Baker Adhesives powerpoint .pptx - CASE 10 BAKER ADHESIVE...

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CASE 10: BAKER ADHESIVE CONNER PATY, GARRETT WEAVER
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INTRODUCTION Small company that produces adhesives Located in Newark, New Jersey Thinking about expanding business internationally Typically deals with local business until Novo, a Brazilian toy company ordered 1,210 gallons of adhesive
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PROBLEM In the original deal, both frims agreed upon a price per gallon of adhesive. Money was exchanged in Brazilian reals (BRL) Payment was exchanged at the current rate at the time of receipt Exchange rate dropped and actual revenues were a lot lower than expected. On the second deal, which was 50% larger, Novo was not willing to negotiate price per gallon
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RISK Foreign exchange risk is the risk that value changes due to currency exchange rate changing Depreciation in exchange rate resulted in lower revenues after transaction was complete. Taught Baker a valuable lesson in exchange rate risks Baker then was smarter about decisions in moving forward in the international market
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