General Motors Foreign Exchange Risk Management Policy Finance Essay - Free Essay Example

Sample details Pages: 4 Words: 1069 Downloads: 7 Date added: 2017/06/26 Category Finance Essay Type Argumentative essay Did you like this example? General Motors was the worlds largest automaker and since 1931, the worlds sales leader. In 2000, it had a net income of $4.4 billion on revenues of $184.6 billion. North America represented the majority of sales to end customers but international operations were also growing and international sales had reached 18% of overall sales. The key objectives of GMs foreign exchange risk management policy was to reduce cash flow and earnings volatility, minimize management time and costs dedicated to FX management and align FX management in a manner consistent with how GM operated its automotive business. Don’t waste time! Our writers will create an original "General Motors Foreign Exchange Risk Management Policy Finance Essay" essay for you Create order GM hedged only cash flows (transaction exposures) and ignored balance sheet exposures (translation exposures). A passive hedging policy of hedging 50% of all significant foreign exchange exposures arising from receivables and payables was adopted. Forward contracts were used to hedge exposures arising within six months and options used to hedge exposures arising within seven to twelve months. GMs overall yen exposure included a commercial exposure based on forecasted receivables and payables of $900 million, an investment exposure resulting from equity stakes in Japanese companies and financing exposure through a yen-denominated loan. GMS COMPETITIVE EXPOSURE GMs competitive exposure to the yen arose because of competing against Japanese automakers who had large parts of their cost structure denominated in yen.Any fluctuation in the dollar/yen exchange rate affected the operating profits of Japanese automakers significantly, since they derived 43% of their revenue from the US markets (as of 2000). The yen appreciation from 117 to 107 during the first half of 2000 had reduced their combined global operating profit by nearly $4 billion. In the second half, the yen had begun appreciating. GM needed to quantify this competitive exposure and effectively hedge it. Depreciation of the yen would lead to reduced costs for Japanese automakers (since 20% to 40% content was sourced from Japan). 15% to 45% of this cost saving would be passed on to the customer. Customer sales elasticity as measured by GM indicated that a 5% price decrease would increase unit sales by around 10%. This market share gain by Japanese automakers would be shared equally and entirely by the Big Three in Detroit. QUANTIFYING GMS COMPETITIVE EXPOSURE Assumptions: ÂÂ ·Japanese car makers source 40% content from Japan (worst case scenario). ÂÂ ·45% of cost savings is passed on by Japanese carmakers to customers (worst case scenario). ÂÂ ·Yen devaluates by 20% compared to the dollar(worst case scenario). ÂÂ ·Total cost per car is $20000 (assumed). The margin obtained by GM is approximately $5900 ($1969 * 3) on the cost. Due to competition, Japanese carmakers would also need to price their vehicles similarly. Hence the same price is assumed for Japanese carmakers as well. ÂÂ ·Loss is valued as a perpetuity at 20% discount rate. Japanese carmakers General Motors Cost of Car $20,000 Price of car $25,900 Component cost (of Japanese component) at old exchange rate of $1=100 (40% components sourced from Japan) 800,000 = $8000 Component cost at new exchange rate of $1=120 800,000 = $6,666.67 Change in profit margin $1,333.33 Addl. Margin passed on to customers ( = 45% of change in profit margin) $600.00 New price of car $25,300 Price decrease 2.32% Increased sales (elasticity = 2) 4.63% Sales in 2000 4100000 Increase in sales in 2001 (Gain by Japanese carmakers shared by Big Three) 189962 -63321 Income loss for 2001 -$249,358,098 Income loss for perpetuity (Discounting at 20%) -$1,246,790,490 Thus the loss due to competitive exposure to GM is around $1.24 billion, which GM cannot afford to ignore. The above calculations have not taken into account any growth of the market or other variables. Also assuming that GM would not respond to a 20% change in exchange rates also may not be realistic. SENSITIVITY ANALYSIS A sensitivity analysis has been carried out, by varying the Yen/Dollar exchange rate from $1 = 120 yen to $1 = 80 yen. Also the content sourced from Japan has been varied from 20% to 40%. Varying these parameters, we get the values for income loss/gain for 2001. These values are discounted at 20% to find out the loss/gain to perpetuity. In this analysis, the margin passed on by Japanese carmakers has been fixed at 45%. Income loss/gain to perpetuity for GM with changes in exchange rate and Japanese content in Japanese carmakers automobiles: Exchange Rate: $1= 120 100 90 80 Japanese content 20% -$623,405,090 0 $415,596,830 $935,097,790 30% -$935,097,790 0 $623,405,090 $1,402,636,840 40% -$1,246,790,490 0 $831,193,660 $1,870,175,890 Another sensitivity analysis has been carried out, wherein the Japanese content in the automobiles is varied from 20% to 40% and the margin passed on by Japanese carmakers to customers has been varied from 15% to 45%. Here the exchange rate has been kept constant at $1 = 120 Income loss/gain to perpetuity for GM with varying Japanese content and margin passed on by Japanese automakers to customers: Japanese content 20% 30% 40% Margin passed on by Japanese carmakers to customers 15% -$207,808,260 -$311,712,390 -$415,596,830 30% -$415,596,830 -$623,405,090 -$831,193,660 45% -$623,405,090 -$935,097,790 -$1,246,790,490 In this case, value erosion ranges from -$208 million to -$1.25 billion REGRESSION ANALYSIS To calculate the effect of fluctuating yen-dollar exchange rate on the value of GM, a regression analysis can also be carried out. The coefficient of the exchange rate will indicate how much the value of GM changes. For example, if the coefficient is negative, it indicates that GMs value will decline as the yen depreciates relative to the dollar. However due to insufficient data in the case, this exercise has not been carried out. HEDGING POLICIES FOR COMPETITIVE EXPOSURE To hedge the competitive exposure to Japanese yen, GM can try the following strategies: ÂÂ ·Shift some of its production to Japan ÂÂ ·Source some parts from Japan However, these are long term strategies and need to be evaluated carefully taking into account market considerations. These decisions cannot be taken just for hedging purposes. GM currently follows a passive hedging policy which does not include guidelines on managing competitive exposure. All deviations from its current policy had to be approved by senior executives. An easier approach to manage the competitive exposure to the Japanese yen would be for GM to increase its yen borrowings (currently around $500 million worth of yen bonds are outstanding). This would serve as a natural hedge to any depreciation in the yen and would also not require the use of complex derivatives.

