S&S Air International
[Type the company name] | Case Study Four | S&S Air International? | | | 5/7/2011 |
The business world is highly competitive, changes quickly and is filled with risks and rewards. The international business world is no different! Things can change on the international stage in the time it takes to get a cup of tea! S&S Air has been in discussions with a dealer in Europe to sell the company’s model known as “The Eagle”. The dealer, Amalie Diefenbaker, has told S&S Air that she will pay the company €60,000 (€, Euro) per plane. She will order 15 planes a month and will pay for all 15 planes within 90 days; the intention would be to continue to order 15 planes each month. S&S Air is confident that they can meet the increase in demand with their current facilities but are unsure of the risks involved with taking their product to the international stage. This paper will analyze the pros and cons, as well as additional risks S&S Air will face. We will discuss some options for S&S Air to hedge the exchange rate risk and make a recommendation on bringing “The Eagle” to Europe.
Some pros to bringing “The Eagle” to Europe are obvious and will need little explanation such as gaining access to a new market. By entering this new market S&S Air has the potential to increase sales and profits either through volume, exchange rate, or both! By entering this new market and introducing their product to new customers, and possibly investors, S&S Air may experience a much faster growth rate. While there will be increased competition because S&S Air is the new player in the market this could be a good thing. The exposure to foreign competition can lead to an increase in quality as well as efficiency. All these things are fairly obvious and to go into detail in this paper would distract us from analyzing our main objective, exchange rate(s) and the risks associated with them.
S&S Air will see its profits increase or
The business world is highly competitive, changes quickly and is filled with risks and rewards. The international business world is no different! Things can change on the international stage in the time it takes to get a cup of tea! S&S Air has been in discussions with a dealer in Europe to sell the company’s model known as “The Eagle”. The dealer, Amalie Diefenbaker, has told S&S Air that she will pay the company €60,000 (€, Euro) per plane. She will order 15 planes a month and will pay for all 15 planes within 90 days; the intention would be to continue to order 15 planes each month. S&S Air is confident that they can meet the increase in demand with their current facilities but are unsure of the risks involved with taking their product to the international stage. This paper will analyze the pros and cons, as well as additional risks S&S Air will face. We will discuss some options for S&S Air to hedge the exchange rate risk and make a recommendation on bringing “The Eagle” to Europe.
Some pros to bringing “The Eagle” to Europe are obvious and will need little explanation such as gaining access to a new market. By entering this new market S&S Air has the potential to increase sales and profits either through volume, exchange rate, or both! By entering this new market and introducing their product to new customers, and possibly investors, S&S Air may experience a much faster growth rate. While there will be increased competition because S&S Air is the new player in the market this could be a good thing. The exposure to foreign competition can lead to an increase in quality as well as efficiency. All these things are fairly obvious and to go into detail in this paper would distract us from analyzing our main objective, exchange rate(s) and the risks associated with them.
S&S Air will see its profits increase or