Question
Consider the following scenario. A company has decided to expand its operations globally. The pricing department has concluded that the company will save two million
Consider the following scenario. A company has decided to expand its operations globally. The pricing department has concluded that the company will save two million dollars annually by purchasing raw materials from Japan. The yen, Japan's national currency is currently stronger than the U.S. dollar which makes importing goods cost effective. Both the U.S. Dollar and the Yen have fluctuated in strength the last ten years. If the yen weakens against the U.S. Dollar, this new purchasing agreement will not be profitable for the company. Please discuss the following:
1. What can the organization do to mitigate this risk?
2. Describe the implications of failing to effectively manage this risk.
a. Describe how these factors will affect the company's profitability metrics.
3. Please include examples of companies that failed to manage this risk and describe how it impacted them.
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