Foreign Exchange Rate Fluctuation on Pricing Decision

Exchange Rates: The Exchange Rates are other important global factors for which company’s ultimate revenue is affected. For example sudden major change in the Exchange rate of UK with other countries is a great threat or facility for TESCO PLC business.

Before we look at these forces, we should sketch out how exchange rate movements affect a nation 's trading relationships with other nations. A higher currency makes a country 's exports more expensive and imports cheaper in foreign markets; a lower currency makes a country 's exports cheaper and its imports more expensive in foreign markets. A higher exchange rate can be expected to lower the country 's balance of trade, while a lower exchange rate would increase it.

* Exchange rates may affect profitability on the business if they are sourcing materials (all the ingredients used to

market, there is price competition. This can lead to price wars and, therefore, lower prices for

The depreciation of naira over the years has caused many firms especially the import dependent firms to suffer many loses as a result of exchange rate fluctuations. This has further led to difficulty in

When the firm exports to the other nation, there are several risks that they should concern about. The fluctuation of currency exchange rate is the primary issue. When the domestic exchange rate is depreciated, it is the great opportunity to export more to the other foreign nations. However, when it gets appreciated, it will increase the price of the product for the foreign customers. It will lead the decline of export to the other nation due to lack of attractiveness to import from foreign countries. It happened to the Deere & Company in 2015. The U.S. dollar was depreciated during 2013 to 2014, which attracted other nations to import their products. However, once it got appreciated, their export has declined substantially. It also let declines of stock

- For the foreign producers, when their currency weakens, production becomes cheaper (especially if they have currency reserves in dollars), and their sales go up, since the weaker currency is more attractive to foreign buyers.

When trying to determine the correct price, a number of factors must be considered: the market and its segments, the size of each segment, the ability to reach each segment, what distribution channels to target, whether to vary price by segment, the usefulness of promotional offerings, and whether the goal is to skim or penetrate each market.

Currency risks are majorly involved with expanding into foreign markets. Due to the fluctuations of exchange rates, apples profits can vary due to demand and supply. The value of a currency is varied due to currency depreciation and appreciation and this fluctuation and

Costs play an important role in setting international prices. Travelers abroad are often surprised to find that goods that are relatively inexpensive at home may carry outrageously higher price tags in other countries. Besides, such price escalation may result from differences in selling strategies or market conditions. In most instances, however, it is simply a result of the higher costs of selling in foreign markets such as the additional costs of modifying and packaging the product, higher shipping and insurance costs, import tariffs and taxes, costs associated with exchange rate fluctuations and higher channel and physical distribution costs. Futhermore, Milo also adopted Promotional Pricing strategy. Selling products is challenging when shelves are lined with similar-quality products, and customers are bombarded with advertising messages. Promotional pricing helps differentiate Milo’s product with its competitor and leverage a potential customer's attention long enough to purchase the Milo products. Promotional pricing involves lowering the price of a product, distributing coupons or offering specials, such as buy-one-get-one-free offers. For example, Milo offer promotional pricing for its product in weekly catalogue to create excitement and a sense of

Economic and the currency: first of all, every business is trying to avoid risk, therefor, the economic status of a foreign country is what the company looking for, they want the low unemployment rate, inflation rate and stable economic environment. Furthermore, the currency difference will change the product price strategy.

So, keeping those in mind the company can adopt a localization strategy in international markets; in every market that they have entered they may produce products just like they did to Asian people. Furthermore, lower prices can show products less qualified in international markets, especially in Europe and America, for those markets the company can came up with an alternative product line that is more niche.

Avon also uses the aspect of global pricing and this is determined by the state in a certain country local market and strategic objectives. This affects the country in the way that the country with the higher price ships the same products from the country with the lower price this making the company to count loss.

Another factor that we need to keep in mind is the cultural and economic realities of these marketplaces and consumers while pricing our products. Let us begin with the pricing for the European Union market Spain. This is a rich market which is centered around good quality and ready to spend the money asked for

• Financial management effort: To minimize the risk of exchange-rate fluctuation and transactions processes of export activity the financial management needs more capacity to cope the major effort