· Product Strategy

Companies can also respond to exchange rate changes by altering their product strategy, which deals with such areas as new product introduction

a. Product Line Decisions

b. Product Innovations

Following home currency devaluation, a firm will potentially be able to expand its product line & cover a wider spectrum of consumers abroad & at home. Conversely, following home currency appreciation, a firm may have to reorient its product line & target it to a higher income, more quality conscious, less price sensitive consumers.

Equivalent strategy for firm selling to the industrial, rather than the consumer, market and confronting a strong home currency is product innovation, financed by an expanded R & D budget.

· Pricing Strategy

Two key issues that must be addressed when developing a pricing strategy in the face of currency unpredictability are whether to emphasize market share or profit margin & how frequently to adjust prices.