Question:
As the research starts to come in about your expansion opportunities abroad, the marketing department has discovered that the price elasticity for CPI's products in Brazil is expected to be much greater than in current markets served. Separately, your CFO sent you an e-mail earlier in the week stating that depending on how much business CPI does abroad, the firm would expose 5 to 20 percent of revenue to currency fluctuations (the Real and Euro are the currencies for Brazil and Germany respectively).
Both of these issues are of concern to you, so you decide to have a meeting with the VP of Marketing and the CFO. Explain the differences among inelastic, elastic, and unitary price elasticity to the VP and CFO. Then, what questions would you ask? What recommendations would you have for the CFO?
Explain the differences between elasticity, inelasticity, and unitary price elasticity to the VP and CFO, considering that they might not fully understand these concepts. Explain these concepts as they apply to CPI.
Questions to be asked might include "what is the price elasticity of CPI's products?" "Why is CPI products relatively elastic or inelastic?" "How would greater price elasticity in Brazil affect pricing strategies, sales, and revenue?" "What are the risks of currency fluctuations and what strategies can CPI use to mitigate these risks?" "What is the political climate like in those countries and can it affect CPI?"