The value of the currency will decrease slightly in the future, however, it will not have any negative impact on the domestic economy in a long-term perspective. The soft drinks in the country can be more expensive compared to American prices; it does not mean anything as there are a lot of countries where the average salary is higher than one in the United States. Therefore, it is not a vital factor for the case analysis and the overall research on currency. The departure of foreign-owned companies from the country can be considered as a sign of economic issues; however, there are multiple aspects which influence the state and position of the company on foreign market (Agarwal, 2009). Hence, it might not be connected to the economic problems in the country and the potential decrease in the value of the currency.
Even big and successful companies like Microsoft, Apple, or Coca-Cola might struggle on the foreign markets. The company might be successful in its home country, but the foreign market is different and can have a different environment for business (Agarwal, 2009). For example, the company has to introduce itself to the market and compete with local competitors who have already been established. The first step has to include consideration of domestic prices, customers’ preferences, the quality of products, the uniqueness of the goods, and awareness about the new company. It is a complex and long-term plan which might or might not fail depending on these factors.
One of the most significant challenges for global companies in entering the new market is the lack of partners and suppliers. In the home country, companies typically have long-lasting business relationships with their partners who provide materials, resources, or services to the company (Agarwal, 2009). In the foreign country, it has to search for new colleagues, and it is a serious issue as new partners might be unreliable. Furthermore, the local legal regulations can be different, and the company will have to adjust its policy, product, or a process of production to meet the requirements. In other words, it is a risky and expensive process and has a high chance of failing (Agarwal, 2009). Therefore, the foreign companies can leave the market due to internal issues that are not related to the economy. However, leave of multiple companies might decrease the value of currency slightly.
References
Agarwal, O. (2009). Chapter 5: Foreign exchange risks. In International financial management. Mumbai, India: Himalaya Pub. House.
Avadhani, V. (2010). Chapter 7: Management of international transaction exposure. Accordingly. In International financial management. Mumbai, India: Himalaya Pub. House.
Shackman, J. (2015). The economic and financial environment of international business. Trident University International, Cypress, CA.