High-profile printers inc.%uFF08A%uFF09.high-profile printers inc.%uFF08HPP%uFF09 of the United states exports computer printers to Brazil whose currency
the real %uFF08symbol R%uFF04%uFF09has been trading at R%uFF041.8000/$. Exports to brazil are currently 100000 printers per year at the real equivalent of
$200 each. A strong rumor exists that the real will be devalued to R$2.0000/$ within two weeks by the brazilian government. Should the devaluation take place
the real is expected to remain unchanged for six years when its patent expires.
Accepting this forecast as given hpp faces a pricing decision that must be made before any actual devaluation: hpp may either 1 maintain the same real price
and in effect sell for fewer dollars in which case brazilian volume will not change or 2 maintain the same dollar price raise the real price in brazil to
compensate for the devaluation and experience a 20% drop in volume. Direct costs in the u.s. are 60% of the u.s. sales price.
What would be the short-run %uFF08one-year%uFF09 implication of each pricing strategy? Which do you recommend?