AQA A-Level Business (2026) | Unit 3.3.2 Business and the external environment
You are Axel Deal, founder of "The Wheel Deal," a successful UK-based bicycle manufacturer. Your bikes are known for quality, innovation, and value. Now you are about to start selling them to the US market.
3 Quarters, 1 Pricing Decision. In Quarter 1, you'll choose whether to price your bikes in pounds (£) or dollars ($). Then you'll experience how that choice affects your business as the exchange rate changes. Your goal is to maximise your US gross profit over all three quarters.
This simulation teaches you about foreign exchange risk. When you price in your home currency (GBP), US customers face the FX risk. When you price in their currency (USD), you face it. You'll experience WPIDEC (Weak Pound Imports Dearer, Exports Cheaper) and SPICED (Strong Pound Imports Cheaper, Exports Dearer) in real time.
Finance Manager (Imports): "Watch those component costs!"
Global Sales Manager (Exports): "We need to win the US market!"
Your pricing decision in Q1 determined who bore the foreign exchange risk:
If you priced in GBP (£): US customers saw their dollar costs change when the pound weakened or strengthened. You had stable revenue per bike, but sales volume was volatile.
If you priced in USD ($): Your GBP revenue per bike changed when the exchange rate moved. US customers saw a stable price, so volume was steadier—but your margins fluctuated.
The mnemonic lessons: