International Business Mod15 This Would Way Avoid Transaction Exposure Foreign Revenues There Would Cost This

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International Business, 2e

Geringer, McNett, Ball

Instructor Guide to Module 15

15–12

GLOBAL DEBATE: Lending to the Poor: Charitable activity or For-Profit Business?

The growing trend of microloans is changing access to capital for extremely small business start–

1. Is profiting from lending to the poor an ethical business model?

2. Is for-profit microlending a way to reach more of the poor more effectively, or a mistaken

development?

GET THAT JOB! FROM BACKPACK TO BRIEFCASE: Brian Goldfinger: Microfinance in Latin

America with Kiva

Brian Goldfinger describes his change of major into accounting and international business, and

then his work in Latin America with Kiva. Most interesting is his initial job with KPMG, which he

1. What advice does Goldfinger offer?

2. Do you admire his leaving his KPMG position to take up a Kiva fellowship or does this seem

foolhardy to you?

International Business, 2e

Geringer, McNett, Ball

Instructor Guide to Module 15

15–13

Education.

immediately got more training with the Kiva fellowship. He describes the courage of facing

loneliness and putting himself on the line in new foreign situations.

International Business, 2e

Geringer, McNett, Ball

Instructor Guide to Module 15

15–14

END OF MODULE EXERCISES

CRITICAL THINKING QUESTIONS

1. The only difference between accounting in the domestic arena and accounting in the

international one is that international transactions may be in foreign currencies that have to

be translated into dollars. Comment on this observation.

There are many differences between international and domestic accounting, in addition to

those presented by the use of different currencies. The purpose of accounting can vary from

2. How might you expect the practice of accounting to be different in another country?

3. Does the process of convergence of accounting standards present any benefits to U.S. firms

that already operate internationally?

4. How might adopting triple-bottom-line accounting influence the competitiveness of U.S.

firms in foreign markets?

5. You are a CFO establishing your firm’s first overseas subsidiary. As you consider how to

capitalize your business, what are your concerns about using the local and home-country debt

and equity markets?

6. A local business new to exporting has signed a sales contract with a buyer in Riyadh that

specifies payment of $3 million in Saudi riyals in six months. Discuss the hedge options you

would advise the exporter to consider.

International Business, 2e

Geringer, McNett, Ball

Instructor Guide to Module 15

15–15

7. One of the characteristics of centralized structures is that they are slow and reduce

innovation. Given that a globalized business needs increasingly quick responses, why would

an MNC set up a centralized cash management operation?

8. U.S. corporations use three major tactics to keep their tax bills low: they avoid repatriating

their foreign earnings; they are careful about how they organize their foreign operations; and

they have explored inversions. Which of these tactics would you choose to be the most

reliable for the corporation?

9. Could transaction exposure be avoided if the revenues generated by foreign sales were

transferred to the home company’s currency at the end of every business day?

10. When accounting systems are fully harmonized and convergence is achieved, will the

company’s functional currency matter? Why or why not?

GLOBALEDGE RESEARCH TASK

Exercise 1

globalEDGE ‘Global Insights’ is where profiles of trade blocs, countries, U.S. states, and industries

can be found. When navigated as described in the exercise (i.e. globalEDGE > Global Insights > by

International Business, 2e

Geringer, McNett, Ball

Instructor Guide to Module 15

15–16

Exercise 2

Search for ‘Australia’ in globalEDGE and on the introduction page click on the country

commercial guide link listed under the ‘Quick Links’ subheader. The ‘Trade & Project Financing’

MINICASE: Dealing With Transaction Risk in a Renminbi Contract

This minicase explores a contract made in renminbi and how to hedge it.

1. How could you cover this risk?

Drawing on the description of hedging tactics in the text, leading and lagging would not apply

because the payment dates are stipulated. Exposure netting could be used, using a centralized

International Business, 2e

Geringer, McNett, Ball

Instructor Guide to Module 15

15–17

BONUS ACTIVITIES

This section provides you with support of your course above and beyond what is found in the

text. We have developed these resources to support your course, to support your traditional,

hybrid, online, or flipped class.

VIDEO SUGGESTIONS

McGraw Hill’s collection of international business videos is available at

TEAM EXERCISES

These may be done individually or in groups or teams, either in or out of class, for later class

presentation. Some are also appropriate for hybrid and online courses.

