Transaction Exposure

Transaction Exposure

Introduction

Transaction exposure is the risk that companies doing business internationally face. This is the risk which occurs due to changes in the currency rates of another country when the company has entered a contract. Such changes in the currency rates can affect the value and functioning of the firm (Maurice, 2005). The exchange rates fluctuations can cause big losses for the multinational firms. This research paper is based on investigating P&G's foreign exchange risk. The research paper will encompass the risks that the campany face. It will also include the foreign exchange risks that are faced by the company. The foreign exchange risks of a multinational firm can affect the way things are managed in the company. Changes in the foreign exchange rates cab affect the financial worth and value of the company. It is extremely important for a multinational company to manage the changes in the foreign exchange rates and act accordingly. If the management of foreign exchange risks is not done in a proper way, things can get really bad for the company. Management of foreign exchange risks is also included in the research paper. The research paper will focus on the kinds of foreign exchange risks that Proctor and Gamble faces. It will also include the management tools and techniques that are used by Proctor and Gamble to minimize the foreign exchange risks. The research paper will also provide a brief introduction of the firm chosen.

Discussion

About Proctor and Gamble (P&G)

Proctor and Gamble is one of the greatest consumer goods company of the world. Proctor and Gamble is an American multinational firm and it has its headquarters in the state of Ohio. The products that the company has include personal care products, pet food and cleaning agents. The company also dealt in food and beverages before Proctor and Gamble sold Pringles to Kellogg. Proctor and Gamble is one of the most successful consumer products company currently operating in the world. Proctor and Gamble is currently operating in more than 180 countries of the world. Its headquarters is in America. Proctor and Gamble recorded $82.6 billion in sales in the year 2011. Proctor and Gamble was also declared as one of the most admired companies of the world by the Fortune Magazine. The Proctor and Gamble company ranked fifth in the world in this category. The Proctor and Gamble company stood at the 6th place in 2010 in the same category. Proctor and Gamble is also the only company listed in the Fortune 500 to issue the common stick. The Proctor and Gamble company issued this common stock by the name of C Share. The business units of Proctor and Gamble include,

Beauty segment

Health care segment

Fabric acre segment

Home care segment

Snacks segment

Pet care segment

Baby care segment and

Family home care segment

Foreign Exchange Risks

Foreign exchange risks are the contingent, agreed or projected cash flows of a multinational company which are not certain. Foreign exchange risk is also known as the currency risk or the exchange rate risk. They are the risks which occur due to an exposure ...