Write a research report on the topic "Impacts of FX Rates on the International Business".
1. Introduction (Research topic):
Foreign exchange rate is one of the major components for business owners dealing with services or products offered overseas. In recent years, most of the organizations have been facing challenges for exciting business on the international platform due to the fluctuation of the foreign exchange rates. However, small and medium size enterprises do not heed to foreign exchange rates in doing business in an efficient manner (Hodrick 2014). The business globalization has experienced a robust change in the business making process. It provides huge exposure to the business organizations. Moreover, it facilitates to enhance the entire sales volume in the business. On the other hand, the business globalization has some drawbacks including the fluctuation of the FX rate (Sermpinis et al. 2013). It has a huge impact on the global business. Most multinational organizations have been trying to implement different strategies for reducing the business risk of the volatile FX rate.
In this context, the researcher provides a brief methodology with theoretical perspective. The researcher develops the research questions for investigating the research topic in an efficient manner. In the methodology section, the researcher engages different tools and techniques for analyzing the research topic in a proper way. The researcher also provides the ethical checklist along with the Gantt chart consisting of estimated timeline for executing the research in a systematic manner.
2. Literature Review:
Banti, Phylaktis and Sarno (2012) have discussed that the business globalization has been facing numerous challenges. However, the fluctuation of FX rates indicates a big challenge for the multinational organizations, who conducts business on the global platform. With the involvement of the business globalization, the organization could be able to enhance their business opportunity. Consequently, in recent years, most organizations have been focusing on the globalization to experience the profitable outcome of the business. Mancini, Ranaldo and Wrampelmeyer (2013) have argued that organizations face several challenges to executing the business on the global platform. The most important business risks indicate the fluctuation in FX market. On the other hand, Hodrick (2014) have stated that global companies need to expose the foreign exchange market, as organizations produce products for a specific country.
Many business analysts have provided brief ideas in the process of conducting business globally diminishing the challenges like currency fluctuation. Banti, Phylaktis and Sarno (2012) have highlighted some of the important methods of reducing the currency fluctuation risks out of the business. With the involvement of new strategies for diminishing business risks including currency fluctuation, the multinational organization could avoid the potential losses. Mancini, Ranaldo and Wrampelmeyer (2013) have opined that the business must be on the top of the exchange rate. According to Hodrick (2014), international companies need to have potential knowledge on the impact of the local currencies on other currencies. Moreover, the business needs to evaluate how other currency impacts on the exports, imports, suppliers, and clients. On the other hand, Sermpinis et al. (2013) have argued that the global organizations must conduct research on the past rates. Through the accumulation of past rates records, organizations could be able to handle the sudden change in the business. Frenkel and Johnson (2013) have stated that the timing of foreign purchase needs to be conducted properly for diminishing the currency exchange rates. Global organizations must consider the fact that the dynamic product purchasing order could facilitate companies to avoid the risk of FX fluctuation.
Hodrick (2014) has discussed that floating exchange rates consist of several disadvantages including higher volatility, the tendency to worsen existing problems and utilization of inadequate resources predicting exchange rates. Among these risks, higher volatility in FX rates indicates major challenges for a global organization to conduct business effectively. On the contrary, Chaboud et al. (2014) have discussed beneficial aspects of the floating exchange rates. Floating exchange rates do not need for the international management. Moreover, the floating exchange rates do not require for recurrent central bank intervention. Mancini, Ranaldo and Wrampelmeyer (2013) have discussed that floating exchange rates do not require to intricate capital flow restrictions. Hence, it can be assessed that the FX rates play an important role in the globalization of the business. With the involvement of managing the FX rates, global companies could enhance the business opportunity, which would facilitate them to experience the profitable outcome of the business.
3. Research Questions:
The researcher develops the below research questions for executing the investigation in a systematic way.
- What are the challenges of multinational organizations to execute business on the global platform?
- How does a high volatile FX rate create difficulties for the global organizations to conduct business in an efficient manner?
- What are the rationales of the volatility of the FX market?
- How do the global organizations reduce the impact of the volatile FX rates in the business?
4. Research methodologies and techniques:
The researcher includes different tools and techniques for investigating the research topic in an effective way. In this context, the researcher employs the quantitative research method for executing the research process in a detailed manner (Panneerselvam 2014). The research design has three parts including explanatory, exploratory and descriptive. The exploratory research design facilitates the researcher to evaluate different facts on the previous research. Exploratory research design identifies the nature of the research topic (Pickard 2012). On the other hand, explanatory research design enlightens the rationale of the research topic. Descriptive research design is the most authenticate design, as it provides a detailed evaluation of the investigation area (Taylor, Bogdan and DeVault 2015).
