Let’s say you run a U.S. corporation that sells widgets to Germans. The deutsche mark drops against the U.S. dollar. What happens? You can sell the same number of widgets, but when the marks are converted into dollars, you get fewer of them in your pocket. And, if your widgets are produced in the United States, your production costs are higher than for your German competitor. Nothing you can do about it, right? George and Schroth argue that you can do something about it, but it takes systematic planning. In this article, they describe the increasing effects of foreign exchange rates on the global market and ways to plan for them. By making foreign exchange planning a part of overall long-term strategy, organizations can avoid its negative effects and even exploit its positive ones.
1. Representatives of forty-four nations met in Bretton Woods, New Hampshire, in 1944 to forge the Bretton Woods Agreement that established the International Monetary Fund and the International Bank for Reconstruction and Development.
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5. With the recent adoption of SFAS 105, which deals with the disclosure of information about financial instruments with off balance sheet risk, outside analysts should be better able to identify the financial actions taken by individual compa-