New Parity concepts to address Globalised economy Essay

New Parity concepts to address Globalised economy - Essay Example Financial institutions, pension funds and institutional investors are reaching out the developing and most prospective markets such as China, India and other Asian markets with lot of investments. In this scenario, there has been a need for proper management of rate fluctuation, risk and exchange rate, which allows the estimation of investment yields and global risk premiums. The important issue is hedging of specific international risks through currency overlay strategies, derivatives and credit risk management models. In this highly globalised business scenario, issues in international business such as trade disputes, exchange rates, inflation and currency crises have necessitated more focus on international financial management. Some new approaches for this are characterized by high analytical rigor, substantial attention to empirical evidence, and integration of functional areas (including finance, economics, strategy, and accounting/taxation). (Reid W. Click, Joshua D. Coval, The Theory and Practice of International Financial Management, Prentice Hall; 1st edition) Global flows of funds have caused a substantial change in the international financial markets and foreign currency markets. ... These issues have potential impact on currency values. Purchasing Power Parity (PPP), Interest Rate Parity, International Fisher Effect, Fisher Effect, and Forwards Rates are some of the major theories on exchange rates. Regarding parity issue, there are analytical problems with the standard comparisons based on market exchange rates existed in developing countries in the global economy. Purchasing Power Parity measures of Global Domestic Product of countries are popularly used for international comparisons. In PPP measures as standard comparisons of GDPs across countries convert national currency aggregates to a common currency-the US dollar exchange rate. Purchasing Power Parity (PPP) is a theory of exchange rate determination and a way to compare the average costs of goods and services between countries. PPP has two versions, absolute PPP and relative PPP. The absolute version stands for an equal real price for a commodity in all countries. The relative PPP says that exchange rate between two countries will adjust to reflect changes in the price levels of the same countries. (Solnik, International Investments, Adisson Wesley Longman, Inc, New York, 2000) However interest rate parity thesis envisages as a relationship that holds between spot interest rates of two countries if there are to be no arbitrage opportunity. The relationship depends on the spot and forward exchange rates between the currencies. (http://www.riskglossary.com/link/interest_rate_parity.htm) The generalized version of the Fisher Effect states that real returns are equalized world wide through arbitrage. It says that many factors such as Psychological barriers, legal constraints, transaction costs, taxes, political risks and currency risks have a direct bearing on

Consumer Behavior Analysis Essay Example | Topics and Well Written Essays - 1500 words

Consumer Behavior Analysis - Essay Example Economists have analyzed that all types of goods and services need not be advertized for the purpose of sales. Producer’s decisions to incur advertisement expenses largely depend on the market or industry concerned. Competitive market producers never go for advertisement expenses, like the sellers and producers of potatoes (Yeshin, 2006). When business firms face high monopolistic or imperfect competitive markets then they resort to high advertisement expenses. Personal care products are consumer goods products and its trading involves cut thought competition. Large number of business firms enter in such trading and the major differences between their products is qualitative in nature. Thus while targeting the young generations between 18 to 35 years in U.S.; the company must select an appropriate advertising strategy. A good slogan or message for advertisement is the one that is simple, clear and short. The slogan should be easy so that most of the buyers in the market of dif ferent classes can relate to it. â€Å"Every Man is Unique† can be an appropriate message for the personal care products for young men. This is because personal care products like shaving accessories; face wash etc. helps to keep the looks fresh and good (Pure Health, 2011). The viewer ship ratings of a product largely depend on the popularity of the advertisement slogan. ... Demand for personal care products depends on the tastes and preferences of the consumers. For some buyers requirement of personal care products may be an act of necessary consumption. While for others it may be a type of comfort good. While marketing a range of consumer care products for men in U.S., a seller might have several difficulties to attract the consumers. This is because U.S. exhibits different types of cultures in its society. The culture in U.S. is primarily western in nature but still influenced by African, Asian and Latin American cultures. Thus the company must consider different types of culture in U.S. and carry its business activities. There are also many other cultures in U.S. like Polynesian and Native American cultures. The essay tries to analyze different cultures appeal for personal care products, the three cultures considered are African, Asian and Latin American. Africans in America resemble the Black Culture in the society. They are traditional in their tho ught and firmly follow the heritage and culture of Africa (FROST, 2012). It is empirically found that despite of the global crisis, the industry for toilet soap has remained successful in Africa (FROST, 2012). The Africans create high demand for personal care products. Thus appeal for male personal care products would be high from the Africans in U.S. The demand for male grooming products in Asian countries is rising significantly. Many natives in U.S. are from Asian families. So it can be analyzed that the demand for male grooming products will be good from the Asians living in U.S. Latin American men consider themselves to be good looking. The consumers of Latin American cultures are demand for large quantities of cosmetics in