Question

consider the importance of Purchasing Power Parity within the global market. PPP provides a baseline forecast of future exchange rates that is usually considered whenever it is necessary to forecast future cash flows in different currencies, especially when inflation rates differ across these countries. How has coca cola leveraged PPP in their favor? Give some background information on your organization and then provide a thorough response to the question.

Answer 1

Coca cola has extensively gained through Purchasing power parity advantage by evaluation of cost of production in one market with respect to another. Thus by this method cost reduction is achieved and sold in markets where prices are comparatively higher to achieve profits maximization. Moreover when the domestic currency of country appreciates the imports are increasingly higher to save in costs due to forex fluctuations.

Coca Cola has been one if largest beverage makers competing with its global rival Pepsi. It has been pioneer in beverage industry with breakthrough innovation and wide spread marketing.