Determinants of Operating exposure Recall that operating exposure cannot be readily determined from the firm's accounting statements as can transaction exposure The firms operating exposure is determined by The market structure of inputs and products: how competitive or how monopolistic the markets facing the firm are The firms ability to adjust its markets, product mix, and sourcing in response to exchange rate changes McGraw-Hilylrwoin 12-10 Copyright@ 2001 by The McGraw-Hill Companies, Inc. All rightsMcGraw-Hill/Irwin Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 12-10 Determinants of Operating Exposure ⚫ Recall that operating exposure cannot be readily determined from the firm’s accounting statements as can transaction exposure. ⚫ The firm’s operating exposure is determined by: ◼The firm’s ability to adjust its markets, product mix, and sourcing in response to exchange rate changes. ◼The market structure of inputs and products: how competitive or how monopolistic the markets facing the firm are