discussion

There are many challenges when it comes to global strategic plans for businesses. Compare and contrast the points provide information or concepts that I may not have considered.

Exchange rates fluctuate and the US dollar may go further in other countries because the exchange rate may be lower. Exchange rate risk is the natural consequence of international operations in a world where relative currency values move up and down. (Ross, 2020) Foreign currency translation reports its accounting net income and earnings per share for a period, must translate into dollars,  translation gains and losses that occur are usually in a special account within the shareholders equity, because they were unrealized or predicted. For the Deere & Company it looks as if their translation it shows the downfall of the US dollar which in turn decreases the cash flow. A decline in sales is apparent, causing a dip into their profits.

One of the strategies a company might use to reduce risk is the forward trade agreement exchange.  This is so two countries can settle on an exchange rate today and it can used or called upon in the next 12 months.  This can be done so that if the future rate is more expensive that it is today it is selling at a discount today. Hedging is another way to protect a business, this can be done to protect the exchange rate against a specified amount in a specific amount of time so that they can be protected against any uncertainties.   Interpretation of the Foreign Currency Risk for Deere & Company is that their practice is to hedge in a twelve-month period. Despite the amount of losses experienced, they plan on being successful and that this method will not put them at risk for any financial turmoil, it would not put any effect on their cash flows.