How is the location of a manufacturing base dependent on foreign exchange rate of a country's currency?
What will be an ideal response?
In deciding where to locate a manufacturing base, costs of production will be determined in part by the prevailing foreign exchange rate for the country's currency. Exchange rates can be volatile and many companies pursue global sourcing strategies from a "portfolio" of countries and in a range of currencies as a way of limiting exchange-related risk. At any point in time, what had been an attractive location for sales or production may become much less attractive due to exchange-rate fluctuations. The prudent company will incorporate exchange volatility into its planning assumptions and be prepared to prosper under a variety of exchange-rate relationships.
Dramatic shifts in price levels of commodities and currencies are a characteristic of the world economy today. Such volatility argues for a sourcing strategy that provides alternative country options for supplying markets. With alternative production locations, if any location is in a country with a seriously overvalued currency, a company with productive capacity in other locations can maintain its competitive advantage by shifting production to competitively valued country locations.
You might also like to view...
Numbering systems are used with outlines, tables of contents, and headings to display
a. details b. agenda c. organization d. research
A study tested whether environmental factors were important and influenced group effectiveness more than leaders did. This study found:
a. that there was strong support for the relative importance of environmental factors compared to leaders, i.e., the environment mattered, leaders didn’t b. the environmental factors did not influence group effectiveness, but leaders did: leaders matter c. both environmental factors and leaders influenced group effectiveness d. neither environmental factors or leaders influenced group effectiveness
Communication begins when A) an idea is put into words or conveyed through gestures
B) the idea is sent through a communication channel. C) the sender has an idea. D) the receiver decodes the message.
Total music consumption in hours of day listening to music has increased even as sales of CDs have drastically declined.
Answer the following statement true (T) or false (F)