In addition to the GM managements efforts to lobby US Go vernment to have a G

In addition to the gm managements efforts to lobby us

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In addition to the GM management’s efforts to lobby US Go vernment to have a G to G discussion with the Japanese government in order to achieve a competitive exchange rate between Japanese Yen and US Dollar, GM management could consider diversifying its operations (and financing as well) in near future internationally, which will preposition GM management both to recognize disequilibrium when it occurs and to react competitively. Although the disequilibrium may have been unpredictable, GM management can often recognize its symptoms as soon as they occur.
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Page 25 Recognizing a temporary change in worldwide competitive conditions permits GM management to make changes in operating strategies. Management might make marginal shifts in sourcing raw materials, components, or finished products. If spare capacity exists, production runs can be lengthened in one country and reduced in another. The marketing effort can be strengthened in export markets where the firm’s products have become more price -competitive because of the disequilibrium condition. Even if management does not actively distort normal operations when exchange rates change, the firm should experience some beneficial portfolio effects. The variability of its cash flows is probably reduced by international diversification of its producitons, sourching, and sales (and financing) beause exchange rate changes under disequilibrium conditions are likely to increase the firm’s competitiveness in some markets while reducing it in others. ~~~~~~ ####### ~~~~~~
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