Suppose you and your teammates are on the board of a global food manufacturing business.
You source your raw materials from South America; process, manufacture, and package in Europe; and sell mainly into Southeast Asia and the United States. You are concerned about economic and translation risks and face the following problems. What is your course of action in each case?
1. You buy raw materials in dollars, and the value of the dollar has dropped by 10 percent against the Brazilian real and 5 percent against the Chilean peso.
2. You want to sell your European factories, but the value of the euro has dropped by 12 percent during the negotiations with potential buyers.
3. Your distribution operation based in Japan operates using the yen. The Japanese government has set out a revaluation program that will be launched next month.