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Hello Sir,
I have read all previous threads on this question at OT however i still dont understand part c answer which says that international competitors gain competitive position as compared to the subsidiary please explain this point to me i understand the exchange rate movement but not the impact on subsidiary’s exposure and how exactly would sourcing inputs from overseas help the subsidiary.
The answer is not referring to it sourcing inputs from overseas.
What it is referring to is that they sell all of their production domestically. If the currency is very strong then their customers might find it cheaper to buy the same products from other countries and therefore the subsidiary could end up losing sales.
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