Published by:
Harvard Business Publishing
Length: 8 pages
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Abstract
Factors like foreign and domestic market structure determine a company''s operating exposure to exchange rates. But sophisticated managers have learned to manage foreign-exchange exposure in new ways. For example, companies can approach production units not as fixed, but as flexible, facilities whose importance to the corporation can be adjusted when exchange rates shift. The company can also shift sources of raw materials, subassemblies, and components. Above all, managers are more likely to adopt appropriate courses of action if their performance measurement takes into account the effect of exchange rate changes on operating performance.
About
Abstract
Factors like foreign and domestic market structure determine a company''s operating exposure to exchange rates. But sophisticated managers have learned to manage foreign-exchange exposure in new ways. For example, companies can approach production units not as fixed, but as flexible, facilities whose importance to the corporation can be adjusted when exchange rates shift. The company can also shift sources of raw materials, subassemblies, and components. Above all, managers are more likely to adopt appropriate courses of action if their performance measurement takes into account the effect of exchange rate changes on operating performance.