1. Foreign Exchange

2. Theoretical Framework
Construct: Foreign Exchange Risk
Variables:
Countries GDP (higher GDP less risk)
Inflation rate (lower inflation less risk)

3. General Motors Overview
-Founded in 1908
-The world’s largest automaker with more than 30 manufacturing operations, vehicles sold in approx. 200 countries
-8.5 million unit sales in vehicles in 2001 (15.1% worldwide market share)
Major product lines include:
Financial services, mortgage, business financing, insurance services, satellite services and more

4. What is the essence of the case? What is the case about?
Changing hedging policy from an active one to a passive one

5. Analysis Argentina at risk of defaulting
Could cause currency to devalue

6. Key Issues Mitigating the devaluation of currency
Reduce cash flow and earnings volatility
Minimize costs and time dedicated to global FX management

7. Alternative Solution

8. Recommended Solutions With Logic
(CAD deviation and ARS deviation)
Canadian dollar
Argentina peso