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Main Catalogs   Accounting Business Communication Business Law Economics Finance Insurance and Real Estate Management Information Systems Management and Organization Marketing Operations and Decision Sciences      Special Catalogs     Case Studies Text Chapters Mapped to Specific Cases How to Build a Book: Select Content Review & Arrange Personalize Request a Copy Keyword    Title, Author, Case #, Etc. ALEKS Homework Manager Discover Econ   Learning Solutions Group     CaseLink for Eun-Resnick: International Financial Management, Fifth Edition To include an item in your complimentary custom book, click the item's Add link. If there is a View link next to an item, you can view the pages by clicking on the link. To review the list of items you have selected so far, click on the word Review in the progress bar above.    Front Matter   Add   View  9 pp.  Preface    I. Foundations of International Financial Management   Add   View  2 pp.  Introduction   Add   View  21 pp.  1. Globalization and the Multinational Firm   Add   View  25 pp.  Case — Creating the International Trade Organization Moss, David A.; Appling, George; Archer, Andrew In the late 1940s, officials at the U.S. State Department began campaigning for the creation of an International Trade Organization (ITO). This new organization would oversee global negotiations on trade liberalization, foreign direct HBS Number: 9-798-057 Type: Case (Library) Publication Date: 2/27/1998 Geographic Setting: United States Subjects: Development banks; International finance; International relations; International trade; Trade policy   Add   View  7 pp.  Case — Economic Gains from Trade: Comparative Advantage Author(s): Kennedy, Robert E.; Koehn, Nancy Publication Date: 06/10/1996 Revision Date: 11/25/1996 Product Type: Note Product Description: How nations trade and whether they benefit from it are two of the oldest and most important questions in political economy. In the 170 years since David Ricardo formally developed the theory of comparative advantage, it has become one of the principles most widely accepted among professional economists. Despite this wide acceptance in the professional community, the basics of international trade are still poorly understood by many policy makers and casual commentators. This note introduces the theory of comparative advantage. It is divided into four sections. The first presents a short history of the concepts behind comparative advantage. The second develops a simple model with several examples to demonstrate the gains that result from trade between nations. The third briefly covers several extensions of the simple model. Finally, two traditional objections to free trade are reviewed. A rewritten version of an earlier note. HBS Number: 9-796-183 Subjects: Business government relations; International trade; Macroeconomics; National competitiveness Academic Discipline: Business & government   Add   View  6 pp.  Case — Note on Comparative Advantage Author(s): Yoffie, David B.; Coleman, John J. Publication Date: 07/31/1986 Revision Date: 08/01/1987 Product Type: Note Product Description: Discusses David Ricardo’s theory of comparative advantage and the refinement of his model developed by Eli Heckscher and Bertil Ohlin. Presents several criticisms of the Heckscher-Ohlin theory, including Wassily Leontief‘s empirical demonstration that the nature of U.S. imports and exports were exactly contrary to the predictions of the theory. HBS Number: 9-387-023 Subjects: Competition; Exports; Imports; International trade; Macroeconomics Academic Discipline: Business & government Supplementary Materials: Teaching Note, (5-389-039), 15p, by David B. Yoffie   Add   View  35 pp.  2. International Monetary System   Add   View  25 pp.  Case — 1994-95 Mexican Peso Crisis Author(s): Froot, Kenneth A.; McBrady, Matthew Publication Date: 01/14/1996 Revision Date: 12/09/1999 Product Type: Case (Library) Product Description: Explores the peso crisis of 1994-95 and why it occurred. Students are asked to examine Mexico’s policies, the capital market‘s reactions, and the implications of devaluation for future capital flows and growth. Teaching Purpose: To discuss capital markets and their effects on exchange rates. HBS Number: 9-296-056 Geographic Setting: Mexico Event Year Start: 1994 Event Year End: 1995 Subjects: Capital markets; Foreign exchange rates; International finance; Mexico Academic Discipline: Finance   Add   View  24 pp.  Case — Collapse in Asia — 1997-98 Lodge, George C.; St. George, Anthony Discusses the Asian crisis and economists’ opinions and solutions. HBS Number: 9-798-084 Type: Case (Library) Publication Date: 3/23/1998 Geographic Setting: Asia Event Year Start: 1997 Event Year End: 1998 Subjects: Asia; Economic conditions; International finance; Macroeconomics; Southeast Asia   Add   View  25 pp.  Case — Peregrine Debacle Author(s): Enright, Michael J.; Mak, Vincent Publication Date: 11/09/2001 Product Type: Case (Field) Publisher: University of Hong Kong Product Description: In January 1998, Peregrine Investments Holdings Ltd., once billed as "Asia’s only indigenous investment bank," was forced into liquidation after the revelation of huge losses in its fixed-income business and the withdrawal of potential investors from Europe and the United States. Peregrine became the highest profile corporate failure in the Asian financial crisis to date. A firm that seemed to be on top of its world in early 1997 had collapsed under a pile of bad debts less than a year later. Peregrine‘s demise raised questions about how the firm might have avoided the debacle. This case can be used to teach corporate governance and strategy development in volatile environments. HBS Number: HKU168 Geographic Setting: Asia Event Year Start: 1998Event Year End: 1998 Subjects: Asia; International finance; Investment banking; Risk management Academic Discipline: Competitive strategy   Add   View  19 pp.  3. Balance of Payments   Add   View  11 pp.  Case — Thailand in May and June of 1997 Uyterhoeven, Hugo E.R. Diagnose the economic situation, evaluate the available options, and recommend a course of action. HBS Number: 9-398-131 Type: Case (Pub Mat) Publication Date: 5/20/98 Geographic Setting: Thailand Event Year Start: 1997 Event Year End: 1997 Subjects: Balance of payments; Economic policy; Fiscal policy; Inflation; Monetary policy; Southeast Asia; Unemployment   Add   View  17 pp.  Case — Kennedy and the Balance of Payments Author(s): Yoffie, David B.; Austin, Jane K. Publication Date: 12/16/1982 Revision Date: 07/15/1985 Product Type: Case (Library) Product Description: In 1960, the United States was facing a balance of payments problem. Gold reserves were being drained, American products were losing competitiveness, and the dollar was under attack. This case analyzes the roots of this problem, provides an opportunity to discuss in depth balance of payments accounting, and allows students to explore various solutions to balance of payments difficulties. May be used with: (9-384-005) Balance of Payments: Accounting and Presentation. HBS Number: 9-383-073 Geographic Setting: United States Event Year Start: 1950Event Year End: 1960 Subjects: Balance of payments; EC single market; Economic policy; International trade; Monetary policy; National competitiveness Academic Discipline: Business & government Supplementary Materials: Supplement (Note), (9-384-006), 1p, by David B. Yoffie, Jane K. Austin; Supplement (Note), (9-385-243), 1p, by David B. Yoffie, Jane K. Austin; Teaching Note, (5-385-241), 13p, by David B. Yoffie   Add   View  26 pp.  4. Corporate Governance around the World   Add   View  24 pp.  Case — Hermitage Fund: Media and Corporate Governance in Russia Author(s): Dyck, Alexander Publication Date: 10/17/2002 Revision Date: 01/07/2003 Product Type: Case (Field) Product Description: William Browder, the top executive of the Hermitage Fund, the best-performing international equity fund over the last five years, attributed much of his funds’ strong returns to its focus on shareholder activism and corporate governance. In 2001, he was putting this approach to the test by accusing the Russian oil and gas giant Gazprom and the international accounting firm Price Waterhouse Coopers of not stemming governance problems. Although the press provided extensive coverage of Gazprom‘s problems and the share price rose, Browder failed in his other efforts to get a board seat, and his lawsuits were dismissed. Was it time to refine or change this activist strategy? These were the questions Browder (and his investors) considered as he left on a long overdue vacation. Teaching Purpose: Illustrates the extent of corporate governance problems in firms, identifies mechanisms investors can use to address concerns about misgovernance, introduces the potential role of the media as a check on corporate governance problems and how firms can use this tool as part of their strategy, and explores the opportunities and risks to shareholder activism. HBS Number: 9-703-010 Geographic Setting: RussiaIndustry Setting: investment fundNumber of Employees: 50Gross Revenues: $200 million revenues Event Year Start: 2002Event Year End: 2002 Subjects: Corporate governance; Media relations; Russia; Strategy formulation Academic Discipline: Business & government Supplementary Materials: Teaching Note, (5-703-033), 13p, by Alexander Dyck   Add   View  44 pp.  Case — Incentive Strategy II: Executive Compensation and Ownership Structure Author(s): Hall, Brian Publication Date: 05/05/2002 Revision Date: 10/11/2002 Product Type: Note Product Description: Used in the course Coordination, Control, and Management of Organizations at the Harvard Business School. Analyzes incentive strategy from the perspective of a company’s board of directors and owners. The focus is the role that executive compensation and ownership structure (the composition of, and financial structure between, a company‘s owners) play in motivating value-creating behavior. Teaching Purpose: To synthesize and summarize the course. May be used with: (9-902-131) Incentive Strategy Within Organizations. HBS Number: 9-902-134 Subjects: Corporate governance; Executive compensation; Incentives; Options; Stocks Academic Discipline: Human resources management   Add   View  20 pp.  