Marketing 13th Edition by Gary Armstrong, Philip Kotler

Exercise 14

Video streaming service Netflix is expanding rapidly around the globe. It is currently available in 50 countries with the goal of expanding to 200 countries by the end of 2016. Netflix's international slogan is "Have content, will travel?' There are challenges to international expansion for this type of service, such as inadequate disposable household income and a low percentage of households with high-speed Internet needed to stream videos. And even though almost half of France's TV-owning households have Internet-connected TVs, cultural restrictions limit English-language program content, requiring Netflix to invest in local content for French customers. The next countries to get Netflix are Italy, Spain, and Portugal. Similar to Netflix's other European offerings, service will be offered at a price of €7.99 per month, which converts to U.S. $8.97 during the time of expansion.
Calculate the market sales potential using the current exchange rate between euros and U.S. dollars (see www.xe.com/currencyconverter/). Is the dollar currently strong or weak compared with the euro? Why are U.S.-based international companies concerned when the U.S. dollar is strong compared to other currencies? (AACSB: Communication; Analytic Reasoning; Reflective Thinking)