The value of the dollar relative to other currencies has enormous impact on your company's supply chain, and its bottom line. For instance, for every cent the euro increases against the dollar, Connecticut-based United Technologies Corporation records an additional $10m in earnings. The diversified manufacturer earns more than 60 percent of its revenues outside the U.S., and it received an earnings boost of about $100m last year as the dollar slid against the euro, according to vice president of accounting and finance, Greg Hayes.
Indeed, the change rippling through the global economic system affects different companies in very different ways. Indian outsourcers are suffering. U.S. manufacturers selling into Europe are celebrating. In Europe, many are considering moving manufacturing operations not only to Asia, but also to an increasingly lower-cost America.
Every CFO, however, must eventually place a strategic bet on the dollar's future course, no matter what the relative economic advantage. If the dollar stays weak, what will be the net effect on diverse, global businesses? And what is the best response?
Source: CFO, http://cfo.com