The Agricultural Facets Of Appalachia Essay - 1676 Words

Appalachian Agriculture The agricultural facets of Appalachia have been influenced over time due to the introduction of various types of foreign farming practices, government enforced regulations, foreign animals and plants, and westward expansion. â€Å"Rapidly evolving technologies and fluctuating costs influence the nuances of sustainability, but the essence of the concept is protection of both the land and the people who occupy it† (400). Beginning simply with subsistence farming and hunting and evolving into modern large-scale industrial agriculture Appalachian agriculture has negatively influenced the natural landscape of the mountains and its forest which resulted in a poor economy that was only advanced after more productive farming methods were invented and practiced. Native American agriculture was largely subsistence farming and hunter-gatherer ontogeny, based on the idea the hunters and the animals shared a mutual understanding and respect and not taking more than absolutely necessary. â€Å"By the Mississippian period (A.D. 900-1550), the largest group of indigenous people within southern Appalachia, the Cherokee, had become proficient in growing crops† (428). It wasn’t until the Spanish settler’s introduction of foreign flora and fauna in the region that the subsistence farming and hunting began to shift to marketable and large scale agriculture in order incorporate new foods into their diets such as peaches, watermelons, and sweet potatoes, as well as domesticatedShow MoreRelatedThe Progressive Montessori School System1748 Words   |  7 Pagesonce produced thirty of the populous little brown bats now produced one on a good night. I applied for the master’s program at Portland State University with two objectives, to experience life in an urban environment outside of Appalachia, and to advance my geographic scholarship and research . As a master’s student at Portland State University, I have had the opportunity for inter- and intra-disciplinary exploration, professional development, and scholarly growth. My thesis, Who’s

