How a global business deal can be scuppered by financial problems

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As a business leader, the advantages of “going global” are immense. You only have to look at the $136bn or so directly invested in China from abroad to show that globalisation has been snapped up by business moguls – and there’s no indication that this trend is about to start reversing any time soon. However, the main barrier in the way of many major recent deals has been the international element. From transferring cash out of one currency and into another to the differences in expectations between participants, global finance is a messy business. Here are some of the main ways that those who are experienced in the field have managed these problems.

Differing expectations

The first problem that you might run into lies at the intersection between finance and culture. In some places around the world, for example, lending money is frowned upon, especially if interest rates are high – so you may have to consider an alternative to a debt-financed investment. You may also find that some places aren’t quite as nimble as your home country: deals can take much longer to complete in places that are drowning in bureaucracy, for example, and this could sap your staff’s time and cost you a lot in resources.

Currency conversions

When investing abroad, you’re going to need to switch your currency from your home one to the one in the destination – otherwise, no seller is going to accept your cash. This could benefit you, but it can also wipe out your spending power if you’re on the losing end of the deal. International business deals are also at the mercy of politics in this regard. When a country’s leadership experiences some sort of political wobble, the currency markets often respond badly as traders take their investments elsewhere. It’s a good idea, then, to defend yourself by carrying out an online money transfer comparison and hunting as hard as you can to get the best deal.

A black hole?

The other major financial worry that many who operate on the international business deal circuit have is that the inherent risks involved mean that cash could simply get sucked away if things go wrong. No matter how much market research is carried out in advance of a deal, it’s impossible for an investor to understand the subtle dynamics of a foreign market to the same degree as they understand their domestic market. This can in some cases lead to the absence of easy-access marketing channels or the presence of hidden regulation being missed – and to more cash needing to be spent putting it right.

International business deals are essential for the functioning of the global economy, and rewards can be reaped by individual participants when done correctly. However, in too many cases, issues such as lack of foresight or tricky exchange rates can cause trouble – and even scupper the deal. For that reason, planning and research are necessary elements of any global deal – and the need for them should not be ignored.

The Editor

I wish it was satire.