Manitowoc Crane$($A$).$Manitowoc Crane$($U$.$S$.)$ exports heavy crane equipment to several Chinese dock facilities. Sales are currently $20,000$ units per year at the yuan equivalent of $$$$23,000$ each. The Chinese yuan$($renminbi$)$ has been trading at Yuan$8\mathrm{.}40/$$$,$ but a Hong Kong advisory service predicts the renminbi will drop in value next week to Yuan$9\mathrm{.}30/$$$,$ after which it will remain unchanged for at least a decade. Accepting this forecast as$$ given, Manitowoc Crane faces a pricing decision in the face of the impending devaluation. It may either$(1)$ maintain the same yuan price and in effect sell for fewer$$ dollars, in which case Chinese volume will not$$ change; or$(2)$ maintain the same dollar$$ price, raise the yuan price in China to offset the$$ devaluation, and experience a$10\%$ drop in unit volume. Direct costs are$75\%$ of the U$.$S$.$ sales price.a$.$What would be the$$ short$-$run $($one$-$year$)$ impact of each pricing$$ strategy?b$.$Which do you$$ recommend?Manitowoc Crane$($A$).$Manitowoc Crane$($U$.$S$.)$ exports heavy crane equipment to several Chinese dock facilities. Sales are currently $20,000$ units per year at the yuan equivalent of $$$$23,000$ each. The Chinese yuan$($renminbi$)$ has been trading at Yuan$8\mathrm{.}40/$$$,$ but a Hong Kong advisory service predicts the renminbi will drop in value next week to Yuan$9\mathrm{.}30/$$$,$ after which it will remain unchanged for at least a decade. Accepting this forecast as$$ given, Manitowoc Crane faces a pricing decision in the face of the impending devaluation. It may either$(1)$ maintain the same yuan price and in effect sell for fewer$$ dollars, in which case Chinese volume will not$$ change; or$(2)$ maintain the same dollar$$ price, raise the yuan price in China to offset the$$ devaluation, and experience a$10\%$ drop in unit volume. Direct costs are$75\%$ of the U$.$S$.$ sales price.a$.$What would be the$$ short$-$run $($one$-$year$)$ impact of each pricing$$ strategy?b$.$Which do you$$ recommend?

Manitowoc Crane $($A$).$ Manitowoc Crane $($U$.$S$.)$ exports heavy crane equipment to several Chinese dock facilities. Sales are currently $12,000$ units per year at the yuan equivalent of $$26,000$ each. The Chinese yuan $($renminbi$)$ has been trading at Yuan $\frac{7\mathrm{.}80}{\text{\$}},$ but a Hong Kong advisory service predicts the renminbi will drop in value next week to Yuan$8\mathrm{.}60/$$$,$ after which it will remain unchanged for at least a decade. Accepting this forecast as given, Manitowoc Crane faces a pricing decision in the face of the impending devaluation. It may either $(1)$ maintain the same yuan price and in effect sell for fewer dollars, in which case Chinese volume will not change; or $(2)$ maintain the same dollar price, raise the yuan price in China to offset the devaluation, and experience a $10\%$ drop in unit volume. Direct costs are $75\%$ of the U$.$S$.$ sales price.

a$.$ What would be the short$-$run $($one$-$year$)$ impact of each pricing strategy?

b$.$ Which do you recommend?