Finding Fish A Memoir By Antwone Fisher - 1495 Words

Introduction This is a paper about the book Finding Fish: A Memoir, which was written by Antwone Fisher. By necessity given the nature of the book, the main character will be examined at length. Through careful examination of the main character a deeper understanding of the book can be reached. After the examination, a number of theoretical perspectives will be applied to the main character, as well as an explanation of how these perspectives can be used to evaluate Antwone in order to understand him better. The perspectives that will be used will be the strengths, systems, conflict, humanistic, and psychodynamic perspectives. Following the connection of the perspectives to Antwone, an explanation of why social workers use theories and†¦show more content†¦Over the course of his eleven years in the navy Antwone gained a sense of self-esteem, learned how to be more vocal, addressed the anger that his early life had built up inside him, and ultimately fell in love for the firs t time. He then spent a few years as a security guard before writing a screenplay and publishing his book. Application of Perspectives In this section, some theoretical perspectives that are often used in social work are going to be applied to Antwone. The perspectives that will be applied will be the strengths, systems, conflict, humanistic, and psychodynamic perspectives. After their application, the perspectives will then be used to assess and evaluate Antwone. It is through this application, assessment, and evaluation that a deeper understanding of the main character as well as the perspectives can be reached. Strengths Perspective Overview â€Å"The strengths perspective embraces the principle that all clients possess them. Strengths can be the client’s willingness to accept help, the client’s positive attitude, their ability to overcome hardships in the past†¦Ã¢â‚¬  (Arnold, 2008, p. 1) In the strengths perspective, the strengths of a person to resist the stressor and problem areas in their lives are what the focus is on. (Hutchinson, 2016, p. 111) What this means is that it is assumed that regardless of who the person is or what they have done, they have strengths that can help themShow MoreRelatedThe Needs of Our Societys Neglected Kids Discussed in Fishers Finding Fish: A Memoir2450 Words   |  10 PagesIn the book titled Finding fish: a memoir, the author addresses the need of our society’s neglected children to find love, safety and protection. Many children like Antwone are subjected to different types of abuse such as: physical, emotional and sexual. Foster care was an option for Antwone. Foster care is the placement for children outside the custody of their parents or legal guardians after court finding that the children have been abused or neglected. The court may also find the child to beRead MoreFinding Fish2920 Words   |  12 PagesFinding Fish Assignment 1 Barbara Calhoun SWK 358 The book, finding fish, is a poignant autobiography of the life of Antwone Quenton Fisher, an African American boy who suffered a tumultuous childhood in a foster care setting. He was born on 8-3-1959 in a Cleveland prison to Eva Mae Fisher. She was incarcerated for the shooting death of his father, her boyfriend at the time, Eddie Elkins. Initially, he spent his first few weeks of his life in a Cleveland orphanage. Then he was fosteredRead MoreConstructive Action Essay5974 Words   |  24 Pagesnecessary and apply it to my everyday life, especially at work. Exploration Phase Setting Analysis I currently work for and adoption agency called â€Å"You Gotta Belive†. We are a homeless prevention program that seeks to prevent homelessness by finding permanent moral and legal adoptive homes for teens and preteen children in foster care. We are considered a nonprofit organization. When we discuss the ideals evaluated within this course we have been learning the importance of effective marketing

