ACME INDUSTRIAL PUMPS-B Situation 3 ---Exchange Rates Shift: What's the impact? The exchange rate changes based on the strength of the U.S. economy. The dollar strengthens against the pound. The new rate is: 1 BP = $1.25 USD a. How much is $1.00 worth in BP? b. Based on the new exchange rate, what is the new cost for the distributor in BP? c. What is the change in the profitability for the distributor? Situation 4: The British Pound Continues to Weaken The distributor now faces another weakening of the BP versus the USD. The new rates are: 1 BP = $1.00 and $1 = 1BP. a. What is the profit situation for the distributor? b. What are some options your firm (the U.S. manufacturer) can pursue to attempt to remain in the U.K. market? Situation 5: Management Responds The UK market is important to your US firm. You explore outsourcing manufacturing to China. You receive a quote for 2,000 RMB (Reminbi, also expressed as Yuan) per pump. The exchange rates are: 8.58 RMB = 1 BP and 1 BP = 1$USD a. How much will the pump cost if it is made in China and exported directly to the U.K.? b. What is the equivalent cost of the pump? ACME INDUSTRIAL PUMPS-B Situation 3 ---Exchange Rates Shift: What's the impact? The exchange rate changes based on the strength of the U.S. economy. The dollar strengthens against the pound. The new rate is: 1 BP = $1.25 USD a. How much is $1.00 worth in BP? b. Based on the new exchange rate, what is the new cost for the distributor in BP? c. What is the change in the profitability for the distributor? Situation 4: The British Pound Continues to Weaken The distributor now faces another weakening of the BP versus the USD. The new rates are: 1 BP = $1.00 and $1 = 1BP. a. What is the profit situation for the distributor? b. What are some options your firm (the U.S. manufacturer) can pursue to attempt to remain in the U.K. market? Situation 5: Management Responds The UK market is important to your US firm. You explore outsourcing manufacturing to China. You receive a quote for 2,000 RMB (Reminbi, also expressed as Yuan) per pump. The exchange rates are: 8.58 RMB = 1 BP and 1 BP = 1$USD a. How much will the pump cost if it is made in China and exported directly to the U.K.? b. What is the equivalent cost of the pump