OSG Corporation: Risk Hedging Against Transaction Exposures Harvard Case Solution & Analysis

In Tokyo, Monday, April 24, 2006, the U.S. dollar fell to a three-month low against the yen, the transfer of its weakness from Friday's trading in New York, where it fell by more than two yen (1.75%). Mr. Teruhide Osawa, President OSG Corporation in Japan (OSG), a multinational manufacturer of cutting tools, followed by the foreign exchange market on his computer screen, that on Monday and was very surprised to see that the yen had appreciated 1.75% in one day . He thought that such large changes would cause problems for business. Faced with the large fluctuations in the yen, the dollar, he called the manager of the financial support for the center, asking him to examine and report back on how OSG foreign currency transaction exposure was measured, and how it can be managed. He asked the manager, in particular, as the company is currently hedge its foreign currency positions. Financial Group, spoke at the board meeting May 29, 2006. They explained that in order to eliminate the short-term transaction exposure, different methods are available to hedge various investments in the company. After the presentation of the Finance Group, the board members were in hot debate. "Hide
by Mitsuru Misawa Source: University of Hong Kong, 22 pages. Publication Date: December 18, 2006. Prod. #: HKU618-PDF-ENG

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