Case — PetroChina: International Corporate Governance with Chinese Characteristics Author(s): Child, John; Xu, Sang; Ho, Mary Publication Date: 02/15/2002 Product Type: Case (Field) Publisher: University of Hong Kong Product Description: PetroChina, the largest oil and gas company in China, was made a showcase for sound corporate governance in China’s state-owned enterprises (SOEs). Its initial public offering (IPO) was part of the government‘s plan to lay the groundwork for other large capital-starved SOEs on the global capital market. In spite of the restructuring efforts, some analysts felt that the company was not yet close to where it needed to be in terms of international governance standards. Teaching Purpose: To expose students to the range of issues relating to corporate governance with Chinese characteristics. In analyzing China's political and economic background and PetroChina's governance model, this case demonstrates that the corporate governance system in China offers limited protection for minority shareholders. HBS Number: HKU183 Geographic Setting: ChinaIndustry Setting: petroleum Event Year Start: 2000Event Year End: 2000 Subjects: Business government relations; China; Corporate governance; Petroleum industry Academic Discipline: Business & government Supplementary Materials: Teaching Note, (HKU184), 6p, by John Child, Sang Xu, Mary Ho   Add   View  32 pp.  Case — Corporate Renewal in America Author(s): Scott, Bruce R.; Mondschean, Thomas S. Publication Date: 01/15/2002 Revision Date: 09/30/2002 Product Type: Case (Library) HBS Number: 9-702-018 Geographic Setting: United States Event Year Start: 1960 Event Year End: 2001 Subjects: Corporate governance; Macroeconomics; Productivity; Profitability; Restructuring Academic Discipline: Business & government Supplementary Materials: Teaching Note, (5-703-023), 28p, by Bruce R. Scott, Thomas S. Mondschean Product Description: Discusses various macroeconomic, regulatory, technological, and financial forces that led to increased corporate restructuring in the United States beginning in the mid-1980s. The U.S. financial system is often viewed as the most developed in the world and a model for other countries to follow. Similarly, the U.S. model of corporate governance — with its emphasis on shareholder value and an active market for corporate control — is also viewed as a model. Examines pressures for corporate restructuring and the emergence of an active market for corporate control for very large firms beginning in the early 1970s. Discusses the effects of this restructuring on corporate profitability and productivity. Provides data on the evolution of a number of indicators of performance, including productivity by sector, market capitalization relative to replacement cost, and rates of return both on assets and on equity. In brief, it finds that U.S. firms showed significantly improved after-tax returns on shareholder equity over the period while failing to make significant improvements on their pre-tax returns on assets — adjusted for the effects of the business cycle. Given the lack of comparable accounting data on returns across countries, conclusions about the performance of U.S. firms versus European ones isn’t possible. Teaching Purpose: To compare and evaluate German, Japan   Add   View  37 pp.  Case — Sustainable Development and Socially Responsible Investing: ABB in 2000 Author(s): Reinhardt, Forest Publication Date: 03/29/2001 Revision Date: 04/25/2001 Product Type: Case (Field) Product Description: Several investment firms and mutual funds position themselves as providers or facilitators of opportunities for socially responsible investment. This case addresses the impact of these firms on publicly traded companies. Focuses on managers at ABB, a large multinational based in Switzerland that has tried to be a leader in integrating principles of sustainable development into its business strategies. ABB’s managers now need to decide what sorts of relationships they would like to have with the firms in the socially responsible investment community, and the extent to which they ought to take the preferences of these firms into account in tailoring their business strategies. Teaching Purpose: Understand the channels through which environmentally and socially "pro-active" behavior might be rewarded in the capital markets, and assess the likelihood that these rewards will actually materialize; understand the possible value propositions of firms that offer services relating to socially responsible investment. HBS Number: 9-701-082 Geographic Setting: SwitzerlandIndustry Setting: electrical equipmentNumber of Employees: 161,000Gross Revenues: $25 billion revenues Event Year Start: 1998Event Year End: 2000 Subjects: Business & society; Corporate governance; Electric industries; Environmental protection; Ethics; International business; Manufacturing; Mutual funds; Social enterprise; Switzerland Academic Discipline: Business & government   Add   View  16 pp.  Article — Board’s Missing Link Author(s): Montgomery, Cynthia A.; Kaufman, Rhonda Publication Date: 03/01/2003 Product Type: Harvard Business Review Article HBS Number: R0303F Subjects: Corporate governance; Corporate responsibility; Shareholder relations Academic Discipline: Organizational behavior & leadership Product Description: The causes of many corporate governance problems lie well below the surface — specifically, in critical relationships that are not structured to support the players involved. In other words, the very foundation of the system is flawed. And unless we correct the structural problems, surface changes are unlikely to have a lasting impact. When shareholders, management, and the board of directors work together as a system, they provide a powerful set of checks and balances. But the relationship between shareholders and directors is fraught with weaknesses, undermining the entire system’s equilibrium. As the authors explain, the exchange of information between these two players is poor. The authors suggest several ways to improve the relationship between shareholders and directors: Increase board accountability by recording individual directors‘ votes on key corporate resolutions, separate the positions of chairman and CEO, reinvigorate shareholders, and give boards funding to pay for outside experts who can provide perspective on crucial issues.    II. The Foreign Exchange Market, Exchange Rate Determination, and Currency Derivatives   Add   View  2 pp.  Introduction   Add   View  26 pp.  5. The Market for Foreign Exchange   Add   View  6 pp.  Case — Exchange Rate Terminology and Analytics Author(s): Kennedy, Robert E. Publication Date: 04/05/2001 Product Type: Note Product Description: Introduces students to the concept of exchange rates, simple analytics regarding currency appreciation and devaluation, and real and nominal exchange rates. Concludes with a series of examples that illustrate how shifts in exchange rates and inflation affect firms’ competitiveness. Teaching Purpose: To introduce exchange rates, basic analytics, and how inflation and currency volatility affect firms. May be used with: (9-701-122) Exchange Rate Exercise. HBS Number: 9-701-121 Subjects: Currency; Devaluation; Economic analysis; Emerging markets; Foreign exchange rates; International business Academic Discipline: Business & government   Add   View  30 pp.  Case — Alphatec Electronics Pcl Author(s): Gilson, Stuart C.; Fagan, Perry L.; Foley, C. Fritz Publication Date: 02/02/2000 Revision Date: 03/12/2001 Product Type: Case (Field) Product Description: The newly appointed CEO of an important high-technology company in Thailand must lead the company through a complicated debt restructuring. Due to the collapse of the Thai currency, the company’s debt burden, like that of most Thai companies, has skyrocketed because it has borrowed heavily in U.S. dollars. The CEO, who is a U.S. citizen, must restructure the company under the recently revised, and largely untested, new Thai bankruptcy law. The new law allows troubled companies to reorganize their businesses following an approach that is similar, but not identical, to that practiced in the United States under Chapter 11 of the Bankruptcy Code. HBS Number: 9-200-004 Geographic Setting: Thailand Industry Setting: Semiconductor industry; High technology Number of Employees: 20,000 Gross Revenues: $250 million U.S. revenues Event Year Start: 1997 Event Year End: 1999 Subjects: Bankruptcy; Foreign exchange rates; Restructuring; Valuation Academic Discipline: Finance   Add   View  15 pp.  Case — Note on Foreign Exchange Author(s): Mason, Scott P.; Allen, William B. Publication Date: 02/04/1986 Revision Date: 03/15/1989 Product Type: Note Product Description: Describes the operation of foreign exchange markets, including bid-offer spreads, cross rates, reciprocal rates, and forward rates. Provides several examples to demonstrate calculation of outright forward rates using discount and premium points quoted in the London Financial Times. Other examples demonstrate interest rate parity, and hedging foreign debt using long-dated forwards. May be used with: (9-286-073) Currency Swaps. HBS Number: 9-286-067 Subjects: Capital markets; Currency; Foreign exchange; Hedging; Interest rates Academic Discipline: Finance   Add   View  11 pp.  Case — Note on Foreign Currency Swaps Author(s): Kester, W. Carl Publication Date: 11/27/1991 Revision Date: 04/25/2002 Product Type: Note Product Description: Provides descriptive background about the development of an international market for currency swaps and, by means of a detailed example, instructs readers in the determination of swap flows and all-in costs of financing using market swap rates. A rewritten version of an earlier note. HBS Number: 9-292-043 Subjects: Capital markets; Currency; Foreign exchange; Hedging; International banking; International finance Academic Discipline: Finance Supplementary Materials: Teaching Note, (5-293-006), 1p, by W. Carl Kester   Added   View  28 pp.  