Deliverable Length: 2-3 pages
Select a U.S. multinational company. In terms of currency denomination, discuss how the firm prices its revenues and costs. For MNE's with multiple foreign operations, consider any one of those operations and the contribution it is making to the parent firm's profits. Using this information, what do you think would be the effect of increases/decreases in the dollar's exchange value on the firm's profitability? Be sure to show all applicable work.
An MNE is a multi-national enterprise, a company that has operations in more than one country. When a such a company prices its product and denominates its costs in terms of US dollars , there is no effect on its revenues or costs when exchange rates change. But when prices and costs are in terms of foreign currencies, an MNE's revenues and costs are affected by exchange rate changes. So select the company, describe its activities. State whether it prices its products in $ or a foreign currency. State whether it pays its suppliers and workers© BrainMass Inc. brainmass.com October 9, 2019, 10:35 pm ad1c9bdddf
For the purpose of this assignment, I will chose US MNC Microsoft. Microsoft has operations in numerous countries across the world, including India. In India, Microsoft operates huge R&D operations to take advantage of the huge pool of Skilled IT professionals at low costs. Microsoft obtains comparative advantage in terms fo cost and quality by carrying out its research and development and back office operations in India. This operation significantly improves the operating margins of the company as such operations in India is carried out at a much lower cost as compared to similar scale of operations in United States. ...
Select a U.S. multinational company. In terms of currency denomination, discuss how the firm prices its revenues and costs.