Currency issues

In investigating currency issues three main aspects were analysed, currencies used in export transactions, influence of currency on export transactions and the main measures undertaken by firms against currency’s floating.

Currency (Food & drink). The most adopted currency is without any doubts euro, even if sales are performed in countries that are adopting other currencies. Sometimes also dollars are adopted if strongly required. Interviewing these managers seemed that are now willing to accept any risk from currency fluctuation and the client has to take all the measures to protect himself from the fluctuations.

“It’s the client that has to worry about purchasing and paying the most favourable moment”

(Interviewee 3)

Continuing in their affirmation, Company 3, asserted that also that prices are increased when dollars are adopted for the transaction in order to cover any possible currency fluctuations.

Asking their opinions about the influence of the currency on export transactions, the common answer was that the influence is low or very low. It’s emerged that only in particular situations currency becomes very important in transactions and the example of Russia was mentioned:

“ During the last month we became more costly that 15%”(Interviewee 1).

Fluctuation in the situation of Russia is something that effected exports, and the major measure adopted in overtake the fluctuation was a discount for the period of time in which the fluctuation was at high levels. That means that this firm, Company 1, is willing to reduce the marginality in order to keep relationships with their clients and the relation is more important than the best margin to obtain. In the case of oil producers, there is no real measure adopted because their marginality is too low, also clients are willing of that, so the common behaviour is to wait the currency levels become acceptable again.

Currency (Furniture). Furniture exporters in dealing with international partners adopt only Euro currency despite the fact that are dealing with countries with different currencies. There is an exception for the US market with which US dollar is adopted.

Regarding currency issues again company 6 differ from the others because in trading luxury furniture and dealing with wealthy customers, currency’s fluctuation does not affect the transaction in any way and as a consequence no currency measures are adopted:

“Is the client that has to protect itself, is clear that it must adopt some measures to cover the fluctuations against euro” (Interviewee 6).

Interviewee 6 assert that is the client that has to face the fluctuations and it’s not a concern of the exporter.

Different situation for Company 4 and Effeti Industrie Srl. For these two firms currency fluctuations are very important and are considered a threat for the business transactions:

“If you don’t pay attention on this matters, the risk is to make an own goal” (Interviewee 4).

The currency fluctuation is something that a firm has to consider acting in the international market, but its influence on the transaction is low because does not affect the relationship with the international partner. The major threat is to lose portions of market but in the short-term.

Effeti Industrie Srl doesn’t adopt any measures against currency fluctuations, while Company 4 affirmed that sometimes some measures are adopted reporting the example of Japan. In that

situation the Japanese yen drop and the company introduced a temporary discount policy according to the variations.

Currency (Fashion). In asking what kind of currency is adopted in business transactions there were different answers, for Company 8 and 9 the main currency adopted is euro and sometimes US dollars. The situation of Company 7 is different because of the following assertion:

“We usually adopt the currency of the client, we deal with Euro, Yen, Dollars, Swiss Francs, and Scandinavian Krone” (Interviewee 7).

Not all the companies are using a single currency, Company 7 in dealing with different currencies because of the kind of their customers. For what concerns distributors Euro, USD and Yen are the currencies adopted. For company 7 that is the more internationalised in respect of the others, the main measure to overcome currency issues is to establish an exchange rate that will be applied in a contractual relationship for the duration one year:

“At the beginning of the year an average currency is calculated” (Interviewee 7)

The other measures adopted are ascribable to discounts for the Russian market due to the last fluctuations.

The interviewees also asserted currency effects only partially business transactions being its influence very low.

“Currency issues are important but its influence over the transaction is not high” (Interviewee 8)

Currency (Engineering). In asking the degree of influence of currency on transactions the answer from interviewee 12 is reported:

“Not so much, in Russia for example it's a strong country so there is no high influence, in Africa is more sensible so maybe the fluctuations can delay the shipments. It depends but not that much”

(Interviewee 12).

Also in this industry, the influence of currency is very low. In their transactions Euro and Dollars are mainly adopted and the major interventions on currency are:

“The currency is established during the agreement process where a fixed exchange rate is established”

(Interviewee 10)

"The main action that we usually adopt is to keep prices 5% higher than transactions made in Euro”

(Monchiero, M.)

"We don’t apply any special condition, mostly we delay the shipment of goods in waiting that the fluctuation ends” (Interviewee 12).

Three different practices are applied, as already observed in the other sectors, mostly a fixed exchange rate is established, prices are increased about 5% in order to cover the risk of eventual currency floating and delay on supplies are introduced.