All footwear companies are subject to exchange rate adjustments at two different points in their business. The first occurs when footwear is shipped from a plant in one region to distribution warehouses in a different region (where local currencies are different from that in which the footwear was produced). The production costs of footwear made at Asia-Pacific plants are tied to the Singapore dollar (Sing$); the production costs of footwear made at Europe/Africa plants are tied to the euro (€); the production costs of footwear made at Latin American plants are tied to the Brazilian real; and the costs of footwear made in North American plants are tied to the U.S. dollar (US$). Thus, the production cost of footwear made at an Asia Pacific plant and shipped to Latin America is adjusted up or down for any exchange rate change between the Sing$ and the Brazilian real that occurs between the time the goods leave the plant and the time they are sold from the distribution center in Latin America (a period of 3-6 weeks). Similarly, the manufacturing cost of footwear shipped between North America and Latin America is adjusted up or down for recent exchange rate changes between the US$ and the Brazilian real; the manufacturing cost of pairs shipped between North America and Europe/Africa is adjusted up or down based on recent exchange rate fluctuations between the US$ and the €; the manufacturing cost of pairs shipped between Asia-Pacific and Europe/Africa is adjusted for recent fluctuations between the Sing$ and the €; and so on.
The second exchange rate adjustment occurs when the local currency the company receives in payment from local retailers and online buyers over the course of a year in Europe/Africa (where all sales transactions are tied to the €), Latin America (where all sales are tied to the Brazilian real), and Asia-Pacific (where all sales are tied to the Sing$) must be converted to US$ for financial reporting purposes. The company's financial statements are always reported in US$. The essence of this second exchange rate adjustment calls for the net revenues the company actually receives on footwear shipped to retailers and online buyers in various parts of the world to reflect year-to-year exchange rate differences as follows:
The revenues (in €) the company receives from sales to buyers in Europe/Africa are adjusted up or down for average annual exchange rate changes between the € and the US$.
The revenues (in Sing$) received from sales to Asia-Pacific buyers are adjusted up or down for average annual exchange rate changes between the Sing$ and the US$.
The revenues (in Brazilian real) received from sales to Latin American buyers are adjusted up or down for average annual exchange rate changes between the Brazilian real and the US$.
No adjustments are needed for the revenues received from sales to North American buyers because the company reports its financial results in US$.
BSG is programmed to access all the relevant real-world exchanges ratesBSG is programmed to access all the relevant real-world exchanges rates between decision periods, handle the calculation of both types of exchange rate adjustments, and report the size of each year's percentage adjustments on the Corporate Lobby page, on pertinent decision screens, and in the company reports. While you do not have to master the details of how the two types of exchange rate adjustments are calculated, you definitely will need to keep a watchful eye on the sizes of the exchange rate adjustments each year and understand what you can do to mitigate the adverse impacts and take advantage of the positive impacts of shifting exchange rates on your company's financial performance.
The size of the exchange rate adjustments each year are always equal to five times the actual period-to-period percentage change in the real-world exchange rates for US$, €, Brazilian real, and Sing$ (multiplying the actual percentage change by five is done so as to translate exchange rate changes over the few days between decision periods into changes that are more representative of a potential full-year change). However, because actual exchange rate fluctuations are occasionally quite volatile over a several day period, the maximum exchange rate adjustment during any one period is capped at ±20% (even though bigger changes over a 12-month period are fairly common in the real world).
There will be no exchange rate adjustments in Year 11. The real-world exchange rate values prevailing when the simulation is started and on the decision deadline for Year 11 will serve as the base for calculating the Year 12 exchange rate adjustments. The real-world changes in the exchange rates between the Year 11 and Year 12 decision deadlines serve as the basis for exchange rate adjustments in Year 13. And so on through the exercise. This means you have the advantage of knowing in advance what the exchange rate effects will be in the upcoming year and can thus take actions to mitigate adverse exchange rate effects (we have done this to help you manage the risks of exchange rate fluctuations as opposed to giving you the option to engage in currency hedging, which is pretty intricate and has risks of its own).
