Pepkoe sells its popular soft-drink in Japan which competes head-on with Suzukoe’s Japanese version of the soft-drink. In early 2005, when the exchange rate was 110 JPY / $, Pepkoe’s price was $ 2 per bottle, while Suzukoe’s price was 200 JPY per bottle. By late 2005, the exchange rate had moved to 120 JPY / $, but neither Pepkoe nor Suzukoe had changed their prices for their soft-drinks
i) What has been the impact on Pepkoe’s competitiveness in the Japanese market?
ii) What has been the impact on the relative purchasing power of the US consumer of soft-drinks?
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