Case Study Description of F. Mayer Imports: Hedging Foreign Currency Risk
In September 2014, F. Mayer Imports Pty. Ltd., an Australian gourmet food importer, had a narrow window of opportunity to potentially protect its budget exchange rate for the rest of that, and the following, financial year. With imports such as European butter, chocolate, and cheese, the company procured a significant portion of its product in euros. The Australian dollar to euro exchange (AUD/EUR) dropped from a high of 0.7027 in October 2013 to a low of 0.6369 in January 2014. With the AUD/EUR recently rebounding and edging back toward the company's budget rate of 0.6900, the company's chief financial officer needed to choose between four proposed hedging strategies. Wallace Fan is affiliated with University of New South Wales.
Swot Analysis of "F. Mayer Imports: Hedging Foreign Currency Risk" written by Wallace Fan includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Eur Imports facing as an external strategic factors. Some of the topics covered in F. Mayer Imports: Hedging Foreign Currency Risk case study are - Strategic Management Strategies, Financial markets, Risk management and Global Business.
Some of the macro environment factors that can be used to understand the F. Mayer Imports: Hedging Foreign Currency Risk casestudy better are - – cloud computing is disrupting traditional business models, increasing government debt because of Covid-19 spendings, increasing inequality as vast percentage of new income is going to the top 1%, geopolitical disruptions, wage bills are increasing, talent flight as more people leaving formal jobs, increasing household debt because of falling income levels,
increasing commodity prices, banking and financial system is disrupted by Bitcoin and other crypto currencies, etc
Introduction to SWOT Analysis of F. Mayer Imports: Hedging Foreign Currency Risk
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in F. Mayer Imports: Hedging Foreign Currency Risk case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Eur Imports, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Eur Imports operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of F. Mayer Imports: Hedging Foreign Currency Risk can be done for the following purposes –
1. Strategic planning using facts provided in F. Mayer Imports: Hedging Foreign Currency Risk case study
2. Improving business portfolio management of Eur Imports
3. Assessing feasibility of the new initiative in Global Business field.
4. Making a Global Business topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Eur Imports
Strengths F. Mayer Imports: Hedging Foreign Currency Risk | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Eur Imports in F. Mayer Imports: Hedging Foreign Currency Risk Harvard Business Review case study are -
Effective Research and Development (R&D)
– Eur Imports has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study F. Mayer Imports: Hedging Foreign Currency Risk - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Diverse revenue streams
– Eur Imports is present in almost all the verticals within the industry. This has provided firm in F. Mayer Imports: Hedging Foreign Currency Risk case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Learning organization
- Eur Imports is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Eur Imports is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in F. Mayer Imports: Hedging Foreign Currency Risk Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Training and development
– Eur Imports has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in F. Mayer Imports: Hedging Foreign Currency Risk Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
High switching costs
– The high switching costs that Eur Imports has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Cross disciplinary teams
– Horizontal connected teams at the Eur Imports are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Ability to recruit top talent
– Eur Imports is one of the leading recruiters in the industry. Managers in the F. Mayer Imports: Hedging Foreign Currency Risk are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Highly skilled collaborators
– Eur Imports has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in F. Mayer Imports: Hedging Foreign Currency Risk HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Ability to lead change in Global Business field
– Eur Imports is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Eur Imports in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Sustainable margins compare to other players in Global Business industry
– F. Mayer Imports: Hedging Foreign Currency Risk firm has clearly differentiated products in the market place. This has enabled Eur Imports to fetch slight price premium compare to the competitors in the Global Business industry. The sustainable margins have also helped Eur Imports to invest into research and development (R&D) and innovation.
Strong track record of project management
– Eur Imports is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Analytics focus
– Eur Imports is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by Wallace Fan can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Weaknesses F. Mayer Imports: Hedging Foreign Currency Risk | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of F. Mayer Imports: Hedging Foreign Currency Risk are -
Need for greater diversity
– Eur Imports has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
Products dominated business model
– Even though Eur Imports has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - F. Mayer Imports: Hedging Foreign Currency Risk should strive to include more intangible value offerings along with its core products and services.
