BMW: Financial Hedging Approach of Exchange Rate Shocks

Only available on StudyMode
  • Download(s) : 99
  • Published : December 2, 2010
Open Document
Text Preview
BMW is a company that has frequently favored the financial hedging approach of exchange rate shocks, while 3M has been a strong proponent of hedging via operational flexibility. BMW managers advocates an integrated risk management approach that combines the use of operational and financial hedging. This combination is exactly what BMW is doing after recently suffering from strong appreciation of the Euro in its heavily European based production operations. BMW has announced expansions of production and sourcing facilities in the North American and Asian continents in an effort to create a more globally diversified supply chain, thus adopting more of an integrated risk management approach in its handling of global risks. When BMW Financial Services Netherlands needs to process BMW vehicle lease applications, the company relies on a D&B Risk Management Solution to provide consistent credit decisions. As stated in a article of the “INVESTER” located on, “Before implementing the D&B solution, BMW personnel had to submit and then wait for a lease application to be approved or denied”. BMW employers can get fast and consistent credit decisions based on a combination of internal BMW information. BMW uses agencies to compare cases on an annual basis and incorporate historical information making future decisions even more accurate. BMW has achieved significant cost and time savings as a result of this solution. Few large companies are willing to embrace the lack of organizational clarity and nebulous structures that drive innovative ideas. At most companies, headquarters would have put the kibosh on the short-film idea, which has since been widely imitated. Researchers say most experiment with networks on a small scale and very few use the practice to full effect since doing so means an uncomfortable balancing act between hierarchy and discipline on one hand, and free-wheeling networks that can veer toward near-chaos. But for innovation-driven...
tracking img