How should a multinational company manage foreign currency risks? Examines transactional and translational exposures and alternative responses to these requests, the. By analyzing two specific hedging decisions by General Motors Describes General Motors’ corporate hedging policy and its risk management structure, and how accounting rules impact hedging decisions. Although the overall corporate hedging policy provides a single framework for the exchange risks that General Motors must manage … Read more »

How should a multinational company manage foreign currency risks? Examines transactional and translational exposures and alternative responses to these requests, the. By analyzing two specific hedging decisions by General Motors Describes General Motors’ corporate hedging policy and its risk management structure, and how accounting rules impact hedging decisions. Although the overall corporate hedging policy provides a single framework for the exchange risks that General Motors must manage, the company has to take into account deviations from the prescribed guidelines. Describes two such situations: a significant exposure to the Canadian dollar with adverse accounting consequences and GM exposure to the Argentine currency devaluation as widely expected. Students must assess the risks General Motors is in every situation and consider which hedging strategy – if any – could be useful. In addition, the students analyze the financial costs and accounting treatment of derivative transactions for hedging purposes alternate asking. A rewritten version of an earlier case.
«Hide

from
Mihir A. Desai,
Mark F. Veblen
Source: Harvard Business School
24 pages.
Publication Date: Mar 08, in 2005. Prod #: 205095-PDF-ENG
Foreign Exchange Hedging Strategies at General Motors: Transactional and Translational Exposures HBR case solution

[related_post themes="flat"]