Workers concerns about automation
– As automation is fast increasing in the segment, Eur Imports needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
High operating costs
– Compare to the competitors, firm in the HBR case study F. Mayer Imports: Hedging Foreign Currency Risk has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Eur Imports 's lucrative customers.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study F. Mayer Imports: Hedging Foreign Currency Risk, is just above the industry average. Eur Imports needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study F. Mayer Imports: Hedging Foreign Currency Risk, in the dynamic environment Eur Imports has struggled to respond to the nimble upstart competition. Eur Imports has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
High cash cycle compare to competitors
Eur Imports has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study F. Mayer Imports: Hedging Foreign Currency Risk, it seems that the employees of Eur Imports don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
Capital Spending Reduction
– Even during the low interest decade, Eur Imports has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
Aligning sales with marketing
– It come across in the case study F. Mayer Imports: Hedging Foreign Currency Risk that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case F. Mayer Imports: Hedging Foreign Currency Risk can leverage the sales team experience to cultivate customer relationships as Eur Imports is planning to shift buying processes online.
Lack of clear differentiation of Eur Imports products
– To increase the profitability and margins on the products, Eur Imports needs to provide more differentiated products than what it is currently offering in the marketplace.
Opportunities F. Mayer Imports: Hedging Foreign Currency Risk | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study F. Mayer Imports: Hedging Foreign Currency Risk are -
Better consumer reach
– The expansion of the 5G network will help Eur Imports to increase its market reach. Eur Imports will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Eur Imports in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Global Business segment, and it will provide faster access to the consumers.
Using analytics as competitive advantage
– Eur Imports has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study F. Mayer Imports: Hedging Foreign Currency Risk - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Eur Imports to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Creating value in data economy
– The success of analytics program of Eur Imports has opened avenues for new revenue streams for the organization in the industry. This can help Eur Imports to build a more holistic ecosystem as suggested in the F. Mayer Imports: Hedging Foreign Currency Risk case study. Eur Imports can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Learning at scale
– Online learning technologies has now opened space for Eur Imports to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Loyalty marketing
– Eur Imports has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Eur Imports can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Leveraging digital technologies
– Eur Imports can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Global Business industry, but it has also influenced the consumer preferences. Eur Imports can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Building a culture of innovation
– managers at Eur Imports can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Global Business segment.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Eur Imports can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Buying journey improvements
– Eur Imports can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. F. Mayer Imports: Hedging Foreign Currency Risk suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Eur Imports can use these opportunities to build new business models that can help the communities that Eur Imports operates in. Secondly it can use opportunities from government spending in Global Business sector.
Threats F. Mayer Imports: Hedging Foreign Currency Risk External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study F. Mayer Imports: Hedging Foreign Currency Risk are -
Consumer confidence and its impact on Eur Imports demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Eur Imports.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Eur Imports business can come under increasing regulations regarding data privacy, data security, etc.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Eur Imports in the Global Business industry. The Global Business industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Eur Imports needs to understand the core reasons impacting the Global Business industry. This will help it in building a better workplace.
Technology acceleration in Forth Industrial Revolution
– Eur Imports has witnessed rapid integration of technology during Covid-19 in the Global Business industry. As one of the leading players in the industry, Eur Imports needs to keep up with the evolution of technology in the Global Business sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
High dependence on third party suppliers
– Eur Imports high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Eur Imports can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study F. Mayer Imports: Hedging Foreign Currency Risk .
Easy access to finance
– Easy access to finance in Global Business field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Eur Imports can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Shortening product life cycle
– it is one of the major threat that Eur Imports is facing in Global Business sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Increasing wage structure of Eur Imports
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Eur Imports.
Weighted SWOT Analysis of F. Mayer Imports: Hedging Foreign Currency Risk Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study F. Mayer Imports: Hedging Foreign Currency Risk needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study F. Mayer Imports: Hedging Foreign Currency Risk is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study F. Mayer Imports: Hedging Foreign Currency Risk is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of F. Mayer Imports: Hedging Foreign Currency Risk is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Eur Imports needs to make to build a sustainable competitive advantage.