Managing Foreign Exchange for Competitive Advantage
Let's say you run a U.S. corporation that sells widgets to Germans. The deutsche mark drops against the U.S. dollar. What happens? You can sell the same number of widgets, but when the marks are converted into dollars, you get fewer of them in your pocket. And, if your widgets are produced in the United States, your production costs are higher than for your German competitor. Nothing you can do about it, right? George and Schroth argue that you can do something about it, but it takes systematic planning. In this article, they describe the increasing effects of foreign exchange rates on the global market and ways to plan for them. By making foreign exchange planning a part of overall long-term strategy, organizations can avoid its negative effects and even exploit its positive ones.