The article presents a case study about a fictional chemical-manufacturing joint venture in China that involves a German parent firm and its Chinese partner. The German firm has insisted upon scrupulous compliance with Western standards regarding industrial safety, business ethics, and the environment. However, its Chinese partners are annoyed that they cannot use gifts, commissions, and other favors said to be frequently used in China in order to secure business. Disagreement has arisen over whether the joint venture should pay a commission to a potential customer's purchasing agent in order to clinch a very large sale.
Keyword
Bribery
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Business ethics
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China
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Cross cultural relations
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ETHICS
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Germany
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Joint ventures
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Laws & regulations
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Organizational Behavior
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safety
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Workplace health
BMW, the world-famous auto and motorcycle manufacturer, produces the majority of its vehicles in Germany, yet sells over two thirds of them outside Germany. In 2010, BMW sold a total of 1.46 million cars, of which 267 thousand were sold in Germany. The German market overall accounts for only 18.3% of global sales, and overseas markets account for 81.7%. The globalization of the markets has brought about not only rapid growth but also a huge foreign exchange risk, leading to growing pains that BMW has to face. BMW learned from the experience of its peer Porsche, whose efforts to pass the foreign exchange risk onto consumers by raising sales prices completely failed. This case focuses on how BMW manages its huge foreign exchange exposure on an operating level and on a strategic level.
Keyword
Natural Hedging
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Germany
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Bayerische Motoren Werke（BMW）
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Motor industry
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Foreign Exchange
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Risk Management
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Hedge Contract
Porsche, the most profitable carmaker in the world, earned six times more in 2008 from managing financial derivatives than from selling cars. This case discusses Porsche’s car business as well as its financial management business. Since the mid-1990s, Porsche has achieved steady growth in the luxury sports car market and has also expanded successfully into the markets of SUVs and low-end luxury cars. Porsche has used currency derivatives to manage its large exposure to currency risks and has made considerable profits from currency derivatives. Since 2005, Porsche has been aggressively purchasing the stock of Volkswagen. In 2008, Porsche realized a windfall from its management of Volkswagen stock. This case features a debate about Porsche’s business model in association with its governance structure. The case can be used in courses focused on international finance and risk management.
Keyword
Corporate Governance
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Financial management & control
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Germany
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Hedge Fund
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Motor industry
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Porsche