Case — Foreign Exchange Markets and Transactions Author(s): Desai, Mihir A.; Wang, Yanjun; Pham, Christina B.; Luchs, Kathleen Publication Date: 10/15/2004 Revision Date: 02/28/2007 Product Type: Note HBS Number: 9-205-016 Industry Setting: Banking industry Subjects: Currency; Derivatives; Foreign exchange; Foreign exchange rates; Futures; International banking; International finance; Options Academic Discipline: Finance Supplementary Materials: Supplement (Gen Exp), (9-205-017), 9p, by Mihir A. Desai, Christina B. Pham, Kathleen Luchs; Teaching Note, (5-206-032), 12p, by Mihir A. Desai, Kathleen Luchs Product Description: Provides information on the foreign exchange market and exchange rate movements. Describes the different types of foreign exchange transactions, including spot transactions, forwards, swaps, futures, and options. Includes worked examples to help students understand the different instruments and an appendix with additional exercises. A rewritten version of an earlier note.   Add   View  31 pp.  6. International Parity Relationships and Forecasting Foreign Exchange Rates   Add   View  9 pp.  Case — Note on Fundamental Parity Conditions Author(s): Kester, W. Carl Publication Date: 02/29/1988 Revision Date: 11/22/1994 Product Type: Note Product Description: Provides a simple framework for analyzing expected exchange rate movements. Basic parity and equilibrium conditions are presented including purchasing power parity, forward parity, interest rate parity, the domestic Fisher effect, and the international Fisher effect (Fisher open). Empirical evidence about these conditions are discussed. References are provided. HBS Number: 9-288-016 Subjects: Capital markets; Foreign exchange; Foreign exchange rates; International finance Academic Discipline: Finance Supplementary Materials: Teaching Note, (5-290-026), 2p, by W. Carl Kester   Add   View  6 pp.  Case — MSDI-Alcala de Henares, Spain Author(s): Luehrman, Timothy A.; Student, James J. Publication Date: 01/06/1989 Revision Date: 09/07/1995 Product Type: Case (Field) Product Description: Merck & Co., Inc. is evaluating a proposed cost-saving investment by its Spanish subsidiary. The case introduces techniques of discounted cash flow valuation analysis in a multicurrency setting. Can be used to teach basic international parity conditions as they relate to the value of operating cash flows. HBS Number: 9-289-029 Geographic Setting: Spain Industry Setting: pharmaceuticals Company Size: Fortune 500 Event Year Start: 1987 Event Year End: 1987 Subjects: Europe; Foreign exchange rates; International finance; Pharmaceuticals; Project evaluation; Securities analysis; Valuation Academic Discipline: Finance Supplementary Materials: Teaching Note, (5-290-046), 21p, by Timothy A. Luehrman   Add   View  25 pp.  7. Futures and Options on Foreign Exchange   Add   View  22 pp.  Case — Futures on the Mexican Peso Froot, Kenneth A.; McBrady, Matthew; Seasholes, Mark The Chicago Mercantile Exchange needs to decide how to design, and whether and when to introduce, a futures contract on the Mexican peso. HBS Number: 9-296-004 Type: Case (Field) Publication Date: 8/1/1995 Revision Date: 10/1/1996 Geographic Setting: Mexico/United States Industry Setting: financial services Event Year Start: 1995 Event Year End: 1995 Subjects: Commodity markets; Country analysis; Foreign exchange rates; International finance; Mexico; Money; Money markets    III. Foreign Exchange Exposure and Management   Add   View  2 pp.  Introduction   Add   View  29 pp.  8. Management of Transaction Exposure   Add   View  10 pp.  Case — Note on Transaction and Translation Exposure Author(s): Kester, W. Carl; Melnick, Richard P. Publication Date: 09/16/1987 Revision Date: 11/24/1992 Product Type: Note Product Description: Describes the transaction and translation exposures that companies doing business internationally face when foreign exchange rates change. Also discusses how to measure and cover both types of exposure. Covering techniques are demonstrated using examples of forward cover, money market hedges, and options market hedges. Other covering devices, such as swaps and leads and lags, are also presented. Explains how these exposures relate to each other and what can be done to minimize overall foreign exchange risk. May be used with: (9-288-018) Note on Operating Exposure to Exchange-Rate Changes. HBS Number: 9-288-017 Subjects: Accounting procedures; Foreign exchange; Foreign exchange rates; International finance; Management accounting Academic Discipline: Finance Supplementary Materials: Teaching Note, (5-290-027), 2p, by W. Carl Kester   Add   View  5 pp.  Case — Metallgesellschaft AG Hawkins, David F.; Weyns, Guy Metallgesellschaft AG is a commodity and engineering conglomerate based in Frankfurt am Main, Germany. Metallgesellschaft Corp., a New York based subsidiary of the group, has made oil trading and hedging errors that could drive the group into insolvency. The impact of hedge accounting rules on the quality of the information available to top management is examined. Teaching Purpose: To illustrate the fundamental issues in accounting for hedges and to show the tradeoffs that have to be made when choosing between deferral hedge accounting and mark-to-market-hedge accounting. HBS Number: 9-194-097 Type: Case (Library) Publication Date: 2/11/1994 Revision Date: 5/19/1995 Geographic Setting: Germany Industry Setting: oil trading Gross Revenues: $7.2 billion DM Event Year Start: 1993 Event Year End: 1994 Subjects: Accounting procedures; Conglomerates; Germany; Hedging; International finance   Add   View  18 pp.  Case — N.V. Philips Electronics: Currency Hedging Policies Meyer, Richard F. Describes Philips Electronics’ policies and problems relating to foreign exchange risk and hedging. Explains centralization versus decentralization of currency hedging; economic role versus transaction role; the difficulties of capturing the necessary information centrally; and assigning currency gains and losses in a matrix system of management. Teaching Purpose: To show the problems of implementing a foreign currency hedging system in a very large, multi-divisional global corporation. HBS Number: 9-295-055 Type: Case (Field) Publication Date: 10/13/1994 Revision Date: 11/16/1995 Geographic Setting: Global Industry Setting: electronics Company Size: large Event Year Start: 1990 Event Year End: 1990 Subjects: Currency; Electronics; Europe; Foreign exchange; Foreign exchange rates; Hedging; Risk management   Added   View  19 pp.  Case — Aspen Technology, Inc.: Currency Hedging Review Author(s): Tufano, Peter; Poetzscher, Cameron Publication Date: 10/10/1995 Revision Date: 07/18/1996 Product Type: Case (Field) Product Description: The chief financial officer of a rapidly-growing U.S.-based software firm that sells its process-control software to industrial users around the globe must review the goals, strategies, and policies of the firm’s currency hedging program. This review is prompted by changes in the firm‘s business, notably its acquisition of a United Kingdom subsidiary, other growing overseas expenses, and its recent initial public offering. Teaching Purpose: Intended to allow students to analyze how a small, young firm's business strategy creates currency exposure and a need to manage this exposure. Designed to allow students to explore the goals and purposes of currency hedging, the measurement of exposures, and appropriate policies to be followed. HBS Number: 9-296-027 Geographic Setting: New England/Global Industry Setting: software Company Size: small Number of Employees: 417 Gross Revenues: $57 million revenues Event Year Start: 1995 Event Year End: 1995 Subjects: Foreign exchange; Hedging; Risk assessment; Risk management; Software Academic Discipline: Finance Supplementary Materials: Teaching Note, (5-298-091), 14p, by Peter Tufano   Added   View  17 pp.  Case — Hedging Currency Risks at AIFS Author(s): Desai, Mihir A.; Sjoman, Anders; Dessain, Vincent Publication Date: 09/08/2004 Revision Date: 02/28/2007 Product Type: Case (Field) HBS Number: 9-205-026 Geographic Setting: London Industry Setting: Education industry; Travel industry Number of Employees: 100 Gross Revenues: $200 million Event Year Start: 2004 Event Year End: 2004 Subjects: Currency; Foreign exchange; Foreign exchange rates; Hedging; Travel Academic Discipline: Finance Supplementary Materials: Supplement (Spreadsheet), (9-205-703), 0p, by Mihir A. Desai, Anders Sjoman, Vincent Dessain; Teaching Note, (5-206-025), 29p, by Mihir A. Desai, Kathleen Luchs Product Description: The American Institute for Foreign Studies (AIFS) organizes study abroad programs and cultural exchanges for American students. The firm’s revenues are mainly in U.S. dollars, but most of its costs are in eurodollars and British pounds. The company‘s controllers review the hedging activities of AIFS. AIFS has a hedging policy, but the controllers want to review the percentage of exposure that is covered and the use of forward contracts and options. AIFS sets guaranteed prices for its exchanges and tours a year in advance, before its final sales figures are known. The controllers need to ensure that the company adequately hedges its foreign exchange exposure and achieves an appropriate balance between forward contracts and currency options. To obtain executable spreadsheets (courseware), please contact our customer service department at custserv@hbsp.harvard.edu.   Add   View  21 pp.  9. Management of Economic Exposure   Add   View  11 pp.  