Like most businesses, Slatterys is one of many businesses that are affected by the exchange rate, in various different ways. Exchange rates can influence the amount of money, Slatterys has to spend on overseas imports.
As Slatterys is a high-class chocolatier, one of the major organic ingredients needed to make chocolate are cocoa beans which Slatterys have to import from different countries abroad, mainly hot countries because cocoa beans only grow in certain climate, like Africa. Due to this factor, Slatterys have to import cocoa beans from abroad. However, the exchange rate can determine if Slatterys gains or losses money, e.g. if the pound (£) was strong against the South African Rand (R) this would make it cheaper for Slatterys to buy cocoa beans, however, if the pound was weak against the South African Rand (R), this would make the cocoa beans more expensive.
Slatterys also offer a different form of cocoa beans, which are chip cocoa beans. Due to this Slatterys have to import chip cocoa beans, from other countries from abroad, the main country being Belgium, which has a different currency than England, therefore, Slatterys have to exchange the pound (£) into the Euro ().
Another essential item that Slatterys needs are chocolate moulds, which make it possible for Slatterys to customize their chocolate in to various different shapes and sizes for customers desired product. However, it isn’t possible for Slatterys to design and make them their selves; therefore, they have to import them from the USA. Due to the fact that the USA has a different currency to the United Kingdom, Slatterys have to covert the pound (£) into the dollar ($), and depending on whether the pound is strong, or weak, against the dollar this determines if Slatterys are saving money, or losing.
If the exchange rate was to rapidly increase Slatterys has to re-price its chocolate if there is a sudden upraise in the exchange rate, this ultimately costs money, making the prices of chocolate in store to increase, so that a loss isn’t made. This would affect the money conscience customers and result in them going to other competitors, resulting in less profit made, and Slattery’s market share would ultimately go down. Moreover,