A company's management team should seriously consider bidding for a private-label footwear contract in a particular geographic region when the data in the Comparative Competitive Efforts section of the prior year's Competitive Intelligence Report indicates that all of the winning bidders for private-label contracts supplied more than 400,000 pairs to chain retailers. all the sellers of private-label footwear in the prior year had a market share under 20% (as reported in the Comparative Competitive Efforts section of the Competitive Intelligence Report) the data in the Comparative Competitive Efforts section of the latest Competitive Intelligence Report indicates that some of the winning bidders for private-label footwear were able to win contracts at an offer price above their selling price for branded footwear the company projects that it will have ample production capacity to supply chain retailers with private-label footwear and the private-label operating benchmark data on p. 7 of the latest FIR showed that the industry average margin over direct costs was $3.45 per pair sold in that particular region. the data in the Comparative Competitive Efforts section of the latest Competitive Intelligence Report indicates that one or more rival firms elected not to submit price offers to supply private-label footwear to chain retailers. VIEVIOUS One strategy with profit-enhancing appeal that company managers can use to deal with the favorable and unfavorable exchange rate adjustments to total production costs that occur each year when footwear from a production facility in one region is shipped to a distribution warehouse in another geographic region is to adjust the company's prior year shipping pattern and pricing and marketing efforts to sell more pairs in regions where exchange rate adjustments are favorable and fewer pairs in regions where the adjustments are unfavorable; such shifts tend to boost profits in regions with favorable adjustments and lessen the adverse impact on profits in regions with unfavorable adjustments. lower the prices of all footwear sold in a geographic region by the full amount of any unfavorable/adverse exchange rate adjustment per pair that the company incurs in that region and raise the prices of all footwear sold in a geographic region by the full amount of any favorable exchange rate adjustment per pair that the company receives in that region-- such pricing adjustments act to maximize the resulting gains in total profits o invest in production facilities in geographic regions where there are favorable exchange rate cost adjustments and use some/all of the capacity to ship pairs to regions where there are unfavorable exchange rate cost adjustments. not bother taking any action and simply ignore exchange rate cost adjustments altogether- the sizes of the favorable and unfavorable exchange rate adjustments in each geographic region will tend to cancel out over the various decision rounds and thus have little or no net long-run effect on the company