Case — Note on Operating Exposure to Exchange-Rate Changes Author(s): Luehrman, Timothy A. Publication Date: 09/18/1987 Revision Date: 11/24/1992 Product Type: Note Product Description: Describes the effects on operating cash flows of a real change in exchange rates. Describes different elements of operating exposure and includes illustrative examples. May be used with: (9-288-017) Note on Transaction and Translation Exposure. HBS Number: 9-288-018 Subjects: Currency; Foreign exchange rates; International finance; International operations Academic Discipline: Finance Supplementary Materials: Teaching Note, (5-293-012), 2p, by Timothy A. Luehrman   Add   View  12 pp.  Case — Tiffany & Co.—1993 Author(s): Kester, W. Carl; Backstrand, Kendall Publication Date: 12/07/1994 Revision Date: 06/09/1995 Product Type: Case (Library) Product Description: The restructuring of Tiffany’s retailing agreement with Mitsukoshi Ltd. in 1993 exposed Tiffany to substantial yen/dollar exchange rate volatility that it had not previously faced. This new exposure requires Tiffany to establish risk management policies and practices. Management must determine whether to hedge, what the objective of hedging ought to be, how much exposure to cover, and what instruments to use. Teaching Objective: To introduce students to the problems of risk management in a relatively uncomplicated administrative situation. HBS Number: 9-295-047 Geographic Setting: Global Industry Setting: retail jewelry Company Size: mid-size Gross Revenues: $500 million revenues Event Year Start: 1993 Event Year End: 1993 Subjects: Currency; Foreign exchange rates; Retailing; Risk management Academic Discipline: Finance Supplementary Materials: Teaching Note, (5-298-014), 11p, by W. Carl Kester   Add   View  13 pp.  Case — Universal Circuits, Inc. Author(s): Piper, Thomas R. Publication Date: 08/15/1985 Revision Date: 07/31/1991 Product Type: Case (Field) Product Description: The manager of international finance of a major U.S. electronics company is concerned about the exposure of the firm to changes in exchange rates. Of particular concern is the exposure of operations to changes in real exchange rates. The teaching objectives include: 1) understanding operating exposure and contractual exposure; 2) understanding the issues in estimating operating exposure; 3) understanding possible actions to neutralize operating exposure; and 4) assigning responsibility for the management of operating exposure. HBS Number: 9-286-006 Geographic Setting: United StatesIndustry Setting: electronicsCompany Size: mid-sizeGross Revenues: $200 million sales Event Year Start: 1984Event Year End: 1984 Subjects: Electronics; Financial management; Foreign exchange rates; International finance Academic Discipline: Finance Supplementary Materials: Teaching Note, (5-293-008), 8p, by W. Carl Kester   Add   View  8 pp.  Case — Ibersnacks, S.A. Author(s): Lessard, Donald R.; Rahnema, Ahmad Publication Date: 01/01/1993 Revision Date: 02/01/1997 Product Type: Case (Field) Publisher: IESE University of Navarra Product Description: Provides a framework for introducing the analysis of costs of financing for different currency choices. Allows for the measurement of the foreign exchange risk and its impact on the firm’s financing costs as well as its operating margin. Also deals with the links between the firm‘s competitive position and its choice of financing. HBS Number: IES017 Geographic Setting: Spain Industry Setting: Snack food industry Event Year Start: 1992 Event Year End: 1992 Subjects: Debt management; Financial analysis; Food; Foreign exchange; International finance; Risk Academic Discipline: Finance Supplementary Materials: Teaching Note, (IES018), 7p, by Donald R. Lessard, Ahmad Rahnema   Add   View  17 pp.  Case — Harley-Davidson, Inc.—1987 Author(s): Kester, W. Carl; Morley, Julia Publication Date: 03/10/1992 Revision Date: 12/15/1992 Product Type: Case (Library) Product Description: After an LBO and near bankruptcy in the early 1980s, Harley-Davidson makes an astonishing recovery, going public in 1986. Its listing on the New York Stock Exchange in 1987 provides the occasion of an equity analyst to publish a research report in which she must issue a buy, sell, or hold recommendation for Harley’s stock. Complicating her analysis is the fact that Harley still faces vigorous Japanese competition and, therefore, has a significant operating exposure to the yen/dollar exchange rate. Stimulates discussion about operating exposure to real exchange rate changes. HBS Number: 9-292-082 Geographic Setting: United StatesIndustry Setting: motorcyclesCompany Size: Fortune 500Gross Revenues: $300 million revenues Event Year Start: 1987Event Year End: 1987 Subjects: Foreign exchange rates; International business; International finance; Motorcycles; Valuation Academic Discipline: Finance   Add   View  13 pp.  Case — Jaguar plc—1984 Author(s): Luehrman, Timothy A.; Schiano, William T. Publication Date: 10/05/1989 Revision Date: 05/18/1990 Product Type: Case (Field) Product Description: A vehicle for analyzing the exposure of operating cash flows to exchange rate changes. Considers the value of Jaguar plc at the time of its privatization and share offering in 1984. Jaguar is a major exporter from the United Kingdom and the United States is therefore exposed to changes in the dollar/sterling exchange rate. Students are asked to estimate the value of the company as a function of expected future exchange rates. Students may also be asked whether and how Jaguar’s exposure should be hedged. HBS Number: 9-290-005 Geographic Setting: United Kingdom Industry Setting: automobile Company Size: large Gross Revenues: $750 million sales Event Year Start: 1984 Event Year End: 1984 Subjects: Automobiles; Foreign exchange rates; Industry analysis; International finance; Privatization; Stock offerings; Valuation Academic Discipline: Finance Supplementary Materials: Teaching Note, (5-290-034), 23p, by Timothy A. Luehrman   Add   View  9 pp.  Case — Foreign Exchange Hedging Strategies at General Motors: Competitive Exposures Author(s): Desai, Mihir A.; Veblen, Mark F. Publication Date: 03/09/2005 Revision Date: 03/31/2006 Product Type: Case (Field) Product Description: 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. HBS Number: 9-205-096 Geographic Setting: New York, NY Industry Setting: Automotive industry Number of Employees: 365,000 Gross Revenues: $177.3 billion revenues Event Year Start: 2001 Event Year End: 2001 Subjects: Competition; Currency; Derivatives; Financial management; Foreign exchange; Hedging; International finance; Multinational corporations; Risk management Academic Discipline: Finance Supplementary Materials: Supplement (Spreadsheet), (9-205-713), 0p, by Mihir A. Desai, Mark F. Veblen; Teaching Note, (5-206-081), 26p, by Mihir A. Desai, Kathleen Luchs   Add   View  18 pp.  10. Management of Translation Exposure   Add   View  6 pp.  Case — Machinery International (A) Author(s): Hawkins, David F. Publication Date: 12/02/1999 Revision Date: 03/13/2001 Product Type: Case (Gen Exp) Product Description: A U.S. company must decide how to translate its German subsidiary’s DM financial statements into U.S. dollars for public and internal reporting purposes. Teaching Purpose: Explore financial and behavioral implications of different approaches to translation of financial statements from one currency to another. A rewritten version of an earlier case. May be used with: (9-101-061) Machinery International (B). HBS Number: 9-100-012 Geographic Setting: United States Gross Revenues: $5 million revenues Event Year Start: 2000 Event Year End: 2000 Subjects: Accounting procedures; Currency; Financial accounting; Financial reporting; Germany; Machinery Academic Discipline: Accounting & control Supplementary Materials: Teaching Note, (5-101-076), 10p, by David F. Hawkins   Add   View  24 pp.  Case — Foreign Exchange Hedging Strategies at General Motors: Transactional and Translational Exposures Author(s): Desai, Mihir A.; Veblen, Mark F. Publication Date: 03/09/2005 Revision Date: 01/09/2006 Product Type: Case (Field) Product Description: How should a multinational firm manage foreign exchange exposures? Examines transactional and translational exposures and alternative responses to these exposures by analyzing two specific hedging decisions by General Motors. Describes General Motors’ corporate hedging policies, its risk management structure, and how accounting rules impact hedging decisions. Although the overall corporate hedging policy provides a consistent approach to the foreign exchange risks that General Motors must manage, the company also has to consider deviations from prescribed policies. Describes two such situations: a significant exposure to the Canadian dollar with adverse accounting consequences and GM‘s exposure to the Argentinean currency when devaluation is widely anticipated. Students must evaluate the risks General Motors faces in each situation and consider which hedging strategy — if any — might be appropriate. Additionally, asks students to analyze the financial costs and accounting treatment of alternative derivative transactions for hedging purposes. A rewritten version of an earlier case. HBS Number: 9-205-095 Geographic Setting: New York, NY Industry Setting: Automotive industry Number of Employees: 365,000 Gross Revenues: $177.3 billion revenues Event Year Start: 2001 Event Year End: 2001 Subjects: Currency; Derivatives; Financial management; Foreign exchange; Hedging; International finance; Multinational corporations; Risk management Academic Discipline: Finance Supplementary Materials: Supplement (Spreadsheet), (9-205-712), 0p, by Mihir A. Desai, Mark F. Veblen; Teaching Note, (5-206-031), 26p, by Mihir A. Desai, Kathleen Luchs    IV. World Financial Markets and Institutions   Add   View  2 pp.  Introduction   Add   View  27 pp.  11. International Banking and Money Market   Add   View  20 pp.  