Chapter IC, Problem 10.3CDQ

Summary Introduction

Case summary:

Company S is an automobile manufacturing division of Country J. There was a sudden drop in the value of yen against the dollar of Country U. This company has concentrated most of its manufacturing in the home country itself to achieve economies of scale than exporting its production to the Country U.

In the year 2012, the Country J has faced recession and the consumer prices have fallen tremendously. Later, the Country J’s central bank has cut down its interest rates to stimulate the economy. There was a sales boom in the year 2015 due to depreciation in the value of yen. Suddenly, the profit has increased in the parent company for Company S.

To discuss: The reason why the Company S’s sales and profits surged in the year 2014 and 2015.