Executive Summary: Jaguar PLC, 1984
This case explores the operating exposure of Jaguar PLC in 1984, just as the government is about to relinquish control and take the company public via an IPO. The primary concern of the CFO is that Jaguar sells over 50% of its cars in the US, while its production costs and factories are U.K.-based. This currency mismatch creates operating exposure for the firm that needs to be hedged.
While the current trend in the USD has been higher, the markets are expecting a pullback in the currency. With labor accounting for a significant portion of the cost base for luxury car industry, it is unlikely that the expense will decline in the near future. Again this creates a potential liability in the matching pf the cash inflows and outflows. Given Jaguar’s primary competitors have operating expenses in DEM, the CFO should also be concerned with the competitive advantages that are associated with favorable exchanges rate when compared to the competition. Thus, there also exists the issue of the GBP/DEM exchange rate. The overarching themes and underlying issues that must be addressed in order to address Jaguar’s currency exposure are:
• Valuation of the risks associated with firms with multiple currency exposure
• Risks associated with revenue streams and expenses in different currencies
• Valuation and assessment of highly competitive niche luxury car markets
• Supply chain effectiveness and labor trends in the automotive industry
• Strategic positioning of operations for a multinational firm
After thoroughly weighing the issues from a qualitative and quantitative perspective, we believe that there are several strategies that Jaguar Management can undertake in order to maximize the profitability of and mitigate the exchange rate exposure for the revenue that is generated in the US. In particular, we would recommend:
• Management should locate a proportionate level of its manufacturing facilities in the US to foster a reduction in operating exposure since revenues and costs would be denominated in the same currency.
• Jaguar Treasury should engage in Forward/Swap Contracts to Sell US$ and hedge against currency fluctuations.
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...problems like over hedge or under hedge.
Buy Call Option on GBP - Another alternative for Jaguar to hedge its operating exposure is to use option. By paying certain amounts of option premium, Jaguar could reserve the right but not bear the obligation to exercise the option, therefore, if the exchange rate changes in favor of Jaguar (i.e., USD appreciate), Jaguar could let the option expired worthless; on the other hand, if USD depreciate, Jaguar could exercise the option and gain revenues. However, Option is relatively expensive since it requires an upfront investment.
Money Market Hedge - Jaguar could borrow USD, convert the proceeds into GBP using spot rate, and use the revenues generated in US market to pay back the USD principle and interests in the future. Borrowing in US dollars would provide a "natural" hedge against Jaguar’s dollar revenue stream. However, Jaguar might not get a favorable interest rate in its USD loans, which might inflate the costs of the money market hedge. What’s more, unpredictable fluctuation of Jaguar’s revenue streams in US might hurt its ability to pay back debts and therefore become a potential threat to Jaguar’s financial situation.
The author, Voltaire, wrote in the Enlightenment period, a literary movement characterized by the rising concern of philosophy, science, and politics. Voltaire’s writing was influenced by the Enlightenment movement to create awareness of global issues. This is evident in the repeated tragedies Candide stumbles upon. Social issues, corrupt authority figures, and war are real world topics that Voltaire chooses to address in Candide. The satirical nature of Candide allows for an in-depth discussion between the characters regarding the problems they face and the problems of the people they meet, creating a perspective that the audience is forced to look through. It is also a coming of age story, not just for Candide, but for the rising awareness in global issues. Voltaire’s inclusion of the issues of his time reflect the severity of those issues. Satire is used as a reaction to a society’s hypocrisy. Candide as a satirical piece reflects what people have neglected to pay attention to. Coming into a new era of awareness and responsibility leads Candide to reflect on the live he lived in Westphalia and the people he encountered across
In Candide, a series of unfortunate events befall the main character—Candide—to demonstrate the absurdity of his mentor’s philosophy that he lives in the best possible world. The main tenet of Pangloss’ philosophy is that even from acts that appear evil, or sub-optimal, there is a positive aspect that produces the best of all possible results. In other words, there is no such thing as a sub-optimal outcome or a bad occurrence. Candide demonstrates the absurdity of this mindset when Pangloss contracts syphilis, and when Candide’s benefactor drowns and an earthquake erupts in Lisbon, concluding with Pangloss trying his best to justify both events through the lens of his philosophy.