Case — CSFB’s China Unicom Incident Author(s): Enright, Michael J.; Mak, Vincent Publication Date: 01/02/2002 Product Type: Case (Field) Publisher: University of Hong Kong Product Description: In August 2001, Credit Suisse First Boston (CSFB), a major international investment bank, was removed from the foreign underwriting team that would handle a pending share offering for China Unicom Group Ltd., the second largest telecommunications company in the Chinese Mainland. Only two months earlier, CSFB was designated to deal with the U.S. portion of that offering. However, after the bank hosted overseas investment "road shows" attended by senior government officials from Taiwan (including the finance minister), it was officially dropped from the China Unicom underwriter list. The incident provoked criticism from governments in the United States and Taiwan and widespread activity in investment banking circles as several other banks dropped plans to host road shows for Taiwan. Teaching Purpose: To teach how business decisions may become caught up in political difficulties and how companies need to formulate strategies and policies to address such issues. HBS Number: HKU187 Geographic Setting: ChinaIndustry Setting: investment banking Event Year Start: 2001Event Year End: 2001 Subjects: Asia; Business government relations; China; International finance; Investment banking; Politics; Strategy formulation Academic Discipline: Business & government Supplementary Materials: Teaching Note, (HKU217), 14p, by Michael J. Enright, Vincent Mak   Add   View  31 pp.  Case — Malaysia: Capital and Control Author(s): Abdelal, Rawi; Alfaro, Laura Publication Date: 04/15/2002 Revision Date: 06/04/2002 Product Type: Case (Field) Product Description: On September 1, 1998 the government of Malaysia imposed currency and capital controls in response to the financial crisis that had swept Asia. The controls sparked an enormous controversy in the world of international finance. Some celebrated the controls for insulating the Malaysian economy from the unstable international financial system. Others criticized the controls for trapping investors and allowing the government to protect the interests of "cronies." This debate also raised the central question about the future of the international financial architecture: What is the appropriate balance between financial market freedom and government discretion in the management of the global economy? Teaching Purpose: The political economy of capital controls in Malaysia during the Asian financial crisis. HBS Number: 9-702-040 Geographic Setting: MalaysiaIndustry Setting: government Event Year Start: 1997Event Year End: 2002 Subjects: Asia; Business government relations; Country analysis; Economic development; Emerging markets; Government policy; International banking; International finance Academic Discipline: Business & government Supplementary Materials: Teaching Note, (5-703-020), 24p, by Rawi Abdelal, Laura Alfaro   Add   View  26 pp.  Case — Korea First Bank (A) Author(s): Huang, Yasheng; O’Neil-Massaro, Kirsten J Publication Date: 02/16/2001 Revision Date: 03/13/2002 Product Type: Case (Field) Product Description: In December 1999, Newbridge Capital, an equity investment fund based in San Francisco, successfully negotiated with the Korean government to acquire controlling interest in Korea First Bank. It was the first time ever a foreign financial institution acquired a Korean Bank. The negotiation was difficult and protracted, and the two sides tried hard to reach an agreement that would preserve the interests of both. The case examines the conditions and the motivations underlying one of the most significant acquisition deals in the Korean economy. Teaching Purpose: To teach the complexities involved in an acquisition of a bank in a previously closed financial system. HBS Number: 9-701-022 Geographic Setting: Seoul, South KoreaIndustry Setting: bankingNumber of Employees: 4,829Gross Revenues: $250 million revenues Event Year Start: 1997Event Year End: 2000 Subjects: Acquisitions; Financial institutions; Foreign investment; Globalization; Government policy; International banking; International business; Korea; Mergers Academic Discipline: Business & government Supplementary Materials: Supplement (Library), (9-701-083), 4p, by Yasheng Huang, Kirsten J. O‘Neil-Massaro; Teaching Note, (5-702-043), 18p, by Yasheng Huang   Add   View  32 pp.  Case — European Monetary Union Author(s): Vietor, Richard H.K.; Ciminero, Sabina Publication Date: 05/25/1999 Revision Date: 12/10/2003 Product Type: Case (Field) Product Description: On January 1, 1999, 11 European countries unified their currencies—48 years after their first integrative efforts. This marks a huge development in the structure of Europe and the world’s economy. This case examines the integrative process, the Single Europe Act and its impact on market structure during the past 13 years, and monetary union. Provides data as of 1998 on European macroeconomics integration and data in the mid-1990s on integration of product markets, capital markets, and labor markets. HBS Number: 9-799-131 Geographic Setting: Europe Subjects: Business government relations; Competition; Currency; EC single market; Eurodollars; Europe; International business; Macroeconomics Academic Discipline: Business & government Supplementary Materials: Supplement (Field), (9-799-151), 4p, by Richard H.K. Vietor, Sabina Ciminero; Teaching Note, (5-799-155), 6p, by Richard H.K. Vietor   Add   View  20 pp.  12. International Bond Market   Add   View  26 pp.  Case — HUTCHISON WHAMPOA LIMITED: THE CAPITAL STRUCTURE DECISION Author(s): G. Andrew Karolyi; Larry Wynant; Geoff Crum; Peter Yuan Publication Date: 9/30/1999 Revision Date: 3/19/2009 Product Type: Case Teaching Note: 8A99N21 Ivey ID: 9A99N021 Geographic Setting: Hong Kong Industry Setting: Holdings and other Investment Companies Size: Large Year of Event: 1996 Level of Difficulty: 4 - Undergraduate/MBA Subjects: Financial Strategy; International Finance; Capital Budgeting Major Disciplines: Finance; International Product Description: Hutchison Whampoa was considering strategies for its long-term capital structure. The HK$35 billion Hong Kong-based conglomerate had ambitious growth plans in multiple business sectors in different geographies. Traditionally, like many of its domestic peers, Hutchison had relied entirely on short to medium-term bank loans. Its demand for long-term financing, attractive rates in other capital markets (especially the U.S.) and concern about a more diversified investor base had led Hutchison to explore other financing options. In particular, the company was debating the benefits of a Yankee Bond Offering. At the time, Hutchison had already approached Moody’s and Standard & Poor‘s for a bond rating.   Add   View  22 pp.  Case — European Bank for Reconstruction and Development: Marketing Strategy for the Deb Author(s): Rayport, Jeffrey F. Publication Date: 07/07/1993 Revision Date: 11/05/1993 Product Type: Case (Field) HBS Number: 9-594-005 Geographic Setting: London/Eastern Europe Industry Setting: financial services/investment banking Event Year Start: 1991 Event Year End: 1991 Subjects: Banking; Bonds; Eastern Europe; International banking; Investment banking; Marketing strategy; Pricing; Social enterprise Academic Discipline: Marketing Supplementary Materials: Teaching Note, (5-596-115), 12p, by Jeffrey F. Rayport Product Description: The European Bank for Reconstruction and Development, the first supranational financial institution of the post-Cold War era, is planning its debut in the international capital markets through a bond issuance of $500 million. The bank must determine its marketing strategy for the offering on two levels — positioning of the institution and of the bond offering itself. Integral to the marketing task is the selection of a lead manager, who will determine the marketing mix. The mix decisions involve determining product (currency, maturity, coupon), pricing (yield), promotion (road shows and media relations), and distribution (formation of the syndicate). In addition, the lead manager will need to select appropriate target markets (retail and institutional investors), along with overall positioning for the institution.   Add   View  11 pp.  Case — Walt Disney Co.’s Yen Financing Author(s): Kester, W. Carl; Allen, William B. Publication Date: 01/09/1987 Revision Date: 09/05/1991 Product Type: Case (Field) Product Description: Walt Disney is considering hedging future yen inflows from Disney Tokyo. It is evaluating techniques using FX Forwards, swaps, and Yen term borrowings. Goldman Sachs presents a rather unusual but potentially attractive solution: Disney could issue ECU Eurobonds and swap into a Yen liability. The case explains how this alternative would work and suggests to the students ways to evaluate the hedging choices. HBS Number: 9-287-058 Geographic Setting: United States Industry Setting: consumer/entertainment Company Size: large Gross Revenues: $1.7 billion sales Event Year Start: 1985 Event Year End: 1985 Subjects: Bonds; Capital markets; Currency; Hedging; International finance Academic Discipline: Finance Supplementary Materials: Teaching Note, (5-290-009), 12p, by W. Carl Kester   Add   View  22 pp.  13. International Equity Markets   Add   View  19 pp.  Case — Global Equity Markets: The Case of Royal Dutch and Shell Author(s): Froot, Kenneth A.; Perold, Andre F. Publication Date: 03/04/1996 Revision Date: 04/27/2006 Product Type: Case (Library) Product Description: Royal Dutch and Shell common stocks are securities with linked cash flow, so that the ratio of their stock prices should be fixed. In fact, the ratio is highly variable, moving with the markets where the securities are intensively traded. Royal Dutch trades more actively in the Netherlands and U.S. markets, whereas Shell trades more actively in the United States. The result is that the Royal Dutch/Shell relative price moves positively with the Netherlands and U.S. markets and negatively with the U.K. market. The ability to arbitrage these disparities and their causes are major case focal points. HBS Number: 9-296-077 Industry Setting: Financial services Subjects: Capital markets; International finance; Valuation Academic Discipline: Finance Supplementary Materials: Teaching Note, (5-201-093), 12p, by Kenneth A. Froot   Add   View  21 pp.  