Itb 4 w4

Please provide an example of a transaction or economic exposure.

QUESTION 2= (COMMENT)

Review the definitions of transaction exposure and economic exposure. How are theydifferent?

According to Eun and Resnick (2012), transaction exposure is sometimes considered short-term economic exposure. The main difference between the two is that transaction exposure is well defined and is based upon the amount of foreign currency that is receivable or payable.

Please provide an example of a transaction or economic exposure.

An example of economic exposure, would be the Russian ruble crisis. The decline of the ruble value has caused MNC’s such as Apple, BMW, and McDonald’s to re-evaluate business relationships with Russia. Apple stopped selling products online, McDonald’s raised their menu item prices, and BMW asked Russian car dealers to pay for already ordered cars within two days to help offset economic exposure effects. 

Eun, C., & Resnick, B. (2012). International Financial Management, 6th Edition. [VitalSource Bookshelf version]. Retrieved from http://strayer.vitalsource.com/books/0077828461

http://www.ibtimes.com/russian-ruble-crisis-what-it-means-apple-mcdonalds-bmw-other-multinational-1761583

QUESTION 3=

Please respond to the following:

•     General Motors exports cars to Spain, but the strong dollar against the Euro hurts sales of GM cars in Spain. In the Spanish market, GM faces competition from Italian and French car makers, such as Fiat and Renault, whose operating currencies are the Euro.  From the second e-Activity, determine the best course for GM to take to maintain its market share in Spain. Explain your rationale.

QUESTION 4= ( COMMENT )