Project Feasibility Study and Timeline Residential Duplex Development

Question: Discuss about the Project Feasibility Study and Timeline Case Study of Residential Duplex Development Project. Answer: Introduction This project is based on real estate development project for construction of Residential Duplex with a cash reserve of $800,000.00. The objective of the project is to develop a small residential development in a regional centre that has to be completed within a timeframe of nine months. The location for the project that has been chosen is Edwardstown in Adelaide of South Australia. The land that has been determined for construction of the duplex building has a size of 3000 sq. m. and minimum land allotment size of 1000 sq. m. The evaluation on project feasibility has been presented in the Appendix along with the project timeline. The sections of this report presents the constraints and goals of this project along with discussion on macro and micro environment business drivers for determining feasibility of the project. Constraints and goals The constraints of this project are almost similar to that of any other construction project as illustrated below: Economic constraints: This constraint mainly occurs due to limited budget and due to this condition, the construction system been adopted may not be suitable for achieving the goals and quality of the project. Legal constraints: In construction projects, there may occur various legal constraints mainly related to work law, regulations in safety and plan for supervising the project. Technical constraints: There may occur various technical constraints that may arise from restrictive site area and congested surroundings. The goal of this project is to develop a Residential Duplex with two attached residences in the city of Adelaide. This project will help to complete the construction of a small residential duplex in a regional centre. Macro-environment business drivers The macro-environment business drivers that have been taken into consideration for determining feasibility of the project are illustrated as below: Economic: The economic condition is an essential factor for the construction project as it have to be completed within the available cash reserve of $800,000.00. The price for the land that have to be purchased is $350,000 and estimated value that will be returned from the duplex project is $750,000. Thus, the economic factors associated with the project have to be determined for success of the project. Competitive: The project have to be completed by maintaining a competitive advantage by keeping the costs at a minimum rate so that other builders do not emerge in the market. The project must be completed within the estimated budget. Resourcing: The resources required for the project have to be analyzed critically so that the project is successful and resources are not over allocated for a particular activity. Demographic factors: The residential duplex will be situated in the suburbs of Adelaide thus providing an elegant feel to the residents. The residents will find it very pleasant to stay in the duplex building as it will be developed far from the crowded populace and mostly focused on retired personnel who wants to lead a peaceful life after their retirement age. Micro-environment business drivers The micro-environment business drivers that have considered in context to this project are illustrated as below: Technical /internal expertise: The skills and knowledge of the workers for completion of the project have to be evaluated prior to allocation of the resources. The resources to be allocated for the project must have knowledge on latest construction tools and techniques. Time pressures: The project have to be accomplished within nine months hence there is a need to stick to the developed plan. There is a need to complete the project with quality within the estimated timeline. The builder that has been determined for completion of the project will have to handover the Residential duplex building within nine month timeframe. Other people-related considerations: The project must not affect interests of the people in the location of land in which the residential duplex building will be constructed. The environmental impact should also be considered so that the local residents does not face any difficulties due to construction works. Conclusion From the discussion it has been identified that macro and micro environment business drives have an essential role to play in feasibility study of a project. The results achieved from feasibility study on the project depicts that it is economically feasible as the equity value of the residential duplex has been calculated to be $103000.00. The net monthly rental income is calculated to be $1000.00 that means it is totally feasible to carry out the project. Bibliography Aarseth, W., Ahola, T., Aaltonen, K., kland, A. and Andersen, B., 2017. Project sustainability strategies: a systematic literature review.International Journal of Project Management,35(6), pp.1071-1083. Fewings, P., 2013.Construction project management: an integrated approach. Routledge. Heldman, K., 2015.PMP project management professional exam deluxe study guide: updated for the 2015 Exam. John Wiley Sons. Heralova, R.S., 2017. Life Cycle Costing as an Important Contribution to Feasibility Study in Construction Projects.Procedia Engineering,196, pp.565-570. Kerzner, H., 2013.Project management: a systems approach to planning, scheduling, and controlling. John Wiley Sons. Mir, F.A. and Pinnington, A.H., 2014. Exploring the value of project management: linking project management performance and project success.International journal of project management,32(2), pp.202-217. Tamoaitien?, J., Zavadskas, E.K. and Turskis, Z., 2013. Multi-criteria risk assessment of a construction project.Procedia Computer Science,17, pp.129-133. van den Ende, L. and van Marrewijk, A., 2014. The ritualization of transitions in the project life cycle: A study of transition rituals in construction projects.International Journal of Project Management,32(7), pp.1134-1145. Walker, A., 2015.Project management in construction. John Wiley Sons. Wang, W.C., Weng, S.W., Wang, S.H. and Chen, C.Y., 2014. Integrating building information models with construction process simulations for project scheduling support.Automation in construction,37, pp.68-80.

