Case study Example | Topics and Well Written Essays - 500 words - 116

Case Study Example In addition, it strengthens during international turmoil (Balcerowicz, & World Bank Group, 2015). Unfavorable foreign exchange movements cause significant appreciation in Swiss franc against the Euro as well as other main currencies thereby challengingly affecting Swiss managers, employees, and firms (Butcher, 2011). According to the perspective of Swiss importing firms, the unfavorable exchange rate movements normally cause the prices of exports to increase thus weakening the customer demand. It makes the Swiss products to be more expensive abroad thus creating a negative impacts on their demand and this directly affects the sales revenue of companies (Horcher, 2013). On the other hand, unfavorable exchange rate movements greatly affect employees in terms of job loss and pay cuts. Low sales volume and profits due to low customer demand prompts firms to seek ways to survive and adapt by adjusting wages. Finally, it may force the managers to move their production to the euro zone in case they fail to cut wages and this also could cause more job losses at Mopac in Switzerland (Balcerowicz, & World Bank Group, 2015). I would have to move the production or the company to the euro zone because it is cheaper to produce in the region due to the weaker currency. Secondly I would have to cut wages to make the products cheaper thereby raising customer demand which in turn increases the sales volume and profits (Horcher, 2013). Thirdly, I would have to employ cross-border workers and pay them in Euros in order to cope with the appreciating Swiss franc. Finally, I would engage in simple currency diversification or currency hedging just like other large companies (Butcher, 2011). I would gladly accept Euros because it is weaker than the Swiss franc. The four options will greatly assist us in coping with the spike in Swiss franc (Balcerowicz, & World Bank Group,