Purchase Solution

Managing Operating Exposure and FX Risk at Nissan

Not what you're looking for?

Ask Custom Question

Managing operating exposure and FX risk at Nissan.

Global businesses are often exposed to financial risks such as currency volatility. These foreign exchange (FX) risks affect all aspects of a global firm. Next, you will read about the automobile industry. Auto makers' operations and manufacturing can be affected by currency fluctuations. In the assigned articles and case you will find out how Nissan and other firms managed this FX risk.

Required Reading:

Kim, Yong-Cheol & R. McElreath (2001) "Managing operating exposure: A case study of the automobile industry", Multinational Business Review. Detroit: Spring 2001. v 9, Iss. 1; pg. 21-27.

Book Review (2005) "The gaijin who saved Nissan", Business Week,1/17/2005, accessed 10/16/2010 at: http://www.businessweek.com/magazine/content/05_03/b3916021_mz005.htm

Napolo, D. (2005) "Managing FX risk; an eight step plan to establish corporate foreign exchange policy", Treasury & Risk Management magazine, March 2005. Accessed10/16/2010 at: https://www.wellsfargo.com/downloads/pdf/com/focus/risk/manage_fx_risk_reprint.pdf

Note: We also recommend you examine information on Nissan's websites below. Bandwidth restrictions may prohibit your accessing Nissan's website; however, it is still possible to complete the assignment without access.

http://www.nissanusa.com/more-nissan-sites/

http://www.nissanusa.com/about/

What did Carlos Ghosn and Nissan do in order to manage global financial risk and why?
Did Nissan follow Napolo's (2005) 8 steps? Discuss which steps they did and those they did not follow.
Draw conclusions and list supporting references and cite sources.

Purchase this Solution

Solution Summary

The solution discusses managing operating exposure and FX risk at Nissan.

Solution Preview

Title: Managing operating exposure and FX risk at Nissan

Submitted by:

Institution:
Date:
Tutor:

Managing global finacial risk
In order for Nissan to perform better, Ghosn identified that the company had to drastically change the way it does business. The automotive industry is a large capital consumer and thus the first step that was necessary was to reduce the cost of doing business. Ghosn decided that the company should reduce the cost incurred in purchasing by 20%, decrease company capacity by 30%, close five of their plants, and to reduce the number of workers by 20,000 through layoffs and attrition (Book Review, 2005). This was a crucial step in improving the company's financial performance but was met with resistance from suppliers and the country at large since the external environment was more concerned with status quo rather than sound financial performance. Nissan had one thousand three hundred subsidiaries and thus was incurring large amount of cost to run the business. By reducing capacity and closing plants Ghosn wanted to reduce cost incurred to operate and maintain numerous plants.
In order to reduce global financial risk Ghosn put a system in place to reduce debts incurred by the company. He put measures in place to analyze company financial performance and developed strategies ...

Purchase this Solution


Free BrainMass Quizzes
Change and Resistance within Organizations

This quiz intended to help students understand change and resistance in organizations

Income Streams

In our ever changing world, developing secondary income streams is becoming more important. This quiz provides a brief overview of income sources.

Organizational Leadership Quiz

This quiz prepares a person to do well when it comes to studying organizational leadership in their studies.

Social Media: Pinterest

This quiz introduces basic concepts of Pinterest social media

Team Development Strategies

This quiz will assess your knowledge of team-building processes, learning styles, and leadership methods. Team development is essential to creating and maintaining high performing teams.