Small Global Retailer
George’s Arts imports high end products from Ireland, Germany, Japan, Denmark, and Turkey to the US. It also buys about 30% of it product in the United States from artisans located in the US. It sells in US dollars online all over the world, with about 50% of sales in the US and the rest exported to Canada, China, Japan, the EU, and some other 40 other small countries with about each of these entities (countries or group of countries) importing similar amounts of products. When it imports product it pays its local artisans in local currency, with the exception of Turkey which is priced in euros. When it sells, exports as well, it does so in dollars.
Note that the company is family owned with sales of about 20 million and profits of about 1 million last year. It has a line of credit of $2 million secured by inventory at Prime plus 2.5%. The market value of the firm is calculated at about 7 -10 million. The firm typically pays out 50% of profits, the rest used to fund growth. Growth in sales has consistently been 20% a year. Its biggest cost is inventory, which tends to turnover every 2 to 4 months.
Identify the major risks this firm has based on the information provided. How should they handle these?