Using the data from Extract F, assess the impact of the exchange rate movements between January 2019 and April 2019 on the total costs of a business, such as Tropicana, which imports to the USA from Brazil. - Edexcel - A-Level Business - Question 2 - 2022 - Paper 1

The appreciation of the US dollar would likely lead to increased costs for Tropicana. If, for instance, the exchange rate moved from R$3.8 to R$4.0, Tropicana would have to spend more Brazilian Real to purchase the same amount of goods. This would significantly impact their cost structure, especially if the imported products, like orange juice, comprise a large portion of their overall expenses.

It is important to note that while the exchange rate changes could increase costs, the extent of the impact may be moderated by other factors. For example, if Tropicana sources a smaller proportion of its ingredients from Brazil, the overall cost increase may be less significant. Additionally, if they have other cost-saving measures in place, this could help mitigate some of the adverse effects of exchange rate fluctuations.

In conclusion, the exchange rate movements between January 2019 and April 2019 likely increased the costs for Tropicana when importing from Brazil. However, the overall impact may vary based on the proportion of imports from Brazil and any cost control measures the company implements. The situation highlights the need for companies involved in international trade to constantly monitor exchange rates and adapt their strategies accordingly.