ANDMANAGINGECONOMICEXPOSURE(跨国公司财务管理-.ppt

1、Multinational Financial Management Alan Shapiro7th Edition J.Wiley the sources of the firms inputs; and fluctuations in the real exchange rate delineate the firms true economic exposure.,PART III. IDENTIFYING ECONOMIC EXPOSURE,III.CASE STUDIES OF ECONOMIC EXPOSURE A.ASPEN SKIING COMPANY 1.Firms exch

2、ange rate risk affected its sales revenues.,IDENTIFYING ECONOMIC EXPOSURE,A.ASPEN SKIING COMPANY (cont) 2.Although there was no translation risk, the global market with its exchange rate risk and its competitors impacted market demand.,IDENTIFYING ECONOMIC EXPOSURE,B.PETROLEOS MEXICANOS (PEMEX) 1.Th

3、e firms exchange rate risk affected cost but not revenues. 2.Economic impact a.Revenues: none b.Costs:decreased c.Net effect:increased US$ flows,IDENTIFYING ECONOMIC EXPOSURE,C.TOYOTA MOTOR COMPANY 1.Exchange rate risk affected BOTH revenues and costs. 2.Flow back effect: previously exported goods r

4、eturn with increased domestic competition. 3.Lower profit margins domestically,PART IV. CALCULATING ECONOMIC EXPOSURE,IV.A quantitative assessment of economic exposure depends on underlying assumptions concerning: A.future cash flows; B.sensitivity to exchange rate changes.,PART V. AN OPERATIONAL ME

5、ASURE OF EXCHANGE RISK,V.NEED FOR A WORKABLE APPROACH A.Regression Analysis 1.Variables a.Independent: changes in parents cash flows b.Dependent: Average nominal exchange rate change.,AN OPERATIONAL MEASURE OF EXCHANGE RISK,B. REGRESSION EQUATION -approach based on the operational definition of the

6、exchange risk faced by a parent or one of its affiliates: -a company faces exchange risk to the extent that variations in the dollar value of the units cash flows are correlated with variations in the nominal exchange rate,AN OPERATIONAL MEASURE OF EXCHANGE RISK,where CFt = CFt - CFt-1 and CFt is th

7、e dollar value of total affiliate(parent)cash flows in period t EXCHt = EXCHt - EXCHt-1 equals the average nominal exchange rate during period t u =a random error term,AN OPERATIONAL MEASURE OF EXCHANGE RISK,1.Output measures: a.Beta coefficient (b) measures the association of changes in cash flows

8、to exchange rate changes.,AN OPERATIONAL MEASURE OF EXCHANGE RISK,b.the higher the percentage change of cash flow to changes in exchange rates, the greater the economic exposure (higher beta values).,AN OPERATIONAL MEASURE OF EXCHANGE RISK,VI.SUMMARY: A.The focus of the accounting profession on the

9、balance sheet impact of currency changes has led to ignoring the important impact on future cash flows.,AN OPERATIONAL MEASURE OF EXCHANGE RISK,B.For firms incurring costs and selling products in foreign countries, the net effect of currency changes may be less important in the long run.,AN OPERATIO

10、NAL MEASURE OF EXCHANGE RISK,C. To measure exposure properly, you must focus on inflation-adjusted or real exchange rates instead of nominal or actual exchange rates.,AN OPERATIONAL MEASURE OF EXCHANGE RISK,D.It is difficult in practice to determine what the actual economic impact of a currency chan

11、ge will be.,PART VI. MANAGING OPERATING EXPOSURE,I.INTRODUCTION Operating exposure management requires long-term operating adjustments. A. Real v. Nominal Changes 1. Relative price changes leads to marketing and/or production revisions,MANAGING OPERATING EXPOSURE,B.Proactive Marketing and Production

12、 Initiatives 1.Marketing: market selection product strategy pricing strategy promotional strategy,MANAGING OPERATING EXPOSURE,B.Proactive Marketing and Production Initiatives (cont) 2.Production: product sourcing input mix plant location raising productivity,MANAGING OPERATING EXPOSURE,II.Marketing

13、Management Adjustments A. Market Selection 1.use advantage to carve out market share 2.Market segmentation,MANAGING OPERATING EXPOSURE,B.Pricing strategy: Expectations critical 1.If HC value falls, exporter gains competitive advantage by increasing unit profitability and market share. 2.The higher p

14、rice elasticity of demand, the more currency risk the firm faces by product substitution.,MANAGING OPERATING EXPOSURE,3.Following HC depreciation, local firm may have much more freedom in its pricing. C.Promotional Strategy,MANAGING OPERATING EXPOSURE,D.Product Strategy exchange rate changes may alt

15、er 1.The timing of new product introductions, 2.Product deletion , 3.Product innovation.,MANAGING OPERATING EXPOSURE,III.Product Management Adjustments product sourcing and plant location are the principal variables to manipulate. A.Input mix B.Shift production among plants C.Plant location D.Raisin

16、g productivity,MANAGING OPERATING EXPOSURE,IV.Planning For Exchange-Rate Changes A.With better planning and more competitive options, firms can change strategies substantially B.before the impact of an currency change makes itself felt. C.Implication: compaction of adjustment period following an exchange-rate change.,MANAGING OPERATING EXPOSURE,V.Financial Management of Exchange Rate Risk: Financial managers Role in Marketing and Production A.Provide local manager with fore- casts of inflation and exchange- rate changes. B.Iden