To: Mr. Leon Jones Chief Business StrategistFrom: Ben Manning Senior Risk AnalystDate: July 16, 20X6Re: International Business OperationsMeasures and Risks As we look to expand our potential foreign trade opportunities, I wanted to take this chance to educate my colleagues as to the benefits and the risks associated with these ventures. When we think about international business operations, there are several key drivers, including:Organizational/operational options for international businessthe decision to centralize or decentralize operations is critical, as is the availability of labor, materials, and transportation.Technological advancementsimprovements here equate to location becoming ((1) less/more) important.Transportation improvementshigher efficiencies increase the competitive status of ((2) exporters/importers) in domestic markets.Deregulation of international financial marketsdirect foreign investment is facilitated through the elimination of capital controls, although inherent political risks and legal limitations will remain. In terms of risk, there are three categories of exchange rate (currency) risk: transaction, economic, and ((3) interest rate/translation) risk. The risk of functioning in a foreign economy is related to the general health or weakness of that economy. A multinational corporation exporting to a foreign country is naturally going to be very concerned with demand in that country. Weakening demand may ultimately lead to a foreign nation's government implementing regulatory measures, such as tariffs, which serve to reduce ((4) imports/exports). Interest rates are a key measure of economic activity, as higher interest rates in a given foreign country indicate ((5) faster/slower) economic growth and ((6) reduced/increased) demand. Also critical to measure is inflation, as higher inflation tends to ((7) reduce/increase) purchasing power; this will have the effect of making imported goods relatively more expensive, thereby ((8) increasing/reducing) local demand. We should also be aware that a strong local currency ((9) increases/reduces) the demand for imported goods. Political risks are something to also be very mindful of, as they can potentially be very disruptive to financial operations. We need to be aware of the potential for the expropriation of our resources, barriers to trade, the attitude of the government and consumers toward foreign firms, corruption, foreign currency issues, and war.

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Ben Manning is a senior risk analyst for a company that is interested in significantly expanding its foreign trade operations. Leon Jones, chief business strategist, has asked Ben to draft him a memo, which will ultimately be distributed to many of his colleagues. Jones would like the memo to address several aspects of international business operations, including measurement, drivers, and risks. For each of the numbered items in the memo in the exhibit, determine the correct wording and select the correct wording from the option list provided. Ben Manning is a senior risk analyst for a company that is interested in significantly expanding its foreign trade operations. Leon Jones, chief business strategist, has asked Ben to draft him a memo, which will ultimately be distributed to many of his colleagues. Jones would like the memo to address several aspects of international business operations, including measurement, drivers, and risks. For each of the numbered items in the memo in the exhibit, determine the correct wording and select the correct wording from the option list provided