Several strategies are discussed for competing internationally, some of the benefits of entering foreign markets and using location to build competitive advantage.
However, there are also many inherent risks when operating in foreign markets.
Two key risks for firms operating in the global economy are:

1. The risk of adverse exchange rate shifts on financial performance.
2. The risk of tariffs imposed by some countries that impact the cost of goods sold and/or transferred.

Companies can decide to either ignore the impact of exchange rate changes and tariffs or attempt to adapt their strategies and decisions to try to capitalize on favorable exchange rate changes and tariffs and minimize the adverse impact of unfavorable exchange rate changes and tariffs.

Answer the following questions for the competitive footwear industry that you are participating in as part of the BSG simulation for your DB post:

1. What are two advantages and two disadvantages of a firm taking a "passive" approach to exchange rates in the footwear industry?
2. What are two ways in which a company can utilize geographic differences in import tariffs to its advantage in the footwear industry? What are the two key risks of this approach?

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