Business-7656247

Business-7656247 - of the inflation is not the same in all...

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1. Why might inflation pose more problems in evaluating foreign firms than in evaluating a domestic business? Inflation can be stated as a general rise/increase in the prices of services and goods in an economy over a period of time. This in turn reduces the purchasing power of the people. Inflation may pose more problems in evaluating foreign firms than in evaluating domestic business because the economic situation will not be the same in all the countries at a given period of time. Inflation can take the form of demand-pull, cost- push or structural inflation. Although inflation exists in most of the countries the degree
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Unformatted text preview: of the inflation is not the same in all the countries making it difficult to evaluate the foreign firms. Domestic firms can be evaluated and compared with other domestic firms keeping them on a same platform because the inflation level in all the domestic firms would be the same in general. This is not the case with foreign firms. A firm in a foreign country A may face a stronger inflation rate than a firm in another foreign country B facing a comparatively lower inflation rate. As such evaluation poses difficultly....
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