Peng Plasma Pricing. Peng Plasma is a privately held Chinese business. It specializes in th manuifacture of plasma cutting torches. Over the past eight years it has held the Chinese renminbi price of the PT350 cutting torch fixed at Rmb 17.300 per unit. Over that same period it has worked to reduce costs per unit , but has struggled of late due to higher input costs. Over that same period in the renminbi has continued to be revalued against the U.S. dollar by the Chinese government. After completing the table( below), assuming the same price in renminbi for all years ---answer the following questions
Fixed Rmb Pricing of the PT350 Plasma Cutting Torch
Year . Cost(Rmb) . Margin (Rmb) . Price (Rmb) Margin(%) . Average Rate(Rmb/US$) . Price(US$) . Change US Price%
2007 16,000 . 1,300 . 17,300 . 7.5% . 7.61 . 2,273
2008 . 15,400 6.95
2009 . 14,800 6.83
2010 . 14,700 6.77
2011 . 14,200 6.46
2012 . 14,400 6.31
2013 . 14,600 6.15
2014 . 14,800 6.16
A) What has been the impact of Peng's pricing strategy on the US$ price? How would you excpect their US dollar-based customers to have reacted to this?
B) What has been the impact on Peng's margins from this pricing strategy?
Complete the table below: (Round all values as in year 2007)
Fixed Rmb Pricing of the PT350 Plasma Cutting Torch
Year . Cost(Rmb) . Margin (Rmb) Price (Rmb) Margin (%) Average Rate (Rmb/US$) Price (US$) Change US$ (Price %)
2007 16,000 . 1,300 . 17,300 . 7.5 . 7.61 . 2,273
2008 . 15,400 . ______ . 17,300 _______ . 6.95 ______ . _______ . ________