Gm Hedging

he format for GM case is very similar to the format you have used for strategy cases, except that we focus more on the quantitative results than the qualitative factors. We usually make decisions based on numbers. For example, we may choose the alternative which brings the highest profits, NPVs, and returns, or which involves the lowest costs, risks, and earnings volatility. Instead of having a qualitative weighted, ranked consequences table, here we use the measures of profits, return, or volatility to rank alternatives directly. In this case, there are two problems related to two different currencies. Please provide the analysis for each currency separately: Part 1 for Canadian dollar and Part 2 for Argentinean Peso. You are required to use the five headings listed below to organize your write-up for each part:

Problem Statement: A statement of the problem GM faced. In the case of Canadian dollar (CAD), the problem is related to its hedge policies. You may want to summarize GM’s hedging policy first and then identify the problem in one or two paragraphs. In the case of Argentinean Peso (ARS), you may want to briefly describe the situation in Argentina and the problem GM had.

Objectives: One or two sentences summarizing GM’s goal of hedging.

Alternatives: Because different positions lead to different hedges, you need to briefly describe GM’s position and exposure to CAD or ARS first and then list and number the options for each currency.

Consequences of Alternatives: Here we have different consequences for two different currencies. The analysis for CAD is more on the quantitative side. You don’t need to create a verbal consequences table or a weighted, ranked consequences table. However, you need to provide a table or tables of cash flows or gain/loss for different hedge strategies under different exchange rate scenarios. This part is difficult. Using Excel spreadsheet may accelerate your calculations and save your time to prepare the...