In this context, the researcher selects descriptive research design for evaluating factors of volatile FX rates in the global business. By involving the descriptive research design, the researcher identifies the rationale and significance of the FX rates on the global business.
Figure 1: Research Design
(Source: Neuman and Robson 2012)
Research approach can be divided into two parts including inductive and deductive approach (Robson and McCartan 2016). In this context, the researcher chooses the inductive approach, as it facilitates the investigator evaluating the precise data on the research study.
Figure 2: Research approach
(Source: Neuman and Robson 2012)
5. Gantt chart:
Calculation Referred to MS Excel
Figure 3: Gantt chart
(Source: Created by author)
6. Research process:
The research process consists of different steps. In the 1st step, the investigator identifies the research area for investigating in an efficient method. In the 2nd stage, the researcher develops aim, the objective on the research topic. Moreover, the research questions will be developed at this stage based on objectives. In the third stage, the researcher provides a brief literature review on the topic through different theoretical aspects. Different theoretical views of authors would facilitate the researcher to highlight the rationale of the research topic. The investigator includes the data accumulation method in the 4th step. Data collection process facilitates the researcher to gather a huge amount of the reliable data on the topic. In the final stage, the investigator analysis the accumulated data based on several statistical tools.
Figure 4: Research process
(Source: Taylor, Bogdan and DeVault 2015)
7. Data collection and data analysis:
Data collection technique indicates two prime processes including primary and secondary (Robson and McCartan 2016). The researcher accumulates a huge amount of valid and reliable data from the primary method. On the other hand, the secondary process suggests data collection from books, journals, and online websites. Consequently, it reduces the data validation. However, in this context, the researcher involves both primary and secondary method to execute the research. Primary data will facilitate the researcher to accumulate huge data on the research topic of impact FX rates on the business globalization, whereas the secondary data will contribute to enhancing the information in the literature review (Taylor, Bogdan and DeVault 2015).
Data analysis consists of two major techniques such as a qualitative and quantitative method. In this project, the researcher selects quantitative research method for investigating the research topic (Pickard 2012). In the quantitative analysis, the researcher will be able to include the statistical analysis such as mean, median, standard deviation and mode. It will enhance the data analysis process in an effective method. Moreover, quantitative analysis facilitates the researcher to conduct the correlation and regression analysis on the topic of the impact of volatile FX rates in the global business (Panneerselvam 2014).
In this context, the researcher includes the probability sampling technique to select the respondents. Random selection will facilitate the investigator to reduce the bias from the data accumulation process (Miller et al. 2012). The researcher opts for 200 experts from FX market for collecting reliable data on the research topic. The small sample size will be selected for reducing the cost of the research. The investigator will conduct an online survey for executing the quantitative analysis. Several online platforms such as FaceBook, Twitter, and Skype will be included for conducting the survey within the short timeline.
Figure 5: Data analysis
(Source: Neuman and Robson 2012)
8. Research outcomes:
Research outcomes indicate a broad range of data and information on the particular research topic. Several analytical frameworks facilitate the researcher in identifying the rationale of the research topic. Research outcome contributes investigators to evaluate the impacts and issues of the FX rates on the global business. In this context, the research outcome provides a detailed discussion on different business risks due to the high volatility of the FX rates.
Banti, C., Phylaktis, K. and Sarno, L., 2012. Global liquidity risk in the foreign exchange market. Journal of International Money and Finance, 31(2), pp.267-291.
Chaboud, A.P., Chiquoine, B., Hjalmarsson, E. and Vega, C., 2014. Rise of the machines: Algorithmic trading in the foreign exchange market. The Journal of Finance, 69(5), pp.2045-2084.
Frenkel, J.A. and Johnson, H.G., 2013. The Economics of Exchange Rates (Collected Works of Harry Johnson): Selected Studies (Vol. 8). Routledge.
Hodrick, R., 2014. The empirical evidence on the efficiency of forward and futures foreign exchange markets (Vol. 24). Routledge.
Mancini, L., Ranaldo, A. and Wrampelmeyer, J., 2013. Liquidity in the foreign exchange market: Measurement, commonality, and risk premiums. The Journal of Finance, 68(5), pp.1805-1841.
Miller, T., Birch, M., Mauthner, M. and Jessop, J. eds., 2012. Ethics in qualitative research. Sage.
Neuman, W.L. and Robson, K., 2012. Basics of social research: Qualitative and quantitative approaches.
Panneerselvam, R., 2014. Research methodology. PHI Learning Pvt. Ltd..
Pickard, A., 2012. Research methods in information. Facet publishing
Robson, C. and McCartan, K., 2016. Real world research. Wiley.