A Study on the Application of Foreign Exchange Risk Management to Foreign Trade Enterprises - A Case Study

• Main Author: 賴麒亦
• Other Authors: 季延平
• Format: Others
• Language: zh-TW
• Online Access: http://ndltd.ncl.edu.tw/handle/bzb7hq

碩士 === 國立政治大學 === 經營管理碩士學程(EMBA) === 103 === Taiwan’s economy is significantly influenced by the world economy due to the development of globalisation and the essence of an island-type economy. Accordingly, fluctuations in exchange rates which are predominately affected by the world economy play an important role in the Taiwanese enterprises’ profitability, especially the enterprises relying on import and export trade for generating revenue. This indicates that the foreign trade enterprises must take the issue of foreign exchange risk into account, and realise that a structured approach to enterprise risk management enables the enterprises consider the potential impact of all types of foreign exchange risks on all processes and provides benefits to monitor overall levels of foreign exchange risk. In order to deal with the above issues, this study selected a Taiwanese foreign trade company A, which mainly imports masking tapes and electrical tapes, for a case study. The core business of the A company is to cooperate with the Japanese enterprises, and therefore the most frequent transaction for the currency is Japanese Yen to New Taiwan Dollars. Obviously, this shows that fluctuations in exchange rates dramatically impact on its financial performance due to a current floating exchange rate regime. In other words, it is crucial and essential for the A company to manage the foreign exchange risk. In order to improve the A company’s foreign exchange risk management performance, the case study methodology is used to carry out this study. The aim of the study is to assist the A company to establish its own foreign exchange risk management system based on the most prevalent approach to the foreign exchange risk management which is implemented in foreign enterprises. According to the case study analysis, there are two findings in this study. Firstly, the study found out that there are two major risk issues, ‘transaction exposure’ and ‘economic exposure’, for the A company to consider. Secondly, the A company’s ability to manage the foreign exchange risk is weak for lack of the complete foreign exchange risk management. In order to develop useful solutions to the existing problems, the study has put forward suggestions for the A company to improve the current weaknesses, i.e. unestablished the foreign exchange risk management system, through setting up an organisation and an information system to manage the foreign exchange risk management in advance. In this way, this enables the A company to efficiently achieve the goal of managing the foreign exchange risk in the long run.