With respect to the food merchandise business, there were certain hardships that were faced by the retailer. During the year 2012, costs of both food items and fuel increased, particularly of fuel which resulted in an escalation in the manufacturing cost of the merchandise. Tate amp. Lyle Plc has in place an import team which constantly monitors the fluctuation in prices of cotton. For the purpose of reducing the cost of fuel, the retailers are now acquiring help from the appropriate technology to manage the distribution in the most cost-effective manner. In addition to that, retailers are now opting annual fixed price contracts. It is considered that the food industry is comparatively remaining consistent. However, it the prevailing market condition especially the low demand for food ingredient in EU countries significantly influence the market and brought the fluctuation the food market. The deterioration in the macroeconomic environment as the result of the existing financial crisis also negatively affects this sector. Additionally, the market is passing through from a bad time because the consumer and government are more focusing on a healthy lifestyle. A lot of advertisement is doing on the published media, social media to create awareness among consumers to adopt a healthy lifestyle. The second main reason for the downward trend of the food market is an increase in sugar prices and other various raw materials. The increase in the input material results in the high price of the end food products. The consumers are price conscious. The purchasing power of the consumer has been tightening due to low income. As the companies being evaluated are situated in Hong Kong, the primary risk that the acquisition of any of these companies entails is that of the currency risk. Curtis Plc needs to have an adequate understanding of what these risks here and how they can be mitigated. The global operations of any multinational require it to actively participate in international trade which causes it to be exposed to a lot of foreign exchange risks. These companies engage in international trade through foreign exchange forward contracts and options and cross-currency swaps to hedge various currency exposures. These exposures primarily include assets, liabilities and bonds denominated in foreign currency. Effective financial management requires the identification of risks and taking effective measures in order to curb them. International exposure of the multinational companies can be defined as the value of its assets and liabilities, presented in its functional (primary) currency, exposed to the change in the foreign interest rates, exchange rates and inflation rates. Transaction exposure can be defined as the risk arising due to the unanticipated change in the exchange rate which affects the cash inflow or outflow at the time of the settlement of an asset or liability. An important factor to consider in these types of risks is that the foreign currency value in such circumstances is fixed and thus these types of risks are also termed as contractual exposure. On the other hand, translation exposure arises due to the operation of the accounting and legislative standards which requires the foreign currency balances of assets and liabilities appearing in the balance sheet, to be revalued at the closing spot rate.
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