Monday, November 18, 2019

Questions and comments on graph and starbucks Essay

Questions and comments on graph and starbucks - Essay Example Euro will definitely make it difficult for European economies to compete in the global market due to comparatively low prices offered by non-European economies. Starbucks’ understanding towards the increase in exchange rate for Euro vs Dollars has saved it from making an investment, which would have resulted in lower revenues earning; however, the other issue of tax avoidance is a considerable one, which not only focuses on the taxation policies but also increases the political risk associated with such practices. The fact that the actions of the company can affect the political risk has to be considered, which will definitely be another setback for the operations of the company in the European market (Kapil). The management of Starbucks shall be concerned about the risks associated with foreign currency translations, which may affect the profitability of the company and thereby deviate unfavourably from projected figures. In this regard, the fact that the company has started using forward contracts to cover risks associated with foreign currency translation is a positive step. The fact that there is a risk associated with such practice is still acceptable while keeping in view the greater risk associated with losses incurred in foreign currency translations

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