Business, 05.05.2020 20:27 miraclejones543

Rolls Royce is struggling with its pricing strategy with a number of its major customers in Europe, particularly Airbus. Since Rolls-Royce is a British company with most manufacturing of the Airbus engines in the U. K. costs are denominated in British pounds. But in the period shown in table a) 2007-2009 , the pound steadily weakened agains teuro. Rolls-Royce has traditionally denominated its sales contracts with Airbus in Airbus’ home currency, the euro. After completing the table, answer the questions:Assuming each Rolls Royce engine marketed to Airbus is initially priced at 22.5 million pounds each, how has the price of that engine changed over the period shown when priced in euros at the current spot rate?What is the cummulative percentage change in the price of the engine in euros for the three year period?If the price elasticity of demand for Rolls-Royce turbine sales to Airbus is relatively inelastic and the price of the engine in British pounds never changes over the period, what does this price change mean for Rolls-Royce total sales revenue on sales to Airbus of this engine?Compare the prices and volumes for the first quarter of each of the three years shown in the table b) . Who has benefitted the most from the exchange rate changes?Table ADate1Q 20072Q 20073Q 20074Q 20071Q 20082Q 2008Price (million of pounds)22.5 pounds22.5 pounds22.5 pounds22.5 pounds22.5 pounds22.5 poundsSpot rate (euro=1 pound)1.49181.47331.46961.41071.319 81.2617Price (millions of euros)33.57 euroDate3Q 20084Q 20081Q 20092Q 20093Q 20094Q 2009Price (million of pounds)22.5 pounds22.5 pounds22.5 pounds22.5 pounds22.5 pounds22.5 poundsSpot rate (euro=1 pound)1.25901.19241.10171.13751.146 71.1066Price (millions of euros)Table B1Q 20071Q 20081Q 2009% changePrice in million pounds22.5 pounds22.5 pounds22.5 poundsSpot rate1.49181.31981.1017Price in millions of euro33.57 euro29.70 euro24.79 euroSale volume20022024020%Total cost to Airbus (millions of euro)6,713,1 euro6,533.01 euro5,949.18 euroTotal Revenue to RR (millions of pounds)4,500 pounds4,950 pounds5,400 pounds

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