Assignment
Overview
The final project for this course is the creation of a Foreign Exchange Rate Risk Management in Multinational Enterprise in Business Strategy. You will examine how a multinational enterprise (MNE) uses foreign exchange risk management in its business strategy.
The final project for this course consists of two major components. The first component is a Case Study Briefing document that focuses on a case study of foreign exchange risk management techniques currently used in a multinational enterprise (MNE). You will complete a briefing document in Module Five that focuses on the risk management techniques currently used in the MNE that you have chosen. Within this document, you will address the background and nature of the company's business, the exposure to foreign exchange rate the company faces (i.e., through its accounts payable because it imports, through its accounts receivable because it exports, or through both accounts), and the tools or techniques the company currently uses to mitigate those risks (i.e., the company uses foreign debt to hedge the currency exposure, using derivatives such as currency swaps, futures, forwards, or options, for only a certain number of months to hedge only a certain percentage of the exposure, etc.).
The second component is a Subsidiary Expansion or an Investment document that focuses on your research to expand this MNE into a new country. The country could be the country in which the MNE is currently located. Or, it could be any country that you are interested in expanding into. Within this document, you will address the capital structure of the new subsidiary and, if the company has debt financing, from where or which currency you would get the debt financing, and why. Once the company breaks even and starts making a profit, how would you manage the profit (i.e., need to invest for expansion for growth or because of restrictions on blocked funds, repatriate back to the mother company annually because you are not certain of the country and currency risk, etc.)?
This paper
You will submit your Company Proposal and Background short paper to begin preparation for your final project. The Company Proposal and Background will explore the historical background of the chosen firm's business, so that you can explore the nature of the firm's products and services. The paper should include a brief historical background of your chosen firm's business. Your background should include the nature of products or services it offers, as well as its major geographical exposure and its major source of foreign exchange exposure. The format should be a one- to two-page Microsoft Word document.
Specifically, the following critical elements must be addressed:
I. Company Proposal and Background: o Provide a brief historical background on the firm you have selected. o Include the nature of its products or services. o Explain the major geographical exposure. o Explain the major source of foreign exposure.
Guidelines for Submission: Milestone One must be submitted as a one- to two-page Microsoft Word document with double spacing, 12-point Times New Roman font, and one-inch margins; reflect at least three sources; and be cited in APA format.