Current Exchange Rates and Changes in Trade Decisions
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I am working on the project based on the article published by Wall Street Journal where BMW is considering moving some of their operations into USA. I need to discuss the impact of Dollar to Euro exchange rate trend and Free Trade status.
Attached is article.
Please advise.
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Solution Summary
Discussion on how the current rate of exchange and its affects on trade. Current exchange rates find the euro worth more than the dollar and European companies are moving operations to the United States. Effects of such moves.
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The impact of free trade is that customers buy what they want at the least expensive price possible when quality and other variables are equal. In the case of foreign trade, this is especially true between countries and for multinational corporations it means the companies can adjust production based on the best prices available for resources of material and labor and also best prices for selling the product. In the case of BMW, the current market of exchange rates makes the United States much more attractive then Europe for several reasons.
Initially the company needs resources to build the product. In the case of BMW and most other Western companies, the resources are materials which must be bought and turned into product and labor. All are available in Europe and the United States in equal quality and for the most part, values. Material can be bought and shipped as necessary or created within both regions though obviously there will be some items that create more expense than others for each location. Accessibility to an educated and trained workforce is necessary for a company to produce a quality ...
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