《跨国经营学》大作业
（15-16-1）
案例 Evolution of Strategy at Procter & Gamble
沈德鸿简介选自 Charles W.L.Hill《International Business》防拐骗安全教育(9ed.)
汽车仪表指示灯大全学生 梅先婷 学号 ******** 专业班级 营销131
小组成员 刘金星 梅先婷 彭娇娇
日期 第十七周
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Ca synopsis
Volkswagen is Europe’s largest car maker. Many multinational companies like Volkswagen do hedging of their international currencies to minimize their risk of adver exchange rates. Generally, Volkswagen hedges about 70% of their international currency. But, in 2003, Volkswagen decided to hedge only 30% of their currency against the US Dollar. Volkswagen manufactures its cars in Europe and exports to US. One of their best-lling models Jetta costs about €14000 to make in Germany and lls for $15000 in US. At the time of manufacturing the Euro to Dollar value was 1 to 1. So with the then current exchange rate, Jetta made Volkswagen about $1000 or €1000 profit per car.
During the year 2003, there was a sharp ri in Euro against Dollar. Earlier which was €1=$1, now in 2003 being traded as €1=$1.25. So, each dollar earned will now only profit €0.80 which squeezed Volkswagen. At the exchange rate of €1=$1.25, Volkswagen only gets €12000 per Jetta sold, that to say Volkswagen lost €2000 per car sold in the US. Unfortunately, Volkswagen only had 30% of their currency hedged to €1=$1 price. This dr
工程维修合同范本
astic increa in Euro value caud a major drop in operating profit of Volkswagen and its fourth quarter profits drop 95 percent to mere €50 million.
Traditionally Volkswagen had hedged 70% of their currencies. In that ca, they wouldn’t have lost such a huge operating profit due to the exchange rates hike. Strategy to buying forward guarantees that at some future point, Volkswagen would be able to exchange its US earned dollars in to Euros at the Pre-Determined rates of €1=$1, regardless of what the current exchange price is. In ca of depreciation in the price of Euro, Volkswagen would have made more profits by hedging less of its currency which ems the ca being anticipated.
单丛茶Hedging is also costly as the foreign exchange dealers will charge a high commission for forward currency lling, but after such a huge loss in their profit, Volkswagen decided to get back to its historic hedging of 70% of its foreign currency exposure.
knowledge point：
The foreign exchange market is a market for converting the currency of one country into that of another country.An exchange rate is simply the rate at which one currency is converted into another.
The foreign exchange market rves two main functions.The first is to convert the currency of one country into the currency of another.The cond is to provide some insurance against foreign exchange risk,or the adver conquences of unpredictable changes in exchange rates.
The spot exchange rate is the rate at which a foreign exchange dealer converts one currency into another currency on a particular day.
The value of a currency is determined by the interaction between the demand and supply of that currency relatives to the demand and supply of other currencies.
The foreign exchange market is not located in any one place.It is a global network of banks,brokers,and foreign exchange dealers connected by electronic communications system.
ca analysis
This feature examines the effects of Volkswagen’s decision to not properly hedge its foreign exchange exposure in 2003. Volkswagen saw a 95 percent drop in its fourth quarter profits after an unexpected surge in the value of the euro left the company with loss of $1.5 billion. Traditionally, Volkswagen, which produced its vehicles in Germany and exported them to the United States, hedged some 70 percent of its foreign exchange exposure. However, in 2003, the company made the unfortunate decision to hedge just 30 percent of its exposure. Discussion of the feature can begin with the following questions.
Traditionally, Volkswagen hedged 70 percent of its foreign exchange exposure, but in 2003, the company was caught off guard by a sudden ri in the value of the euro against the dollar. Experts had failed to predict the ri in the euro, and Volkswagen, like other companies that failed to hedge their foreign exchange exposure, was hard hit. Volkswagen lost some €1.2 billion as a result of its decision to hedge just 30 percent of its
foreign exchange exposure. Most people will recognize that the experiences of Volkswagen underscores the volatility of the foreign exchange market and the need for companies to take steps to protect themlves even if there are no anticipated changes in currency values
Volkswagen was especially vulnerable to the ri of the euro against the U.S. dollar in 2003 becau the company manufactured its cars in Germany and then exported them to the United States. When Volkswagen failed to adequately hedge its exposure to foreign exchange rate changes, and the euro-dollar relationship shifted, the company lost out. Most people will probably recognize that had Volkswagen produced some of its cars in the United States, the effects of the currency shift would have been much smaller.
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