Just like large multinational corporations, SMEs venturing in international markets face liability of foreignness. Unlike MNEs, however, SMEs are less diversified, dispose of fewer resources and commonly have less knowledge about foreign markets. Hence, the liability of foreignness is exacerbated by, what could be referred to as “liability of smallness”. To overcome these liabilities, internationalizing SMEs require a clear strategy and professional risk management. These country-related risks include, but are not limited to credit risk, political risk and socio-cultural risks. Most importantly, SMEs internationalizing into foreign markets face exchange rate risks. Despite disproportional exposure to exchange rate risks, “Many SMEs fail to grasp foreign exchange risk. (Bolshaw, 2013)”. In a study conducted by Giambona et al. (2018), 48% of non-financial firms rate foreign exchange risk as the most important or a material risk in international business. The course covers SMEs’ risks in internationalization with particular focus on the financial and strategic management of exchange rate risks. This course is designed to teach students (a) the theoretical frameworks necessary to understand exchange rates' effects on firms (b) familiarize them with internal, contractual, external and strategic hedging instruments and (c) systematically reflect on the challenges of SMEs operating in multiple currency areas.In addition to these traditional treasury strategies, the course includes an extensive discussion of organizational issues in SME risk management and longterm strategic remedies for reducing the risks of internationalization.
Language of instruction
|Thursday||10/07/21||09:00 AM - 12:30 PM||D3.0.222|
|Thursday||10/14/21||09:00 AM - 12:30 PM||Online-Einheit|
|Thursday||10/21/21||09:00 AM - 12:30 PM||Online-Einheit|
|Thursday||11/04/21||09:00 AM - 12:30 PM||Online-Einheit|
|Thursday||11/18/21||09:00 AM - 12:30 PM||D3.0.222|
|Thursday||12/02/21||09:00 AM - 12:30 PM||Online-Einheit|
|Thursday||12/09/21||09:00 AM - 12:30 PM||Online-Einheit|
During the course, students
- acquire a fundamental understanding of exchange rate determination and forecasting on a macro-economic level
- are familiar with exchange rate quotation customs
- have a detailed understanding of different exchange rate exposure concepts (book exposure, transaction exposure and economic exposure)
- can analyze the corporate hedging process in SMEs from a theoretical perspective
- can implement simple internal and contractual strategies to mitigate foreign exchange risks in SMEs
- can calculate and implement more complex external hedging strategies (forwards, futures, options)
Attendance of all synchronous sessions is mandatory
The course uses a mixture of asynchronous lecture casts and interactive, synchronous teaching in class. Students study the basics and apply them to case studies in groups.
- Group case studies 30%
- Final exam 60%
- In class participation 10%
Basic command of EXCEL and basics of Corporate Finance.
Digital open office upon request.
Bloomberg Education: https://www.bloomberg.com/professional/expertise/education/
Class Code: YRWFTPG28M