of its subsidiaries. Works Cited Bartlett, Christopher A., Sumantra Ghoshal. Managing Across Borders - The Transnational Solution. Boston: Harvard College, 1998. Mitroff, Ian I., Business Not as Usual - Rethinking Our Individual, Corporate, and Industrial Strategies for Global Competition. San Francisco: Josey-Bass Inc, 1987.