Candide or Optimism, written by Voltaire in 1759, was created to satirize the a priori thinking that everything is for the best in the world. Candide, the guileless and simpleminded main character and his companions are exposed to the very worst the world possibly has to offer with rape, murder, whippings, war, earthquakes, shipwrecks, cannibalism, thievery, disease, greed, and worst of all, human nature. Through these horrific events, Pangloss, the philosopher maintaining a priori thinking, stubbornly upholds the idea that everything is for the best. It is Pangloss’s influence above all else that is imprinted upon Candide and that as the novel progresses, is slowly replaced in Candide’s mind by others characters’ viewpoints. Rather than assertive
see, foreign exchange hedging was an area of key importance for AIFS given the level of currency
Voltaire’s Candide can be understood in several ways by its audience. At a first glance it would appear to be simply a story blessed with outrageous creativity, but if you look deeper in to the novel, a more complicated and meaningful message is buried within. Voltaire uses the adventures of Candide as a representation of what he personally feels is wrong within in society. Written in the 18th century (1759), known commonly as the age of enlightenment, Voltaire forces his audience to consider the shift from tradition to freedom within society. He achieves this by exploring the reality of human suffering due to traditions which he mocks throughout Candide. In particular he focused on exploiting the corruption he felt was strongly and wrongfully present within three main aspects of society these being religion, politics and morals. Each chapter represents different ways in which Voltaire believes corruption exists providing the audience with the reality of society’s problems due to its fixation on tradition. As a philosopher of the Enlightenment, Voltaire advocated for freedom of religion, freedom of expression and the separation between church and state. Voltaire successfully presents these ideas within Candide by highlighting why they are a significant problem in 18th century Europe.
In chapter 5 of Candide, the Enlightenment and the birth of tolerance were on full display. In Candide, the Enlightenment thinkers’ view of the optimum world is challenged through the shipwreck and the satiric explanations of the Lisbon Bay and Lisbon Earthquake. Voltaire continues to use ironically tragic events to test Pangloss’s optimistic philosophy, which attempts to explain evil. The use of grotesque and naive behavior between individuals in this chapter makes the reader question Pangloss’s irrational thinking with the cause and effects of the events.
The desired outcomes from reorientation of the company’s business were to reduce risk of increasing prices, decrease costs and increase sales. These desired outcomes have ap...
Voltaire did not believe in the power of reason to overcome contemporary social conditions.In Candide, Voltaire uses Pangloss and his ramblings to represent an often humorous characterization of the "typical" optimist. Of Pangloss, Voltaire writes, "He proved admirably that there cannot possibly be an effect without a cause and that in the best of all possible worlds the Baron’s castle was the best of all castles and his wife the best of all possible Baronesses." (522) The attack on the claim that this is "the best of all possible worlds" permeates the entire novel. Throughout the story, satirical references to this theme contrast with natural catastrophes and human wrongdoing. When reunited with the diseased and dying Pangloss, who had contracted syphilis, Candide asks if the Devil is at fault.
James Kittelson’s biography on the life of Luther is thought provoking and informative. Kittelson does not have a concise thesis, but as it is a biography the central theme of Luther the Reformer is an insightful narrative of Martin Luther’s life from his birth in Eisleben until his death on February 18, 1546 in Eisleben. Kittelson thoroughly and with great detail and sources explains Luther’s mission to reform the catholic church. Luther the Reformer seeks to condense Luther’s life in a manner which is more easily read for those who do not know the reformer’s story well. Luther is portrayed not only as a theologian throughout the book, but as a person with struggles and connections throughout the Germanic region in which he lived. Luther’s theology is portrayed throughout the entirety of the book, and Kittelson approaches Luther’s theology by explaining Luther’s past. The inclusion of
Dr. Martin Luther King, Jr. uses the appeal of ethos from the beginning until the end of his speech. Because he was talking about African-American people, his own race that were dealing with racism and discrimination. However, Dr. King uses all the rhetorical devices in many ways to the best of his ability to gain the favor of his audience, and he made an unforgettable and effectively speech that made an impact on America. His main purpose was to fight for the equal rights of African-American people and in order for him to do that, he aided the civil rights to help his own race to improve their
... oppression blacks faced. King’s appeal to ethos set the stage for other methods of persuasion. By building up this appeal, King was able to establish a common ground between himself and the audience. King delivered an effective appeal to pathos, which in turn evoked an emotional response from the viewers. King also used appeals to logic in order to reason with his audience. By appealing to all three rhetorical elements, pathos, logos, and ethos, King was able to effectively persuade and motivate the audience to achieve equality for all American citizens.
Howells, Peter., Bain, Keith 2000, Financial Markets and Institutions, 3rd edn, Henry King Ltd., Great Britain.
After the financial crisis of the late 1990s, the demands for risk management tools have increased. The investors have been effectively utilizing such products as KOSPI 200 futures and options, 3-Year KTB futures and USD futures to meet their hedging needs.
1. What is the business reason for China Noah’s potential currency exposure? Does the company need to subject itself to substantial exchange rate risk? Is the risk “material” to China Noah? Do you think China Noah should hedge?
...y equals the United States. Hence, in this new world of international monetary structure U.S. needs to be very careful about its economic policies or it may lose its dominance over the monetary markets internationally. However, in examining the U.S. economy in the recent past we realize that the trouble has already begun for e.g. The current account deficit jumped by about $100 billion annually during the three-year period 1998-2000, nearing $450 billion or about 4.5 percent of GDP in 2000. The net international investment position of the United States reached a negative $2 trillion at the end of 2000. Hence it is quite possible that in near future the dollar may experience some sharp depreciation, the evidence of which is reflected in the excel sheet attached.