Case study for final exam
“STMIcro Case”
1. It says in the case that few analysts predicted that the value of the dollar would fall against the euro in 2003, so this means that it is hard to tell whether the currency is going to fall or rise. It depends on the demand and supply of the currency.
2. Many foreigners sold the dollars for other currencies such as Japanese yen, British pound, for example, and this was because the foreigners became pessimistic about the future value of the dollar. The foreigners had this statement because that the US government preferred a weaker dollar in order to increase the competitiveness of US companies in the global market place. Secondly, the US had high budget deficits, which means that the country was importing more than exporting products. Some foreigners assumed that the US would have to expand the supply of the dollar by printing more money, and this would lead to an inflation, and also reduce the value of the dollar even more.
3. I think that the company did a very little hedging because of the high manufacturer of semiconductor chips and with high sales. Even if the dollar value would fall, the company would still sell a high amount, so this may not bother the company. In my opinion, it’s not wise to not try to predict about the future value of a currency because this is an important factor that affects the whole company in terms of revenue and profits. The company would also reduce the risks by hedging.
4. Mr. Bozotti described the strategy as a “real hedging” strategy that would allow the company to move from Europe to Asia, and back if necessary, in order to deal with the consequences of shifts in exchange rates against the dollar. This strategy is not so smart because it will cause unemployment for many thousands of people. The company has to find a location as well in order to precede the manufacturing, which takes time and use of a lot of money.
Levi Strauss
1. There are physiological, socio cultural differences, and also climate differences in different countries that we have to respond in order to attract and satisfy customers.
2. The distribution and pricing strategy varies among different nations because of the difference in terms of development and markets. In the US, for example, the Levi jeans are sold through mass-market discount retailers, which drive down the prices. In India, the jeans are low-priced Signature brand, and this is the case of the selling growth. In Spain, these jeans are considered as high quality jeans, and are therefore sold for a more expensive price than the US. In the UK, there is a more competitive environment, which drives up the price of the jeans.
3. Advertising and promotions can vary in different nations because of the cultures and languages. The differences in ads and promotions can be in the taglines that the company uses in order to attract customers. If the ads are global, it might attract customers in one place, but not in another because it can have the different meaning in different languages.
4. A pricing strategy varies in different countries because the different value of the currencies. In developed countries, the price tends to be higher because the customers have a higher income than developing countries. In the US, the company sells jeans in Walmart, which is cheap, but in the UK, they sell in high price outlets because of the highly environment competitive.