Case: Discussion on Australian Auto Industry
Some videos related to the event covered in the case:
- Toyoda Announcing the closure:
- Speech to the Parliament about Tony Abbott’s inaction on Toyota (Note he mentioned the loss of jobs in US between 2007-2009)
- Workers reacting to closure:
Discuss in detail:
1) What caused the decline of auto industry in Australia? Does it make sense to have an auto industry in Australia in the first place?
2) Should the government adopt more protective trade policies to save the auto industry in Australia? What kind of policies would work?
3) What do you think of the on-going trade conflicts between US and China?
Note: Answer each question briefly and include the references. (12 pt. 1.5 spacing)
Table of Contents
Case : Global Capital Market and Foreign Exchange Risks
The risks and rewards of global capital market
https://www.youtube.com/watch?v=VEq04xjxfyY
this topic, we will focus more on the flow of capital globally. Obviously, the global capital market provides opportunities as well as risks for investors & companies looking for financing. However, a major development over the past 2 decades — a rather worrisome one in my mind — has been the dominance of financial institutions (the ultimate handlers of capital) in the world economy. Financial industry emerged to serve the “real” industries. For instance, the creation of install payments allowed the exponential sales growth for Singer sewing machines. The innovative mortgage products allow us to enjoy the ownership of a house before we save up enough to buy one. But now, the servant has become the master — CEOs of companies now listen to Wall Street and try to meet the earnings estimate of some analysts who may have never set foot on the floor of any factory. Private equity fund managers buy and sell companies, often destroying the core competencies and the culture of a company while dressing up the balance sheet and then they exit with 100% to 300% returns in 1 to 3 years. A newly college-minted investment banker can make $200k plus while a senior engineer makes half of that. Smart graduates from MIT go to Wall Street to do financial engineering rather than real engineering. With their ingenious engineering, we now have all kinds of financial products. While the real-world economy is about $70 trillion, outstanding derivative contracts are estimated to be more than 10 times that, some of which we don’t know what they are and how they work or how risky they are and whether they will lead to another financial crisis like 2008 again. With my rather “biased” negative view of Wall Street out in the open (Mind you, I have an MBA in finance),
I would like that you think about the following:
1) In what ways can a company be exposed to foreign exchange risks? What are some of the ways to hedge? Should companies try to make money from such hedging activities?
2) What are the causes of the global financial crisis of 2008? What caused the crisis in Greece a few years back? Have we (governments, financial institutions, investors etc.) made enough changes (or any changes at all) to prevent future crises?
Note: Answer each question briefly and include the references. (12 pt. 1.5 spacing)
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