Case — Compania de Telefonos de Chile Kester, W. Carl; Ostale, Enrique; La Follette, Charles M. The newly privatized Chilean telephone company, Compania de Telefonos de Chile (CTC) must raise substantial new funds externally in order to finance its expansion program. This task is complicated by Chile’s small, illiquid capital markets and the skeptical view of Latin American borrowers held by investors outside of the region. CTC‘s chief financial officer must determine if listing American Depository Receipts (ADRs) on the New York Stock Exchange is a viable financing option for the company. HBS Number: 9-293-015 Type: Case (Field) Publication Date: 8/13/1992 Revision Date: 6/10/1993 Geographic Setting: Chile Industry Setting: telecommunications Company Size: mid-size Number of Employees: :7,000 Gross Revenues: $375 million revenues Event Year Start: 1990 Event Year End: 1990 Subjects: Capital markets; Equity financing; International finance; South America; Telecommunications Supplementary Materials: Teaching Note, (5-298-019), 9p, by W. Carl Kester   Add   View  26 pp.  Case — HUANENG POWER INTERNATIONAL INC.: RAISING CAPITAL IN GLOBAL MARKETS Karolyi GA; Foerster SR; White J Huaneng Power International (HPI), an independent power producer in the People’s Republic of China (PRC), is in the process of executing a global equity issue to raise funds for the construction of new power plants. The company is planning to listthe new shares through an American Depositary Receipt program on the New York Stock Exchange. The company has recently reduced the price of the issue due to poor market conditions and investor resistance to the price range stated in the preliminary prospectus. HPI‘s management must decide whether the new offer price and choice of listing exchange is reasonable in light of recent market events and the political, economic, social and technological environment in the PRC. Industry: Electric, Gas and Sanitary Services Issues: Finance, International Finance, Initial Public Offerings, Valuation Location: China Size: Large organization Year of event: 1994 Level: Undergraduate/MBA Revised: 1/11/99 Ivey #: 9A98N001   Add   View  18 pp.  14. Interest Rate and Currency Swaps   Add   View  11 pp.  Case — Note on Foreign Currency Swaps Author(s): Kester, W. Carl Publication Date: 11/27/1991 Revision Date: 04/25/2002 Product Type: Note Product Description: Provides descriptive background about the development of an international market for currency swaps and, by means of a detailed example, instructs readers in the determination of swap flows and all-in costs of financing using market swap rates. A rewritten version of an earlier note. HBS Number: 9-292-043 Subjects: Capital markets; Currency; Foreign exchange; Hedging; International banking; International finance Academic Discipline: Finance Supplementary Materials: Teaching Note, (5-293-006), 1p, by W. Carl Kester   Add   View  18 pp.  Case — Gaz de France Author(s): Kester, W. Carl; Allen, William B. Publication Date: 04/28/1988 Revision Date: 05/18/1992 Product Type: Case (Field) Product Description: The treasurer of Gaz de France is an aggressive, proactive manager of his company’s liability structure, running one of the largest swap books of any non-financial corporation in the world. Currency futures, interbank forwards, and currency options are also frequently used to control the company‘s multi-currency liability structure. This case prompts students to explore the reasons and ramifications of such aggressive liability management, with particular attention being paid to the administrative challenges created by such a large swap position. An important decision has to be made regarding the management of the swap book in the face of the depreciating dollar, the decline of the franc against the German mark, and a possible realignment of the European Currency Unit. This is a comprehensive case involving swaps, debt policy, and foreign exchange exposure that is best taught after students have been introduced to these topics. HBS Number: 9-288-030 Geographic Setting: France Industry Setting: natural gas Company Size: large Gross Revenues: $8.5 billion revenues Event Year Start: 1986 Event Year End: 1986 Subjects: Debt management; Foreign exchange; France; International finance; Natural gas Academic Discipline: Finance Supplementary Materials: Teaching Note, (5-290-023), 15p, by W. Carl Kester   Add   View  21 pp.  Case — J.C. Penney (B) Author(s): Mason, Scott P.; Allen, William B. Publication Date: 04/17/1986 Revision Date: 06/20/1986 Product Type: Case (Field) Product Description: Penney’s assistant treasurer was considering various capital markets issues to finance store modernizations. This case provides the financing terms available to Penney for domestic, current, and zero coupon debt. Eurodollar debt, and nondollar SFr and Yen issues hedged and swapped back to dollar liabilities. Also, Penney is considering using interest rate futures, options, and options on futures to hedge a forthcoming debt issue. HBS Number: 9-286-118 Geographic Setting: New York, NY Industry Setting: Retail industry Company Size: large Gross Revenues: $13 billion sales Event Year Start: 1985 Event Year End: 1985 Subjects: Bonds; Capital markets; International finance Academic Discipline: Finance Supplementary Materials: Teaching Note, (5-287-041), 13p, by Scott P. Mason, William B. Allen   Add   View  14 pp.  Case — R.J. Reynolds International Financing Author(s): Kester, W. Carl; Allen, William B. Publication Date: 01/06/1987 Revision Date: 11/19/1991 Product Type: Case (Field) Product Description: Reynolds must source a substantial portion of the financing of its Nabisco acquisition in offshore bond markets. Morgan Guaranty has proposed a yen/dollar dual currency Eurobond that could be hedged into dollars. This structure is compared to Eurodollar Bonds, Euroyen Bonds, and Euroyen Bonds swapped or hedged into dollars. HBS Number: 9-287-057 Geographic Setting: United States Industry Setting: capital markets Company Size: Fortune 500 Gross Revenues: $13 billion sales Event Year Start: 1985 Event Year End: 1985 Subjects: Bonds; Capital markets; Currency; Hedging; International finance Academic Discipline: Finance Supplementary Materials: Teaching Note, (5-290-010), 17p, by W. Carl Kester   Add   View  36 pp.  15. International Portfolio Investment   Add   View  29 pp.  Case — Merrill Lynch’s Acquisition of Mercury Asset Management Perold, Andre F.; Ahmed, Imran; Altschuler, Randy In the Spring of 1998, Merrill Lynch faced an array of challenges and opportunities related to its global asset management business. The firm had recently completed its $5.3 billion cash acquisition of U.K.-based Mercury Asset Manageme HBS Number: 9-299-005 Type: Case (Field) Publication Date: 11/18/1998 Revision Date: 7/16/1999 Geographic Setting: Global Industry Setting: money management Event Year Start: 1998 Event Year End: 1998 Subjects: Acquisitions; Asset management; Investment management; Mutual funds; Pension funds   Add   View  21 pp.  Case — Innocents Abroad: Currencies and International Stock Returns Author(s): Desai, Mihir A.; Luchs, Kathleen; Veblen, Mark F. Publication Date: 03/02/2004 Revision Date: 11/15/2004 Product Type: Case (Library) Product Description: What do international stocks contribute to the portfolio of a U.S. investor? How do currencies interact with stock price movements in determining the benefits of international diversification? Allows students to compare the risks and returns of foreign stock markets with each other and with the U.S. market and to examine the risks and returns of international diversification. Forces students to calculate returns, adjust for currencies, derive correlations, and map efficient frontiers based on raw data. Teaching Purpose: To demonstrate how international diversification affects the risk and return characteristics of a stock portfolio. Spreadsheets available, please contact customer service at 1-800-545-7685 or custserv@hbsp.harvard.edu. HBS Number: 9-204-141 Geographic Setting: GlobalIndustry Setting: financial servicesNumber of Employees: 8 Event Year Start: 2004Event Year End: 2004 Subjects: Currency; Foreign exchange; International finance; Investment management; Money; Stocks Academic Discipline: Finance    V. Financial Management of the Multinational Firm   Add   View  2 pp.  Introduction   Add   View  29 pp.  16. Foreign Direct Investment and Cross-Border Acquisitions   Add   View  28 pp.  Case — FDI in China Author(s): Huang, Yasheng Publication Date: 03/14/2001 Revision Date: 03/14/2002 Product Type: Case (Library) Product Description: China is one of the most popular investment destinations in the world. Throughout much of the 1990s, China accounted for 50% of foreign direct investment (FDI) going into developing countries and between 1994 and 1997, China was the second largest recipient of FDI in the world, after the United States. The recent agreements between China on the one hand and the United States and the European Union on the other hand over China’s accession into the World Trade Organization (WTO) may increase China‘s already impressive FDI inflows significantly. This case examines the drivers of FDI flows into China and the lessons for other developing countries. Teaching Purpose: To teach students to think about FDI as a competitive process. HBS Number: 9-701-061 Geographic Setting: China Event Year Start: 2000 Event Year End: 2000 Subjects: Business government relations; China; Foreign investment; Globalization; International trade; National competitiveness Academic Discipline: Business & government Supplementary Materials: Teaching Note, (5-702-048), 16p, by Yasheng Huang   Add   View  20 pp.  