Professional Documents
Culture Documents
Case - TCAS
Case - TCAS
Case
Why this case?
This case is typical of a young, real‐world company entering
the international markets
1. The company is relatively small and with no previous
experience in international business
2. The company finds itself with a large FX risk exposure
3. The company fails to account for the “international
nature” of the revenues when structuring the current bid
4. The company has a lot of “unnoticed” problems before
going international
5. The company needs simple advice from a professional in
International Finance (You!)
6. Great opportunity to introduce hedging strategies which
are later fully developed in this course
Your job
• Your job is to give TCAS proper advice
(you’re Ms. Wright in the case)
• In giving advice, you must look at the firm’s finances,
look at int’l conditions of the countries involved in the
deal at hand, and look at the financial options to hedge
– You need to “educate” this company’s managers!
• Generally put, your job is to help TCAS:
1. Maximize its profits in this int’l contract,
2. Manage its foreign exchange risk, and (to an extent)
3. Rethink its entire finances/balance sheet
Strategy for case analysis
Submit/present a written proposal answering the following:
1. What is your forecast for the Canadian dollar in the future?
Discuss how you arrived at your forecast
(Hint: Consider Exhibit 3)
2. What are the financial needs of TCAS? Is TCAS in good financial
health? Why? (Hint: Consider Exhibit 1)
3. How well did TCAS structure its bid?
Was 5% an appropriate mark up figure for this deal?
4. If you were Ms. Wright, which hedging alternative would you
recommend Mr. Christopher in managing TCAS’s FX risk?
Why exactly?
Make sure that you present financial details on all of the
hedging alternatives considered, except alternative #6
Note: As in all cases, some of the concepts, terms, lingo used were
not necessarily covered in class yet. It is part of the assignment
for students to research these items (e.g., “performance bond”)
This is not like doing homework. Real‐life is complex, confusing
Your job is to do the best you can w/ limited information