Question Details

Explain how Albany Corp. can reduce its economic exposure 


1. Reducing Economic Exposure. Albany Corp. is a U.S.-based MNC that has a large government
contract with Australia. The contract will continue for several years and generate more than half of
Albany- total sales volume. The Australian government pays Albany in Australian dollars. About
10 percent of Albany- operating expenses are in Australian dollars; all other expenses are in U.S.
dollars. Explain how Albany Corp. can reduce its economic exposure to exchange rate
fluctuations.
2. Tradeoffs When Reducing Economic Exposure. When an MNC restructures its operations to
reduce its economic exposure, it may sometimes forgo economies of scale. Explain.



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