In the light of the following article, Explain the impact on Apple. Http://www.m
ID: 2656542 • Letter: I
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In the light of the following article, Explain the impact on Apple. Http://www.marketwatch.com/story/some-companies-are-already-warning-investors-that-a-strong-dollar-will-pinch-performance-2018-06-22 In the light of the following article, Explain the impact on Apple. Http://www.marketwatch.com/story/some-companies-are-already-warning-investors-that-a-strong-dollar-will-pinch-performance-2018-06-22 Http://www.marketwatch.com/story/some-companies-are-already-warning-investors-that-a-strong-dollar-will-pinch-performance-2018-06-22Explanation / Answer
In the given article, the emphasis has been made on the impact of appreciation of dollar on some major companies. One among them is apple. Apple, over the years has grown from a US company to a multi national company. Being a MNC, appreciation of dollar will impact Apple in two probable manner.
First is the impact of appreciation of dollar on Apple sales volume. Apple has a hige sale volume around the world. But in countries other than US, apple products are sold in local currency. Appreciation of dollar indirectly means depreciation of other currencies. When other currencies depreciates, then foreign goods become dearer. Hence, foreign consumers will find it expensive to buy the Apple products. Apple is not gaining any profit but still the consumer needs to pay extra for its products which can have a huge impact on Apple sales volume in next couple of years.
Next impact is on the earnings. Apple has set up operating and distribution centres all over the world. Every year a lot of earnings are made in local currencies and needs to converted back into dollars. But with the appreciation of dollars, converting of currency has become expensive and the earnings level will begin to fall. Hence bringing back the earned income outside US is a major challenge for Apple.
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