All footwear companies are subject to exchange rate adjustments at two different points in their business. The first occurs when footwear is shipped from a plant in one region to distribution warehouses in a different region (where local currencies are different from that in which the footwear was produced). The production costs of footwear made at Asia-Pacific plants are tied to the Singapore dollar (Sing$); the production costs of footwear made at Europe/Africa plants are tied to the euro (€); the production costs of footwear made at Latin American plants are tied to the Brazilian real; and the costs of footwear made in North American plants are tied to the U.S. dollar (US$). Thus, the production cost of footwear made at an Asia Pacific plant and shipped to Latin America is adjusted up or down for any exchange rate change between the Sing$ and the Brazilian real that occurs between the time the goods leave the plant and the time they are sold from the distribution center in Latin America (a period of 3-6 weeks). Similarly, the manufacturing cost of footwear shipped between North America and Latin America is adjusted up or down for recent exchange rate changes between the US$ and the Brazilian real; the manufacturing cost of pairs shipped between North America and Europe/Africa is adjusted up or down based on recent exchange rate fluctuations between the US$ and the €; the manufacturing cost of pairs shipped between Asia-Pacific and Europe/Africa is adjusted for recent fluctuations between the Sing$ and the €; and so on.
The second exchange rate adjustment occurs when the local currency the company receives in payment from local retailers and online buyers over the course of a year in Europe/Africa (where all sales transactions are tied to the €), Latin America (where all sales are tied to the Brazilian real), and Asia-Pacific (where all sales are tied to the Sing$) must be converted to US$ for financial reporting purposes. The company's financial statements are always reported in US$. The essence of this second exchange rate adjustment calls for the net revenues the company actually receives on footwear shipped to retailers and online buyers in various parts of the world to reflect year-to-year exchange rate differences as follows:
The revenues (in €) the company receives from sales to buyers in Europe/Africa are adjusted up or down for average annual exchange rate changes between the € and the US$.
The revenues (in Sing$) received from sales to Asia-Pacific buyers are adjusted up or down for average annual exchange rate changes between the Sing$ and the US$.
The revenues (in Brazilian real) received from sales to Latin American buyers are adjusted up or down for average annual exchange rate changes between the Brazilian real and the US$.
No adjustments are needed for the revenues received from sales to North American buyers because the company reports its financial results in US$.
BSG is programmed to access all the relevant real-world exchanges ratesBSG is programmed to access all the relevant real-world exchanges rates between decision periods, handle the calculation of both types of exchange rate adjustments, and report the size of each year's percentage adjustments on the Corporate Lobby page, on pertinent decision screens, and in the company reports. While you do not have to master the details of how the two types of exchange rate adjustments are calculated, you definitely will need to keep a watchful eye on the sizes of the exchange rate adjustments each year and understand what you can do to mitigate the adverse impacts and take advantage of the positive impacts of shifting exchange rates on your company's financial performance.
The size of the exchange rate adjustments each year are always equal to five times the actual period-to-period percentage change in the real-world exchange rates for US$, €, Brazilian real, and Sing$ (multiplying the actual percentage change by five is done so as to translate exchange rate changes over the few days between decision periods into changes that are more representative of a potential full-year change). However, because actual exchange rate fluctuations are occasionally quite volatile over a several day period, the maximum exchange rate adjustment during any one period is capped at ±20% (even though bigger changes over a 12-month period are fairly common in the real world).
There will be no exchange rate adjustments in Year 11. The real-world exchange rate values prevailing when the simulation is started and on the decision deadline for Year 11 will serve as the base for calculating the Year 12 exchange rate adjustments. The real-world changes in the exchange rates between the Year 11 and Year 12 decision deadlines serve as the basis for exchange rate adjustments in Year 13. And so on through the exercise. This means you have the advantage of knowing in advance what the exchange rate effects will be in the upcoming year and can thus take actions to mitigate adverse exchange rate effects (we have done this to help you manage the risks of exchange rate fluctuations as opposed to giving you the option to engage in currency hedging, which is pretty intricate and has risks of its own).
การแปล กรุณารอสักครู่..
![](//thimg.ilovetranslation.com/pic/loading_3.gif?v=b9814dd30c1d7c59_8619)