International Trade Operations in US Essay Example | Topics and Well Written Essays - 1500 words

International Trade Operations in US - Essay Example According to the study findings international buyers who do not have US dollars as their local currency would have to go through the cumbersome process of having to convert their currencies to US dollars whenever they want to do business with you. The excesses in the procedure may just be one reason that someone may prefer other competitors to you. Again, the differences in exchange rate between the local currencies of international buyers and the US dollars will cause price flatuations. It is very likely that the price of good for each particular day will have to change because of changes in exchange rate. This, according to Gibbons creates currency swing, where by the customer may have to build in a 10-15% "adverse currency swing" factor. Conversely, quoting the US dollars may be very desirable when dealing with buyers who already deal in US dollars. It is common k knowledge that a lot of buyers around the world today are into the use of the US dollars. This is because it ensures u niformity in quantum price of goods and products. Again, quoting in US dollars very advisable for smaller companies with limited human resource as Gibbons, notes that â€Å"you may not have the ability to assume the currency risk, the currency exchange costs and the effort needed to run pricing in local currency.† Regarding quotation of prices in local currencies, once prices are quoted in local currencies and not in US dollars for international buyers, whose local currencies are not the US dollars would not have to create any price hedge to cater for the prices of goods. This is a major advantage for dealing with international buyers. This is because the duty of having to convert prices into US dollars and also having to go through the exchange processes, which sometimes attracts extra cost from banks would all be avoided. In would be observed that because pricing in US dollars creates price fluctuations, local buyers are often forced to hedge for the price of goods so that they will not have to be changing their expenditures so often. The converse demerit with pricing in local currency is that there would have to be a different price of same goods when they move from one country to the other. In this case, it is likely that by the time all sales are completed and the seller converts his earnings back to a common currency, there may be some little price falls because of the differences in US dollar rates in different countries (Colacito and Croce, 2011). Rate parity theory and how it is used to predict future exchange rates According to Forex Karma (2010), â€Å"Interest Rate Parity (IPR) theory is used to analyze the relationship between at the spot rate and a corresponding forward (future) rate of currencies.† The theory operates on a number of principles that makes it possible to predict future exchange rates. First, Picardo (2012) writes that â€Å"the basic premise of interest rate parity is that hedged returns from investing in different currencies should be the same, regardless of the level of their interest rates.† This means that future predictions of exchange rate can be made if returns on rate hedging remain constant. This is because in such as situation, both the exchange rate and interest rate do not have any influence on one another. The second has to do with the quote rates of interest rate and currency rates. This is because

Economy and Telecommunication Networks Essay Example | Topics and Well Written Essays - 250 words

Economy and Telecommunication Networks - Essay Example TDF has its disadvantages too in that division of labour leads to greater interdependency thus developed countries like the US allow and favor free flow of information to ensure management and coordination of other countries (Kamalipour, 2007). Therefore, TDF leads to developed countries controling the developing countries because of heir overreliability to their countries. Secondly according to Sawhney, ‘industrielaizedcountries take a disappropiate share of the additional wealth produced by specialization and leave the ordinary workers poorly compensated for their contribution’ (Sawhney, 1998). Lastly, TDF also leadsds to developed countries using it as a means to challenge local authority in third world countries. The most interesting issue in this book is the division of labour. This is issue is most interseting because in my view, this is where it all began. This is root cause of telecomunications data flow and other technologies. It is amazing how in the past business people could achieve produciton succesfully while using all locally available raw materials and complete a product from scratches. It is also pitiable that products that could be easily transported were only light high value goods like silk, which furthermore could only be afforded by the rich. Indeed division of labour has changed the world in that common people can affrod foreign producst . Moreover, division of labour has increased production rate, and enhanced specialization which has further led to quality due to experience, while also cutting on