International Finance
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Please help with the following business problem.
Texas Instruments (TI) manufactures integrated circuits and memory chips that it sells around the world. It has major markets in Europe. TI's primary competitors are Japanese companies.
a. What factors will influence TI's exposure to movements in the dollar value of European currencies?
b. Does TI's European business have yen exposure? Explain.
c. How can TI use financing to reduce its yen exposure, to the extent this exposure exists?
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This posting provides detailed solutions to problems about international business strategy in the global market.
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a. What factors will influence TI's exposure to movements in the dollar value of European currencies?
ANSWER. Since TI's main competitors worldwide are Japanese companies, one critical factor affecting its exposure is the dollar/yen exchange rate. If the dollar appreciates relative to, say, the euro, but the $/¥ exchange rate remains constant, then TI should be able to raise its euro prices without ...
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