Carrefour Case

This case shows us that apart from transaction, translation and economic exposure to currency risk, firms also have the very real strategic impact on their competitive position from competitive exposure. Apart from GM’s exposure to the yen which is reflected in their financial statements, their competitive position vis-à-vis Japanese manufacturers is affected by a potentially declining yen. This is because a declining yen reduces the Japanese manufacturers’ $ cost, enabling them to pass on some of the benefit to US customers and thus taking some of GM’s market share. This will impact GM’s top and bottom line. However, GM has a difficult decision regarding managing this risk.

The goal of this case is to help Sandra Meyer develop a presentation to address Henry Bosse’s concerns about international investments. The general idea is to demonstrate to Henry the benefits of international diversification, if any. To achieve this goal, you need to have a view on 1) the impact of foreign exchange (FX) rates on the return and risk of international investments, and 2) the impact of having more assets on the return and risk of the investment portfolio To form views on these two points, answer the following questions: I. The impact of FX rates on the risk and return of foreign investments 1a) Using data in Appendix A, calculate the

With the development of multinational companies, financial risk has played an increasingly remarkable role in financial market. In order to overmaster interest risk, currency and price risks, multinational corporates tend to hedge their exposure to financial risk. In practice, Coca-Cola Company has charged its business for a period of one century and made it as one of the principal players in the beverage industry. Coca-Cola Company markets have 500 non-alcoholic beverage brands in more than 200 countries. The essay discuss the pros and cons of hedging and analysis the financial statement of Coca-Cola. Eventually, hedging is a reasonable secession in risk management for multinational companies.

Mr. Lee and the other executives expect to generate a higher profit from hedging since they have majority of their personal wealth invested into the firm. The focus of any hedging program should always be to minimize the firm’s risk of loss, but that does not mean the they will

General Motors Corporation, the world’s largest automaker, has an extensive global outreach, which places the firm in competition with automakers worldwide, and subjects itself to significant exchange rate exposure. In particular, despite most of its revenues and production being derived from North America, depreciating yen rates pose problems for the firm indirectly through economic exposure. While GM possesses ‘passive’ hedging strategies for balance sheet and income statement exposures, management has not yet quantified or recognized solutions to possible losses from the indirect competitive exposure it now shared with Japanese automakers in the U.S import

625 10.125 8.125 10.000 9.875 10.250 9.750 9.125 8.500 4.250 4.375 3.625 3.125 2.625 Close 12.125 16.000 8.375 10.375 10.500 10.625 9.750 9.375 9.125 5.500 4.625 3.875 3.500 3.000 2.500 167.24 211.28 242.17 288.36 290.10 304.00 318.66 329.80 321.83 251.79 230.3 247.08 257.07 267.82 266.37 S&P 500 Closing Bond Prices 11.13% $81.875 82.000 77.750 76.000 94.000 75.625 76.125 72.000 55.250 50.000 41.500 41.750 27.000 14.38% $90.125 101.875 100.875 99.500 96.500 95.000 95.000 98.625 96.000 94.375 68.875 63.500 50.000 54.125 34.250 S&P longterm gov bond 40.29 48.93 58.04 60.69 51.55 52.42 51.89 50.40 47.39 47.17 50.31 49.89 51.28 53.67 52.50

merchandise stores in many continents .it is one of the leading market of the groceries in the UK in which it has

Rob Griffin, the senior vice president and U.S. director of search for Media contacts, a media consulting firm, is faced with the task of optimizing search engine marketing (SEM) for Air France as the company seeks to compete in the hyper-competitive U.S. market. Even though Griffin is satisfied with the performance of his company, he wants to make the team to remain the leading position and provide the results that Air France wanted. At the time of the case, SEM has become an advertising phenomenon, with North American advertisers spent $ 9.4 billion in the SEM channel, up to 62% in 2005. In the past, Media contacts h had concentrated on Google, Microsoft, and Yahoo for the search engine

Multinational corporations often sell products in various countries with prices denominated in corresponding local currencies. It is widely recognized that as the volatility in exchange rates has increased dramatically after the breakdown of the Bretton Woods system of fixed exchange rates (Smith, Smithson and Wilford, 1990), multinational corporations may have become increasingly vulnerable to exchange risk since the short term movements in exchange rates are often not accompanied by offsetting changes in prices in the corresponding countries (Shapiro, 1992). Exchange rate exposure is an important source of risk for multinational corporations such as transaction exposure, economic exposure, and translation exposure. Thus, managers of multinational firms employ a number of foreign exchange hedging strategies in order to protect against exchange rate risk. The primary reason companies would hedge foreign exchange risk is so that they do not want to lose money on capital or assets they have stored in different

But, even though the possibility of winning exists, the company is exposed to a greater risk if it does not hedge. Moreover, the policy of the company is to ensure against the risk, not to speculate on the foreign exchange market.

Aspen has become a public company with more risk adverse investors who want to invest in the core business of the firm and not assume any foreign exchange risk. Foreign exchange risk is a core risk to Aspen’s business because they have many customers outside of the United States. We believe that transferring this risk to the customers would limit Aspen’s growth on the foreign markets: Aspen should keep its current marketing strategy, which includes credit installment payments and payments in local currencies for Japan, the UK and Germany. The current risk management program hurts the company because it doesnot consider Aspen’s expenses abroad that balance sales exposures to currency fluctuations. We then recommend that

MNCs utilize various hedging or arbitrage strategies to stabilize financial earnings or firm value especially when there are obvious inconsistencies in global exchange movements.

In the year 2012, it was the fourth largest retailer in the world. It is represented in more than 2200 sites across Europe, proves the competence with concepts that meet the highest quality demands.

Great Eastern Toys is a company in Hong Kong that exports a huge percent of its total sales to the North American and European markets and hence is exposed to currency risk. Previously, the company was occupied with expanding their business and the company 's management had never given much attention to currency risk until their recent meeting with their banker. The banker pointed out that the depreciation of the European currencies during the previous two years had resulted in a substantial loss of income. The company 's management was indeed convinced that they should begin to devote more time and manage their currency position. In this report, we are going to explore the different options for Great Eastern Toys to hedge

As of 2010, Carrefour S.A. was the largest global retailer in Europe and the second largest of the world in terms of revenue1. Carrefour develops with a multiformat approach ranging from its core hypermarket chains to supermarkets, convenience and hard discount stores. For professionals, Carrefour is also developing the cash & carry format. At year-end 2009, Carrefour had over 15,600 stores in 34 countries.