Foreign Exchange: Seize the Opportunity!

Posted on October 13, 2010

Why do U.S. companies often fail in their efforts to establish themselves in foreign markets?  One repeated mistake is an insistence upon structuring strategies and tactics that treat foreign markets as though they were across town, rather than across an ocean or an international border.  Typically, this miscalculation is reflected in companies trying to avoid things they aren’t familiar or comfortable with – like the exchange of currencies – at the expense of making other things more difficult and less comfortable for their prospective customers and suppliers.  Rather than alleviating one risk, they simply assume a different one they haven’t considered thoroughly, and it too often reduces both their opportunities and their profits.

When contemplating doing business in other countries the old expression ”When in Rome, do as the Romans do!” couldn’t be more true, and a secret to success is in embracing the differences between you and your counterpart rather than trying to avoid them.  One crucial difference between domestic and international business, is the need to manage and take the initiative of forex transactions.  To choose otherwise is a classic example of how what you don’t know, or choose to ignore, can hurt you.

A common concern of companies approaching overseas markets, is that dealing with the foreign exchange aspect of their sales and purchases will adversely impact on their profitability. Consequently, many are tempted to limit their foreign currency exposure by requiring their overseas customers to pay in U.S. dollars, or their overseas suppliers to invoice them only in dollars.  But in their mistaken belief that they are avoiding risk, those companies are in reality reducing their opportunities.  Better they accept the notion that since a foreign currency exchange is present in every international business activity, it’s to their advantage to familiarize themselves with the subject, take advantage of it and do as the Romans.
Foreign Currency Exchange

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