Now that the Loonie has climbed steadily, Corporations and Small Businesses need to develop a proactive strategy; to remain competitive in the evolving marketplace. Canadian merchants simply cannot sit idle, and allow the tidal flows of exchange rates; to determine their future.
When developed early and applied properly, there are four (4) effective strategies to mitigate the financial pitfalls of a powerful Canadian Loonie:
-
Match Currencies Whenever Possible. When Canadian-made goods increase in price in the U.S. Market, as a result of changes in currency value, it is reasonable to suggest that raw materials found there; would also be cheaper. However, with the high price of oil, make certain that the perceived savings are not eaten up; by freight and transportation costs. As another option, some developing nations such as China and India, often trade in U.S. currency.
-
Seek-out Foreign Marketplaces. Actively search for foreign markets where the Canadian dollar is received more favorably than the U.S. “Green-Back”. Often in these countries, the price of Canadian goods are not as high or burdensome as they are in the United States. This motivates a new market of global consumers.
-
Review The Product Mix. Management needs to consider related products that can be easily produced or distributed, and in turn generate higher profits for the Company. In the short term, the wider profit margins will subsidize products that have been negatively affected by the recent currency shifts.
-
Review Productivity. Capital investment in innovative equipment that enhances productivity and reduces labor costs, such as PAS management software; must be considered as part of a revised business plan. Regrettably, labor costs in Canada were staggering before the dollar began it’s rise; now as a result of recent changes in currency values, the global costs have risen by at least 20%.
Under the emerging currency trends, not all companies will remain viable in the future. When determining the long-term viability of your business, it is important to seek the honest opinion; of a trusted third party. As well, businesses may want to consider a properly conducted liquidation of over-stock and unpopular inventory. Often, this strategy will result in a restructured, highly viable operation, that operates efficiently; with significantly less risk.
Join Weal_Media on Twitter.
