“All units are responsible for their transaction currency exposure. There are no
exceptions. The managers must manage. For product sourced through our manufacturing
units the rule is simple. If manufacturing adds more than one-third of the product value, then
the manufacturing unit is responsible for managing the currency hedging. Note that the
transfer price uses the buyer’s currency to calculate the price. If the manufacturing units add
less than one-third of the product value, then the buying unit is responsible for the currency
hedging. Note that the transfer price uses the seller’s currency to calculate the price. In this
case, the value passes through the marketing organization for recovery. In essence, we
determine the denomination of the transfer price by the value added to the product based on
the cost and the final selling price.”