Foreign Exchange Exposure

You are the Group Treasurer of a UK multi-national company, Enterprise plc which is quoted on the London Stock Exchange and reports its financial results in UK Sterling. It has wholly owned subsidiaries in the US, Italy, and Beijing, and is considering opening a manufacturing facility in Brazil and Argentina. The UK Headquarters and each of the 3 subsidiaries have substantial production assets and trade with customers and suppliers in their region.

Enterprise has just appointed a new non-Executive Director, Jon Simmons, who has no experience of an international trading company. He asks you to produce a business report, including diagrams and appropriate references, explaining the foreign exchange exposure that Enterprise face, and any actions that can be taken to minimise the impact of foreign exchange exposure on volatility in their reported and forecast future financial performance. He also asks you if you have any recommendations on how the Brazilian and the Argentinian investments should be funded.
You will be assessed on:
Analyse and evaluate the causes and nature of foreign exchange exposure to a multi-national company, and highlight those that particularly apply to Enterprise, illustrating your answer with appropriate referencing (40%)
Apply the theory of foreign currency exposure to the Enterprise company, making recommendations of actions that can be taken to minimise the impact of foreign exchange exposure on volatility in their reported financial results, and any recommendations of how Enterprises Brazilian and Argentinian investments should be funded to minimise the impact of foreign exchange issues (25%)
Discuss and analyse whether the various elements of foreign exchange exposure impact on Shareholder Value, or whether Shareholders should be relaxed about the issues, and regard them as of a technical nature that dont affect the value of their investment in the company. (20%)
Presentation and referencing (15%)
Your work should:
Be well presented and coherently structured, using report style format. (Please see the CASE site for details of report format).
Have all information appropriately sourced and referenced using Harvard Referencing format and should include a reference list.
Include appropriate content which is focussed on the topic and question set.
Demonstrate appropriate use of required reading (and any other appropriate sources) and demonstrate skills of synthesis.
Demonstrate independence of thought and critical thinking skills.