Impact of Arab Credit Crisis on a Sourcing Decision - Article Example

As a result of mismanagement, the cost of exporting has increased dramatically. Therefore, the manufacturing industry has been weakened further. It is evident even when it comes to the sourcing of finance. Manufacturing companies in Egypt are expected to give more collateral when seeking cash to finance the import of raw materials.

On the other hand, the Egyptian pound has dropped by 6.6% making exports low-priced. On the opposite, the price of fuel has increased. Therefore, companies incur a higher cost of manufacturing. In the long run, the manufacturers end up getting minimal profits.

Companies can reduce the risk of losing their customers by refraining from increasing the price of their commodities. When manufacturers pass the added cost incurred to the buyers, they stretch the ability of the consumers. Therefore, the customers will consider buying cheaper alternative goods. Manufacturers can also opt to seek to produce cheaper affordable goods. Customers will tend to spend the cash they had put aside as savings. Therefore, more money will be in circulation making the rate of inflation go down.