What is the nature of BMW’s FX exposure? What fundamental financial principle should BMW use to neutralize the impact of FX rate movements on their results?

In recent years BMW have experienced massive growth. India, Russia, China and Europe becomes the largest market for the company. Due to the exchange rate changes the profit of the company often experience decline. By moving production facilities to various countries not only foreign exchange risk is managed appropriately but also the organization become more responsive to its customers.

1.      How did BMW decide to tackle the problem? Do you see any problems with BMW’s approach and implementation?

BMW tackle the problem of foreign risk exposure by opening production facilities in its major markets. The strategy which the BMW implemented proved successful which means that there was no major problem in the strategy.