Free Nike in Latin America Essay Sample
Growth and expansion in business is expressed by growth in market share. Strategies aimed at penetrating the Latin America should be wary of the unpredictability of the inflation rates and develop tactics sufficient enough to counter them. This will stem a sound and sustainable market share and influence the clientele, tackling two factors key to business success. Due to the fluctuation of the dollar versus the countries currency rates, the question of remitting funds to the United States is a complex one that ought to be sufficiently addressed. The sustenance of the business will to a great extent depend on the exquisite execution of a perfect master plan.
Instances of high inflation rates need acute attention. Remittances from regions affected by high inflation rates could signify a significant decrease in returns from investments; such a move would negatively influence monthly returns. In addition, the total portfolio value; read stocks, and company growth will be highly affected. This will also force high operational costs for the company in a bid to align itself to the perfect position as the economy dictates so will the staff. This makes the question of remittances to the United State tricky and a burden if indeed executed.
High inflation rates will mean high taxation rates. Money outflow and inflow will be governed by comparatively high taxes to support the weaker economies. Such remittances will also burden the operational costs forcing them to cut down working costs resulting in less allowances, annuities and stringent operational budget for operational and staff motivation ventures.
Cognizant of the risks, better strategies would revolve around how operations are financed, the capital structure and aim at exploiting local finance institutions. Large proportions of debt financing will mean that fewer funds will need to be converted into dollars for remittance (Jones 2010). This will reduce the exposure to inflation and having to round the hill of exchange rate risks. This would not be the case if financing was done in dollars. In addition, a thorough examination of the capital structure is essential. Utilizing local financial institutions will ensure that they do the shielding for their subsidiaries, guarding against government taxation and payments made to the subsidiary.
To conclude, the high inflation rates in Latin American countries calls for a multi-faceted dimensional penetration. Use of perfect and well-calculated Strategies will duly mean success for Nike in such a venture which as merchandisers they should never be afraid to undertake.