Foreign Exchange Hedging Strategies at General Motors: Competitive Exposures

Mihir A. Desai; Mark  Veblen

Case | HBS Case Collection | March 2005 (Revised March 2006)

Foreign Exchange Hedging Strategies at General Motors: Competitive Exposures

Abstract

How can a multinational firm analyze and manage currency risks that arise from competitive exposures? General Motors has a substantial competitive exposure to the Japanese yen. Although the risks GM faces from the depreciating yen are widely acknowledged, the company's corporate hedging policy does not provide any guidelines on managing such competitive exposures. Eric Feldstein, treasurer and vice-president of finance, has to quantify GM's yen exposure and recommend a way for GM to manage the risks that arise from its competitive exposure. Students must analyze the impact of a yen depreciation on GM sales and profits. A rewritten version of an earlier case.

Keywords: Multinational Firms and Management; Currency Exchange Rate; Competition; Credit Derivatives and Swaps; International Finance; Financial Management; Investment Funds; Risk and Uncertainty; Auto Industry;

Format: Print

9 pages

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Citation:

Desai, Mihir A., and Mark Veblen. "Foreign Exchange Hedging Strategies at General Motors: Competitive Exposures." Harvard Business School Case 205-096, March 2005. (Revised March 2006.)

Case | HBS Case Collection | August 2015 (Revised October 2017)

Turnaround at Norsk Gjenvinning (A)

George Serafeim and Shannon Gombos

Erik Osmundsen, CEO of Norsk Gjenvinning (NG), had initiated a program to eliminate corruption and improve compliance, and as a result the company had experienced a turnover of almost half of its top 70 line managers and strained relations with several competitors and the waste management industry association. Osmundsen had relentlessly pushed an agenda that involved transforming and professionalizing the waste management industry to mitigate instances of corruption and other crimes. Osmundsen was convinced that his turnaround strategy would be effective. Having brought employees on board, he was planning to relentlessly engage customers, regulators, and security agencies. It was still unclear though how fast customer demand for robust compliance programs would affect the competitive dynamics. How should NG go about convincing its customers? What could NG learn from companies in other industries that have relied on customer support to shift to responsible business practices? Did competitors that maintain non-compliant practices have an Achilles heel that NG could exploit? To what degree should NG drive change on its own in order to achieve customer differentiation vs. cooperate with competitors to bring the whole industry on board? What other mechanisms existed to level the playing field if NG did not succeed in convincing the customers?

Keywords: change management; change leadership; Crime and Corruption; governance; Compliance; waste management; Environmental Impact; social responsibility; industry regulation; regulatory enforcement; Leading Change; Change Management; Crime and Corruption; Governance Compliance; Wastes and Waste Processing;

Citation:

Serafeim, George, and Shannon Gombos. "Turnaround at Norsk Gjenvinning (A)." Harvard Business School Case 116-012, August 2015. (Revised October 2017.) View Details

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Foreign Exchange Hedging Strategies at General Motors: Competitive Exposures

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