International Business Paper

Running Head: International Business
International Business Paper
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Abstract
The aim of any company is should be to overcome these berries and expand the business to become bigger. Companies have been going global in order to create a bigger market for their products. However these companies face a big challenge in trying to do business in those countries. One of the problems is financial risk due the difference in currencies. This paper examines how Ghosn was able to overcome financial risks and recover Nissan Company.
International Business
Many companies have gone global in today’s business world in order to find markets for their products. This means that the companies have to conduct transactions between the borders where there are different currencies that are volatile and pose the risk of loss in conducting the transactions. It is therefore important for companies to find mechanisms which they can use to reduce this risk and avoid incurring losses through transactions (Hyman, 2005).
According to Homaifar (2004), the risk of foreign exchange rates volatility is always intense for companies that are operating globally. Such is the case with Nissan an automobile company that has branches in different parts of the world. Nissan was a very competitive and favorable company in the automobile industry before the 1990s when it started experiencing financial problems with huge debts that led to its merger with Renault in 1999. Nissan had opted to unite with General Motors but the plan did not work. It experienced a devaluation of the yen from 100 to 90 for the dollar. This is the form of financial risk that leads to companies loosing value due to cross border transactions. The loss of value led to Moody’s and Standard agencies announcing that Nissan was going to be reduced from investment grade to junk. After the merger the vice president of Renault became the CEO of Nissan and introduced policies that have led to Nissan recovering to its form and position as one of the world’s largest automobile company.
Recovery of Nissan is credited to its CEO who put in place policies that led to the company being able to recover and make profits to pay off its debts that amounted to $22billion at the time when it merged with Renault. Today Nissan is one of the biggest automobile companies in the world. There were many changes made including firing of employees and Ghosn insisted that such actions had to be taken promising that if Nissan didn’t make profits in the following year then he would resign together with his management team. This was however achieved which saw Ghosn be viewed as one of the best CEOs. There was minimal assistance from Renault and Ghosn relied on the resources that Nissan had to stop it from collapsing and bring back the company back to its position in the...