EA and its Impact on Business

Question: Describe about "EA and its impact on Business". Answer: Executive Summary An enterprise is an organization which has its own business plans and actions to perform so that it can earn maximum profits and maintain its credibility in the market. And the word architecture means the art and methods of carefully designing and building the structural framework of something in a professional way(Booch, 2010). Therefore, combining both these words, the meaning of Enterprise Architecture can be understood very clearly. Enterprise Architecture An Enterprise Architecture is a well-defined art or practice of designing and building the structural and functional framework of an organization. The main motive of enterprise architecture is to understand the business information and to formulate its strategies so that the overall objectives of the business can be achieved efficiently and effectively(Gulledge, 2008). There are various departments within a business in where the process of architecture is required which can be understood with the help of this diagram: Impact of Enterprise Architecture on Business In todays contemporary and competitive environment, organizations are looking for methods or procedures that can enhance the productivity of the business, maintain its profit-making capacity, and maximize its effectiveness and efficiencies. To overcome these issues and to survive the challenges of day-to-day business, businesses need to concentrate on the architecture of the enterprise. A deep understanding of the company's policies and procedures is required which helps in the formulation of strategies, and their execution to achieve the desired results(Nrman, Johnson, and Gingnell, 2014). By applying EA procedures into the business, a company can improve its business operations described below: It provides a deep understanding of the current IT infrastructure of the company. It helps in identification and mitigation of risks involved in the business. There are a lot of threats involved in the business which it helps to identify. It helps in the development and improvement of strategies formulated for the business infrastructure. It develops an efficient decision support system for the business which helps in the long-run. It provides a systematic vision to perform the business operations and achieve operational excellence. Issues with Enterprise Architecture EA has recently gained much importance in the field of business, but apart from his assistance, there also exists many implications while performing the EA functions and those are as follows: Misinterpreting EA as an IT function. Misalignment of IT, and business goals. The disconnected community of Architecture. Wrong representative in the major role of EA. Not measuring the future impacts of EA on business. Establishment of ineffective EA governance. Conclusion Enterprise Architecture plays a significant role in organizations. It is basically a strategy plan which is developed for the use of organizations, and its various departments. It is managed, and implemented through specific processes known as Enterprise Architecture Implementation Methodology (EAIM). This report represents the relevance of Enterprise Architecture and its impact on businesses(Niemi and Pekkola, 2015). It also focuses on the problems that are associated with it and the different contributions that has been recorded. There still has been ambiguity among researchers, and scholars about the role and importance of Enterprise Architecture but it will be wrong to say that the practice of EA is worthless considering its contributions and benefits. References Booch, G. (2010). Enterprise Architecture and Technical Architecture.IEEE Softw., 27(2), pp.96-96. Gulledge, T. (2008). Architecture-driven Enterprise Integration.International Journal of Management and Enterprise Development, 5(3), p.265. Nrman, P., Johnson, P. and Gingnell, L. (2014). Using enterprise architecture to analyse how organisational structure impact motivation and learning.Enterprise Information Systems, 10(5), pp.523-562. Niemi, E. and Pekkola, S. (2015). Using enterprise architecture artefacts in an organisation.Enterprise Information Systems, pp.1-26.