1. International Accounting Standards

Deloitte Touche Tohmatsu hosts an International Accounting Standards (IAS) webpage that

2. Major Trading Countries

Deloitte Touche Tohmatsu also has a resource that provides information on the investment

International Business, 2e

Geringer, McNett, Ball

Instructor Guide to Module 15

15–18

3. Capital Markets of the World

Have students research the various capital markets of the world, including the differences,

advantages, and disadvantages of each. Have them track market movements for two weeks and

report on factors that may have caused these changes. Then ask them to discuss the question,

“Do changes in one market affect the others? Why or why not?” This can be done in small

groups with report-backs that work within your course delivery mode.

SUPPLEMENTAL ACTIVITIES

CASE STUDIES

Case studies that focus on intercultural issues and their effects in business environments are

Ivey Cases

“International Investor: Islamic Finance and the Equate Project” looks at a union Carbide–

Petrochemical Industries petrochemical plant project in Kuwait. It gives students the

opportunity to think about an Islamic finance project.

Harvard Cases

“Olam International: Financial Accounting and Disclosure” investigates a British challenge to this

Singaporean company’s reporting. The challenge, made by the founder of Muddy Waters, led to

a stock price decline and was regarded critically. This case reviews the episode, including Olam’s

response to the challenge. It is an ABCC, Nanyang Tech University case available through

Harvard. There is a series of Olam cases, including the building of a supply chain in the Ivory

Coast.

International Business, 2e

Geringer, McNett, Ball

Instructor Guide to Module 15

15–19

CONTROVERSIAL ISSUES

1. U.S. Current Account Deficit: A Concern or Not?

2. Current Events for Sources of Controversy in Finance and Accounting

A focus on current events that are relevant to the module’s topics is a good way to bring home

the concepts, review their application, and build news-review habits. Ask everyone to come

TEACHING SUGGESTIONS

1. This chapter is very important to students’ understanding of the importance of finance and

accounting in international business. They are fundamental issues for international managers.

2. From an international perspective, accounting is in a state of flux. By focusing on this

3. When an IC has a subsidiary in a country that imposes currency exchange controls, the

4. Focusing on the boxed material and the case study will help students achieve the objectives

5. The Critical Thinking Questions at the end of the module will help in understanding chapter

International Business, 2e

Geringer, McNett, Ball

Instructor Guide to Module 15

15–20

Education.

problems in several ways: (1) collect assignments at random and assign a grade; (2) occasionally

give some of the same questions as a quiz, thus rewarding students who have done their

assignments; (3) have students hand in assignments and give credit for work submitted; and (4)

call on students at random to answer specific questions (giving a small number of points for

correct answers or counting this as part of participation).

6. Guest lecturers on finance and accounting are a way to underscore the importance of the

information in this module. Possible guests include:

International Business, 2e

Geringer, McNett, Ball

Instructor Guide to Module 15

15–21

CONNECT TOOLS FOR ASSESSEMENT OF LEARNING

CONNECT CONTENT MATRIX

For every chapter, please refer to the Connect Content Matrix to see what application exercises

are available and what Learning Objectives they help reinforce/assess.

Title

Assignment

Type

Topic(s)

Learning

Objective(s)

AACSB

Accreditation

Tagging

Bloom’s

Taxonomy

Managing Foreign

Exchange Risks

Click and Drag

Ways to Hedge

Transaction

Exposure

15–05

Analytical

Thinking

Understand

A Business’s

Strategic Choice

Case Analysis

Global Money

Management

15-04; 15-05

Analytical

Thinking

Understand

Cash Flow

Management

Click and Drag

Cash Flow

Management

15-04; 15-05

Analytical

Thinking

Understand

CONNECT ACTIVITIES

1. Managing Foreign Exchange Risks

Activity Summary: This is a click and drag activity in which students are presented with a grid

that consists of rows labeled with different types of exchange exposure and columns that are

2. A Business’s Strategic Choice

Activity Summary: This is a case about a textile firm that operates in many countries and is

concerned about currency exchange exposure.

International Business, 2e

Geringer, McNett, Ball

Instructor Guide to Module 15

3. Cash Flow Management

Activity Summary: In this click and drag activity, the students are given a grid that has one