Case — Financing the Mozal Project Author(s): Esty, Benjamin C.; Qureshi, Fuaad A. Publication Date: 11/22/1999 Revision Date: 03/08/2002 Product Type: Case (Field) HBS Number: 9-200-005 Geographic Setting: Mozambique, Africa Industry Setting: aluminum/metals Number of Employees: 900 Gross Revenues: $500 million revenues Event Year Start: 1997 Event Year End: 1997 Subjects: Africa; Aluminum; Capital investments; Developing countries; Emerging markets; Metals; Political risk; Project finance Academic Discipline: Finance Supplementary Materials: Teaching Note, (5-200-025), 34p, by Benjamin C. Esty Product Description: Opens in June 1997 with a team from the International Finance Corp. (IFC) recommending that the board approve a $120 million investment in a $1.4 billion aluminum smelter in Mozambique known as the Mozal project. Four factors make the investment controversial: it would be the IFC’s largest investment in the world; total investment was almost the size of Mozambique‘s gross domestic project (GDP); Mozambique had only recently emerged from 20 years of civil war; and several key contractual issues were still undecided. Because commercial bankers have refused to finance the deal unless the IFC is involved, the sponsors have requested IFC participation. Whether the IFC's board will agree that it is the right time and the right place to make such a large investment remains to be seen. Teaching Purpose: Designed for people with an interest in capital investments in emerging markets. Presents an extreme example of political risk in a developing country and shows how project sponsors attempt to mitigate the risks through project selection, structuring, and insurance. Next, it highlights the contributions of multilateral development institutions in general, and the IFC in particular, in financing infrastructure projects. In particular, it analyzes IFC's involvem   Add   View  22 pp.  Case — Petrolera Zuata, Petrozuata C.A. Author(s): Esty, Benjamin C.; Millett, Mathew Mateo Publication Date: 09/23/1998 Revision Date: 03/07/2002 Product Type: Case (Field) Product Description: Petrozuata is a proposed $2.5 billion oil-field development project in Venezuela. The case is set in 1997 as the project sponsors, Conoco, Inc. and PDVSA (Venezuela’s national oil company), are planning to meet with various development agencies and rating agencies regarding the proposed financial structure. The sponsors hope to raise a portion of the $1.5 billion debt in the capital markets, which will require an investment-grade rating. The key questions are whether the project will achieve an investment-grade rating and, if not, how to finance the project. Teaching Purpose: Describes what turned out to be an extremely well-crafted financial transaction, one that was named “Deal of the Year” in 1997 by virtually every journal covering project finance. Addresses questions like why use project finance, how to allocate project risk, and how to value project investments. Also addresses the ratings process and, in particular, the possibility that a deal can pierce the sovereign ceiling (to receive a higher rating than the country rating in which it is located). Finally, shows how the capital markets are becoming an important source of funds for development projects. HBS Number: 9-299-012 Geographic Setting: Venezuela Industry Setting: petroleum Number of Employees: 150,000 Gross Revenues: $77 billion revenues Event Year Start: 1996 Event Year End: 1997 Subjects: Capital markets; Developing countries; International finance; Natural resources; Petroleum; Project finance; Risk assessment; South America; Valuation Academic Discipline: Finance Supplementary Materials: Teaching Note, (5-299-013), 38p, by Benjamin C. Esty, Mathew Mateo Millett   Add   View  13 pp.  Case — Background and Agreements on Foreign Direct Investment Wells, Louis T., Jr.; Sprague, Courtenay A brief history of foreign direct investment (FDI) is put forth, with emphasis on conflicts, accompanied by developments in the legal framework governing FDI, as well as international agreements and nonbinding principles formulated to resolve disputes brought in by FDI. Propositions provide a context from which core issues may be discussed by the students. Teaching Purpose: To explore the reasons for international conflict over foreign direct investment and the opportunities for international agreements to manage these conflicts. HBS Number: 9-796-148 Type: Case (Library) Publication Date: 4/1/1996 Revision Date: 11/20/1997 Geographic Setting: Unspecified Subjects: Foreign investment; International business; International finance; Negotiations   Add   View  13 pp.  Case — Note on Foreign Direct Investment Author(s): Spar, Debora; Kou, Julia Publication Date: 01/04/1995 Product Type: Note Product Description: Between 1985 and 1990, the global economy witnessed an unprecedented surge in flows of foreign direct investment (FDI). This sudden increase called back into prominence the range of questions that have long surrounded FDI. What causes firms to expand or contract their purchase of foreign assets? How do patterns of investment affect trade and development? What is the impact of FDI on host countries? This note explores these questions in some detail and includes data summarizing recent trends in FDI flows. Teaching Purpose: To present background information on the causes and effects of FDI. HBS Number: 9-795-031 Subjects: Developing countries; Foreign investment; International trade Academic Discipline: Business & government   Add   View  12 pp.  Case — Note on Political Risk Analysis Author(s): Spar, Debora; Deringer, Heidi; Wang, Jenni Publication Date: 09/17/1997 Product Type: Note Product Description: Describes the emergence and subsequent decline of the political risk analysis industry. Discusses what political risk means for multinational firms and various ways in which firms have tried to analyze and grapple with these risks. Teaching Purpose: Serves as background for discussions on foreign direct investment, risk management, and the politics of international business. HBS Number: 9-798-022 Geographic Setting: Industry Setting: Subjects: Business conditions; Business government relations; Forecasting; Foreign investment; International business; Political risk; Politics Academic Discipline: Business & government   Add   View  21 pp.  Case — Refinancing of Shanghai General Motors (A) Author(s): Desai, Mihir A.; Veblen, Mark F. Publication Date: 07/27/2003 Revision Date: 09/22/2003 Product Type: Case (Field) HBS Number: 9-204-031 Geographic Setting: China Industry Setting: automotive Number of Employees: 390,000 Gross Revenues: $185 billion revenues Event Year Start: 2000 Event Year End: 2000 Subjects: Automobiles; Capital structure; China; Financial strategy; Financing; International business; International finance; Joint ventures; Multinational corporations; Partnerships; Subsidiaries Academic Discipline: Finance Supplementary Materials: Supplement, (9-204-025), 2p, by Mihir A. Desai, Mark F. Veblen Product Description: The CFO of General Motors’ joint venture in Shanghai, Shanghai General Motors (SGM), wants to refinance almost $900 million of project finance it raised to begin operations. The highest priority is improving the terms of the financing with regard to costs and specific covenants. Several factors complicate the CFO‘s objective, including the presence of capital controls, the impending entry of China into the World Trade Organization, the joint venture partner's captive finance subsidiary, and the conflicting goals of the joint venture partners. The case illustrates how subsidiary financial decisions must trade off entity-level and parent-level concerns. Also illustrates how multinational financial decision making — including transfer pricing, repatriation, and funding decisions — must be designed to accommodate governance concerns, financial objectives, and the potentially divergent interests of joint venture partners. Teaching Purpose: Allows students to understand the core elements of financing a multinational subsidiary overseas, from its initial formation, to subsequent refinancing discussions. Capturing this “life-cycle” of subsidiary finance is accomplished in the framewo   Add   View  26 pp.  17. International Capital Structure and the Cost of Capital   Add   View  14 pp.  Case — LOEWEN GROUP, INC. Author(s): Erarac, Ali; Erarac, Ali Darden ID: UVA-F-1448 Published: 7/21/2004 Copyright Year: 2004 Subject Area: Finance Keywords: Discounted cash flow, efficient markets Teaching Note: UVA-F-1448TN Abstract: This case asks students to select and implement a methodology for estimating the damages in a complex lawsuit filed under Chapter 11 of the North American Free Trade Agreement. Students are given market-price information to facilitate an event study to measure damages for the firm. The case works well as an introduction to and example of efficient capital markets.   Add   View  16 pp.  Case — New World Development Co. Ltd.: Diversify or Focus? Author(s): Chan, Su Han; Wang, Ko; Ho, Mary Publication Date: 11/09/2001 Product Type: Case (Field) Publisher: University of Hong Kong Product Description: New World Development Co. Ltd. (NWD) was a leading conglomerate based in Hong Kong. After more than 20 years of operations, the group had expanded its core businesses to include property, infrastructure, services, and telecommunications. From late 1997 to June 2001, the stock price performance of the company had been abysmal. Its efforts at asset disposals to reduce gearing, while making additional investments in new businesses, confused investors. Security analysts also blamed the company for not keeping its promise to focus on its core business of property. Teaching Purpose: Requires students to conduct an objective assessment of NWD on both a divisional and a consolidated basis. It provides sufficient information for them to compute the divisional cost of capital using the capital asset pricing model (CAPM) and to conduct a simple Economic Value Added (EVA) analysis. HBS Number: HKU166 Geographic Setting: Hong Kong Event Year Start: 1997Event Year End: 2001 Subjects: Asia; Capital costs; Conglomerates; Diversified companies; EVA; Financial analysis Academic Discipline: Finance Supplementary Materials: Teaching Note, (HKU167), 11p, by Su Han Chan, Ko Wang, Mary Ho   Add   View  12 pp.  