DePaul University Week 10 Chapter 12 Leadership Team at Rolls Royce Paper Week 10 chapter 12 DBIn this board, you will examine the Brexit & Rolls Royce Case. Please watch the following video (the Power Points accompanying the Video are located on Canvas). https://youtu.be/hpszPS_NvCkIn a single post, provide your answer to one of the case questions and provide one extra article on the impact of exchange rate risk on McDonald’s. I found this article, which discusses how a strong dollar impacts McDonald’s bottom line. The questions are attached 11:07
Chapter 12 Brexit and Rolls Royce C…
LIY Tales VIII CHIMICU MWC Nicar-.
— Investor Update, Rolls-Royce Group plc, July 2016, p. 5.
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Brexit and Rolls-Royce (7 of 7)
• In addition to exchange rate concerns, Brexit confronted Rolls-Royce with a
number of very large long-term questions – questions about investment and
strategy. Like other U.K. companies, Rolls was trying to decide whether or not to
continue to invest in its operations and facilities in the U.K., or possibly redirect
that invest to Continental Europe.
• No longer an EU member, U.K.-based companies now faced the possibility of
being treated as outsiders to the Continental European markets, raising threats of
trade restrictions, regulatory distinctions, and documentation requirements and
delays.
Rolls-Royce said it has held “high-level” talks with ministers about the areas
that it is keen to resolve after the Brexit vote, while the UK boss of Airbus said
he did not want to deal with thousands of pages of documents and tariffs
when dealing with his colleagues in mainland Europe.
— “Airbus and Rolls-Royce say UK must quickly get beneficial EU trade deals; Two
of Britain’s biggest manufacturers say favourable agreements have to be reached
speedily to avoid jeopardising investment,” Graham Ruddick, The Guardian, 12
July 2016.
P Pearson
Copyright © 2018, 2015, 2012 Pearson Education, Inc. All Rights Reserved
Brexit and Rolls-Royce: Case Questions (1
of 4)
1.
2.
Why do you think Rolls has continued to bear this
structural currency mismatch so long? Why hasn’t it
done what many automobile companies have done, and
move some of their manufacturing and assembly to the
country in which the customer resides?
Why are Rolls-Royce’s foreign currency hedges
performing so poorly? Shouldn’t the hedges be
protecting its sales and earnings against exchange rate
movements?
If you were a member of the leadership team at Rolls-
Royce, what would you recommend the company do to
manage the risks arising from Brexit?
3.
P Pearson
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