Investment in R&D Activities Can Allow the Firm to Maintain

Investment in R&D activities can allow the firm to maintain and strengthen its competitive position in the face of adverse exchange rate movements. The mechanism for this includes

A) successful R&D efforts allow the firm to cut costs and enhance productivity.
B) R&D efforts can lead to the introduction of new and unique products for which competitors offer no close substitutes-since the demand for unique products tends to be highly inelastic the firm would be less exposed to exchange risk.
C) successful R&D efforts can create a perception among consumers that its product is indeed different from those offered by competitors. Once the firm's product acquires a unique identity, its demand is less likely to be price-sensitive.
D) all of the above