Internet Connections through LED Bulbs and Light Waves (Li

Design in relation to technology refers to the study involving the construction of man-made objects used to solve human needs. The devices designed must always meet the set scientific standards. The Li-Fi project is a design that was done by a group of Chinese scientists who succeeded to produce internet signals which were sent exclusively through light bulbs.Advertising We will write a custom essay sample on Internet Connections through LED Bulbs and Light Waves (Li-Fi) specifically for you for only $16.05 $11/page Learn More The process of conducting the tests involved hooking up of computers to LED bulbs. Thus, they were able to connect to the web using light waves as a carrier instead of the usual radio frequencies as is the case with Wi-Fi. The scientists were able to prove that the designed project could transfer data at a rate of 150mbps. Furthermore, they made the LED lights to act as digital switches by using them to either connect to the intern et or cut the connection. Hence, this technology has made it possible to pave way for LED bulbs to be retrofitted and turned into hotspot access points for broadband networks in both home and office networks (Designboom 2013). The internet is a resource used by each and every individual including the government, companies, institutions and enterprises. The technology is superb as it addresses the needs of most people in society. The internet is an asset for everyone whether young or old and in addition it is of utmost importance to all. The Li-Fi design is a very good piece of technology since it is cost effective and efficient. The cost of LED bulbs is extremely low as compared to the Wi-Fi adapters, access points and repeaters used for the usual broadband connections for both wide area networks and local area networks. The design is sustainable as LED bulbs are available in each and every country in the world. Acquiring LED bulbs will not be a problem in any region even in the thi rd world countries. The Li-Fi project is a very viable project as it does not require a lot of technological expertise like Wi-Fi and the technology is simple and if understood can be implemented by an ordinary individual as long as they have basic knowledge of networking.Advertising Looking for essay on engineering? Let's see if we can help you! Get your first paper with 15% OFF Learn More The Li-Fi project is also a very innovative project as internet connection is a very dynamic field. This design meets the criteria that the field of internet connection requires because it is fast, cheap and very flexible. It also makes internet connection easily accessible to areas where there is no broadband coverage. The design is aesthetic as it captures the eye of a viewer. It makes an individual develop interest to learn more about the device. Thus, considering the usefulness of the design, it is applicable to everyone irrespective of the generational, religious and cultural d ifferences. As far as portability is concerned the design did not meet the standards since it looks bulky and not easily portable (Schubert 2003). The Li-Fi project seems very massive as depicted by its image. It would require a lot of space to be able to accommodate this piece of technology. Although, weighing the strengths and weaknesses of the Li-Fi project I would say it is worth a try. Slow internet connection is one of the most annoying things in the world and this design curbs the problem as the speed of 150 megabits by second is considerably high. Thus, this design if implemented will be a success. Works Cited Designboom 2013. Web. https://www.designboom.com/technology/internet-connections-through-led-bulbs-light-waves-lifi-10-22-2013 Schubert, Fred. Light-Emitting Diodes. Cambridge: Cambridge University Press, 2003. Print. This essay on Internet Connections through LED Bulbs and Light Waves (Li-Fi) was written and submitted by user Tyrell W. to help you with your own studies. You are free to use it for research and reference purposes in order to write your own paper; however, you must cite it accordingly. You can donate your paper here.

Sample Essay on Functionalism

Sample Essay on FunctionalismThe sample essay on functionalism will help the candidate, if he is required to write his own thesis. As the student himself is very aware of the way of life in the society, the essay must cover the specific field of study in functionalism. In this case, the choice of words would be very important. The writer must make sure that the essay is indeed functionalistic in nature.Functionalism has two meanings, viz., structuralism. The former is the thinking of a discipline where the main idea is that the structure of a structure is also an important element of that structure, while the latter is a theory that all structures are necessarily functional. This can be used as an analysis of all science and engineering theories.So the essay should be functionalism in the main aspects. The emphasis should be on the structure, rather than on the material for example. In fact, it would be more beneficial to utilize functionalism as a non-empirical approach rather than trying to find meaning in the material. The person will also not be able to specify the material but he will know how it should be used to the best effect. Functionalism is sometimes defined as a sort of scientific rationality.The advantage of using functionalism as a non-empirical way of analyzing the content is that it tends to be a scientific approach to writing. It gives the student a strong foundation that he can build upon in his studies. In other words, if he uses functionalism in his writing, he will be able to differentiate between the written expression and the reality.It will be best to give the article on functionalism a general application and place it on a class syllabus as well. But if the student cannot fit the function into his class schedule, then the option of the online publication is open. All the essays will be sent to the instructor for evaluation. The results will be used to decide whether or not the essay would be accepted.There are many advantages of using functionalism in a sample essay on functionalism. The first is that the professor can learn more about the subject and write about it in a way that it will be helpful to the student. The second is that the student will benefit by being prepared and thus is likely to learn more from the assignment. This is because the student will have to base his expectations on the essay and therefore he will be ready to write an essay on functionalism.Before starting an essay on functionalism, it is better to learn what functionalism is first. The student must know the main principles and the uses of functionalism. This is important as he will use this information in the essay. He must remember that he has to apply the functionalism in his studies.The essay on functionalism can be used as a preparation for a topic in functionalism as well. The students may also be allowed to use it in their assignments. To check whether your essay on functionalism has been accepted, visit the site.