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Merton Electronics Corporation

Published 01 Jan 1996
Reference 4569
Region North America
popular
Prizes & Awards

2003 ecch Best-selling Case in Finance

Winner of 1998 European Case Awards, Accounting Control and Business Environment Category

Summary

In February 1996, Merton Electronics was reviewing its currency risk position. Its principal foreign suppliers were Japanese and fluctuations of the dollar/yen exchange rate during the past 2-3 years seemed to have had a serious impact on costs and earnings.

Teaching objectives

The case raises many of the typical issues facing exporters, importers and others active in international trade. The case also gives students exposure to understanding foreign exchange, futures, and options market information appearing in the financial press. Finally the question of whether or not currency movements can be forecast is brought up.