Answer :
Starbucks manages currency exchange and political risks through strategies such as hedging and maintaining relationships with local governments, while analyzing the profitability of underwriting and investment functions involves assessing financial statements and specific performance metrics.
4. Starbucks manages currency exchange risks and political risks through various strategies and practices. To mitigate currency exchange risks, Starbucks may use techniques like hedging, forward contracts, or currency options to minimize the impact of currency fluctuations.
Regarding political risks, Starbucks conducts thorough assessments of the political environments in the countries they operate in, engages in political lobbying, and maintains strong relationships with local governments to mitigate potential risks.
5. To analyze the profitability of the underwriting and investment functions separately, Starbucks likely employs financial analysis techniques. This involves evaluating financial statements, such as income statements and balance sheets, to assess the performance and profitability of each function.
By examining revenue streams, costs, and profitability ratios specific to underwriting and investment activities, Starbucks can determine the effectiveness and profitability of each function individually. This analysis helps them assess the success of their strategies and competitive strengths in generating growth opportunities and sustainable profit margins.
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