Case — Novo Industri A/S—1981 Kester, W. Carl This small but rapidly growing Danish biochemical company must choose among several financing opportunities that include a convertible Eurobond, a rights offering in Denmark and an issue of new common shares in the United States. The case involves a broad range of issues concerning the ability of a multinational company to lower its cost of capital by tapping different capital markets worldwide. HBS Number: 9-286-084 Type: Case (Library) Publication Date: 2/18/1986 Revision Date: 11/23/1992 Geographic Setting: Denmark, United States Industry Setting: biochemical Company Size: mid-size Gross Revenues: $300 million sales Event Year Start: 1981 Event Year End: 1981 Subjects: Capital costs; Capital markets; Financing; International finance Supplementary Materials: Teaching Note, (5-290-037), 10p, by W. Carl Kester   Add   View  23 pp.  Case — Globalizing the Cost of Capital and Capital Budgeting at AES Author(s): Desai, Mihir A.; Schillinger, Doug Publication Date: 12/12/2003 Revision Date: 10/23/2006 Product Type: Case (Field) HBS Number: 9-204-109 Industry Setting: Energy Gross Revenues: $4,317 million revenues Event Year Start: 2003 Event Year End: 2003 Subjects: Capital budgeting; Capital costs; Electric power; Emerging markets; Financial analysis; Foreign subsidiaries; Globalization; International finance; International operations; Investments; Risk management Academic Discipline: Finance Supplementary Materials: Supplement (Spreadsheet), (9-204-707), 0p, by Mihir A. Desai, Doug Schillinger; Teaching Note, (5-206-080), 22p, by Mihir A. Desai, Kathleen Luchs Product Description: With electricity generating businesses around the world, AES Corp. is seeking a methodology for calculating the cost of capital for its various businesses and potential projects. In the past, AES used the same cost of capital for all of its capital budgeting, but the company’s international expansion has raised questions about this approach and whether a single cost of capital adequately accounts for the different risks AES faces in its diverse businesses and diverse environments. The company recently suffered heavy losses from currency devaluations in South America and regulatory changes in other countries. The director of the corporate planning group is developing a methodology for taking account of different country and project risks, and the case allows students to use this methodology to calculate the cost of capital for 15 different projects around the world. Students must consider how a global firm can account for differing risks in evaluating its international operations and in investing abroad. To obtain executable spreadsheets (courseware), please contact our customer service department at custserv@hbsp.harvard.edu.   Add   View  18 pp.  18. International Capital Budgeting   Add   View  7 pp.  Case — Note on Adjusted Present Value Author(s): Luehrman, Timothy A. Publication Date: 01/08/1993 Revision Date: 10/28/1994 Product Type: Note HBS Number: 9-293-092 Subjects: Capital budgeting; Capital costs; Present value; Valuation Academic Discipline: Finance Supplementary Materials: Teaching Note, (5-295-113), 6p, by Timothy A. Luehrman Product Description: Describes the “adjusted present value” (APV) approach to discounted cash flow analysis. Much of the note is devoted to a critical comparison of APV and an approach based on the wrighted average cost of capital (WACC). Argues that APV is usually, if not always, simpler, more accurate, and/or more informative than using the WACC. Designed to be distributed in conjunction with a case on valuation and captial budgeting. Assumes students are familiar with the WACC but not with APV.   Add   View  24 pp.  Case — Note on Cross-Border Valuation Author(s): Kester, W. Carl; Morley, Julia Publication Date: 02/06/1992 Revision Date: 07/06/1992 Product Type: Note Product Description: Provides a fundamental technical review of valuation techniques used to assess cross-border investments. Discusses the discounting of free cash flows with a weighted average cost of capital, the use of adjusted present value, and the importance of considering real options. Special concerns such as foreign-exchange risk, country risks, and so forth are also discussed. HBS Number: 9-292-084 Subjects: Capital costs; Foreign exchange; Foreign exchange rates; International finance; Present value; Real options; Valuation Academic Discipline: Finance Supplementary Materials: Teaching Note, (5-293-005), 2p, by W. Carl Kester   Add   View  11 pp.  Case — Ocean Drilling, Inc. Author(s): Piper, Thomas R. Publication Date: 12/22/1981 Revision Date: 07/30/1991 Product Type: Case (Gen Exp) Product Description: Management must choose between two mutually exclusive bids to build two drilling rigs. Both bids involve attractive export credit financing denominated in foreign currencies. HBS Number: 9-282-050 Geographic Setting: United States Industry Setting: Petroleum industry Gross Revenues: $300 million sales Event Year Start: 1981 Event Year End: 1981 Subjects: Bids; Currency; Foreign exchange; International finance Academic Discipline: Finance Supplementary Materials: Teaching Note, (5-293-007), 13p, by W. Carl Kester   Add   View  6 pp.  Case — MSDI-Alcala de Henares, Spain Author(s): Luehrman, Timothy A.; Student, James J. Publication Date: 01/06/1989 Revision Date: 09/07/1995 Product Type: Case (Field) Product Description: Merck & Co., Inc. is evaluating a proposed cost-saving investment by its Spanish subsidiary. The case introduces techniques of discounted cash flow valuation analysis in a multicurrency setting. Can be used to teach basic international parity conditions as they relate to the value of operating cash flows. HBS Number: 9-289-029 Geographic Setting: Spain Industry Setting: pharmaceuticals Company Size: Fortune 500 Event Year Start: 1987 Event Year End: 1987 Subjects: Europe; Foreign exchange rates; International finance; Pharmaceuticals; Project evaluation; Securities analysis; Valuation Academic Discipline: Finance Supplementary Materials: Teaching Note, (5-290-046), 21p, by Timothy A. Luehrman   Add   View  11 pp.  19. Multinational Cash Management   Add   View  11 pp.  20. International Trade Finance   Add   View  2 pp.  Case — U.S. Export-Import Bank and the Three Gorges Dam (B) Author(s): Lodge, George C.; Reavis, Cate Publication Date: 05/09/2000 Revision Date: 07/20/2000 Product Type: Supplement (Library) Product Description: Supplements the (A) case. Must be used with: (9-900-017) The U.S. Export-Import Bank and the Three Gorges Dam (A). HBS Number: 9-900-018 Subjects: Banking; Business government relations; China; Economic infrastructure; Government agencies; Government policy; Politics; Project finance Academic Discipline: Business & government Supplementary Materials: Teaching Note, (5-901-053), 4p, by George C. Lodge   Add   View  9 pp.  Case — Barter Industry Note Lange, Julian; Leleux, Benoit; Perkins, Sam Provides an overview of the corporate barter industry, including industry trends, and traces the technical steps in barter transactions. The motivation for various barter transactions is explored, including purchase of underperforming assets, remarketing inventory, trade credit retirement, and purchasing media and other services (including bill-payer and cross-purchasing arrangements). The accounting treatment of barter transactions is illustrated. May be used with: (BAB024) Active International. HBS Number: BAB025 Type: Case (Field) Publication Date: 6/14/2000 Subjects: Advertising media; Barter; Cash flow; Entrepreneurial finance; Entrepreneurial management; Entrepreneurs; Financing; Information technology Publisher: Babson College   Add   View  23 pp.  21. International Tax Environment and Transfer Pricing   Add   View  16 pp.  Case — Corporate Inversions: Stanley Works and the Lure of Tax Havens Author(s): Desai, Mihir; Veblen, Mark; Hines, James R Publication Date: 09/18/2002 Revision Date: 10/17/2002 Product Type: Case (Gen Exp) HBS Number: 9-203-008 Geographic Setting: United States Industry Setting: industrial Number of Employees: 15,000 Gross Revenues: $2,264 million revenues Event Year Start: 2002 Event Year End: 2002 Subjects: Accounting; Corporate control; Financial management; Financial statements; Financial strategy; International finance; Mergers & acquisitions; Taxation; Valuation Academic Discipline: Finance Product Description: In response to Stanley Work’s announcement that it is moving to Bermuda — and the associated jump in market value — a major competitor sets out to determine how the market is valuing the consequences of moving to a tax haven and whether his company should invert to a tax haven. In particular, the competitor‘s CFO needs to attribute Stanley's stock price movements across several dimensions of potential tax savings (tax savings on foreign operations and on interest payments) to see whether maybe there isn't something else at play (earnings stripping.) In the process, the mechanics and incentives created by the international tax regime are illustrated. Teaching Purpose: Familiarizes students with the ways in which the U.S. tax code alters managers' incentives by examining the U.S. tax treatment of foreign income. Further demonstrates that the fundamental difference between the manner in which the U.S. taxes its companies — worldwide income taxation — differs from how many other nations tax their companies — territorial taxation — and provides a context in which to understand the foreign tax credit system. Forces students to explain the stock market reaction to an inversion announcement through detailed examination of financial statements. Aggregating the separate compon    Back Matter   Add   View  7 pp.  Glossary   Add   View  19 pp.  Index  Privacy Notice    The McGraw-Hill Companies    McGraw-Hill Higher Education    McGraw-Hill Custom Publishing   2008 copyright reserved