Reducing Economic Exposure
Response to the following problem:
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's total sales volume. The Australian government pays Albany in Australian dollars. About 10 percent of Albany's 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.