Corporate Risk Management

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Policies and Implementation. Every good risk- management strategy relies on a sound dose of market assessment and opinion. As a result, corporate finance divisions and treasury groups and start with detailed market analysis and forecasts to inform their strategic risk-management choices. Analyze BMW’s risk-management framework and identify the economic and organizational reasons for their particular approach to FX hedging.
(a) What risk factors does the Group face? Present the risks in tabular form distinguishing between financial and nonfinancial risks and identifying each risks’ origin.
(b) Explain BMW’s approach to risk management in the context of FX rate forecasting and operations. What is their stated policy and how well have they been doing? Do you see any problems with BMW’s approach and implementation?
(c) Why did BMW decide to consolidate FX risk management globally in its Munich group treasury? What principle are they implementing and what are its advantages for the Group?
(d) Evaluate the advantages and disadvantages of various exchange-hedging instruments and techniques. Distinguish financial from nonfinancial risk management approaches.
(e) Which financial hedges does BMW use? What nonfinancial hedges are available to them and how do they use them?
(f) Bonus problem. What differences if any exist in BMW’s approach to FX exposure management in North America and Asia?

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Of Currencies and Competition

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The Environment. The case references USD ex- change rates from the 1980s and 1990s in terms of Deutsch(e) Mark (DEM), Germany’s old money before the advent of European Monetary Union and the common currency Euro, which now is the official currency of 19 of the 27 member states of the European Union. With the introduction of the Euro in 1999, the official conversion rate for Deutsche Mark was set to 1.95583/EUR.
The euro was introduced to world financial markets as an accounting currency on 1 January 1999, replacing the former European Currency Unit (ECU) at a ratio of 1:1 (US$1.1743). Physical euro coins and banknotes entered into circulation on 1 January 2002, making it the day-to-day operating currency of its original members, and by March 2002 it had completely replaced the former currencies.
(a) What kind of quote is $0.34/DEM and $0.64/DEM in 1985 and 1992, respectively? What is the price of $1 in terms of DEM?
(b) When the Euro was introduced, the official conversion rate for the DEM was fixed at DEM 1.95583/EUR. What would have been the USD/EUR exchange rate on average in 1985 and 1992, respectively?
(c) In 1992, a BMW which sold for DEM 50,000 marks in Germany sold in the United States for $32,000. Compute the implied PPP exchange rate in terms of both DEM and EUR. Is the USD over or undervalued? What can BMW do in light of the prevailing exchange rates in 1992 to make their cars more appealing to US customers?
(d) Auto workers in the US made approximately $23.50 hourly on average in terms of wages ($15)andbenefits($8.50)intheearly1990s.1(1 See https://www.bls.gov/opub/mlr/2019/article/earnings-of-production-workers-in-manufacturing-1990-2018.htm and various other sources. ) How much did German auto workers make in USD and DEM during the same period? What is the USD/DEM break-even PPP exchange rate in terms of wage and benefit costs? What are the competitive implications for BMW?
(e) Given your preceding analysis, advise BMW on their globalization strategy. What other problems can the company address through your recommended course of action?
(f) Bonus problem. BMW estimates that in the 1990s the US will retain a cost advantage of about 30% over the German car industry in terms of hourly compensation (wages and benefits). Assuming that hourly compensation in the US car industry remains steady throughout the decade, what does this assumption imply for the German hourly compensation by the year 2000? What are the corresponding break-even FX rates in terms of the Euro?

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innovative brewery

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A post that provides an example of an innovative brewery Provide the name (and web link) of a brewery that has implemented or plans to implement practices and innovations with the potential to contribute to sustainability objectives. Describe the practices/innovations in terms of their relationship to sustainability.

Elementary Statistics Behavior and Social Science

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Outline Content:
Summarize each of the following sections of the selected research article.

  1. Introduction
    Where did the researchers’ idea come from?
    State the question the article’s research is trying to answer
    What is the theory behind the research questions?
  2. Hypotheses
    State the alternative hypothesis (what the researchers predict)
    State the null hypothesis (the opposite of the researchers’ prediction)
  3. Methods (for ONE study within the article)
    Who is their sample? Who is their population?
    Summarize the procedure. What did they do to the sample?
    Walk the reader through participants’ experience in the study
  4. Analyses and Results (for ONE study within the article)
    What statistical analyses did they do and why? (e.g. z-test, independent samples t-test, related samples t-test,
    ANOVA, correlation, etc).
    What were the results of the statistical analyses?
    Report a brief summary of the means (M), standard deviations (SD), and test statistics (z, t, p, f, r, etc.)
    Did they reject the null hypothesis or fail to reject the null hypothesis?
    What does that mean?
  5. Conclusions
    What’s the take-home message of the research?
    What are the practical implications of the results?
    Future research
    If they had more resources what could be done to improve their project?
    What is the logical next step for their work to examine?

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