What Is Economic Exposure?

Economic exposure management refers to the process of predicting the impact of exchange rate fluctuations on future cash flows and taking necessary measures to ensure that the future earnings of foreign-related companies are not affected. The diversification of foreign-related enterprises' operations and financing is the main way to avoid economic exposure.

Economic exposure management

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Economic exposure management means

Economic exposure management means

Economic exposure management is specifically divided into:

Marketing management, which mainly includes formulating price strategies, selecting markets, and determining product strategy; production management, which includes selecting plant sites and formulating production plans; financial management, which mainly includes maintaining and comparing capital costs.

The purpose of economic exposure management is unexpected

Economic exposure management can work in the following areas:

First, if it is necessary to raise funds for marketing, the stress map should be obtained from different financial markets and calculated using various currencies;

Secondly, the unpaid receivables in different foreign currencies shall be matched with the foreign currencies borrowed by the enterprise in order to offset the different foreign currencies receivable and payable. Of course, this is easy in theory and difficult in practice. However, this method is feasible if only a certain degree of success is sought;

Third, due to the international diversification of marketing business, the product sales and raw materials required by many companies are also international. Therefore, marketing managers should have a deep understanding of production costs, product sales, and market changes in different regions to adjust their operations. Strategy.