Questions 1. You are the Western regional sales controller, and the sales manager has asked for your help. A major California bank with over 200 branches has chosen to cancel the Xerox copier contract (annual lease revenue of over $1 million per year) due to pricing. The competition with a West Coast assembly plant has made an offer 27 percent less than yours. You can make up percent of the difference without materially affecting your budget. If the customer is to be preserved, you need pricing help from the factory. You call the US Customer operations controller because the loss of sales revenue will significantly affect your budget. What are the options for Xerox, and how will Sach resolve the issue?
2. The Venray plant transfers copiers to the US Customer operations for FOB EC port price. If the US customer price is 100 percent and the Venray transfer price is 60 percent, answer the following:
A. What currency is used to value the trade?
B. who is responsible for hedging?
C. As the Venray controller, what's your currency exposure?
D. How does this influence your performance measures?
E. Does this system seem fair to you? What, if anything, would you change?