Hedging Currency Risks At AIFS Homework Essay Sample

            Currency hedging simply means to the control cost of foreign exchange in future. The AIFS used currency hedging to protect its bottom line from damaging their exchange rates in relation to the American students sent abroad for their studies. The AIFS did this two years in advance basing this on the expected cost they should cover and the proportion it should have used to forward contracts and options. AIFS also deals with business activities. In this, it sends its students abroad for academic and cultural exchange programs. These trips exposed the students to foreign countries in which foreign exchange rate was required. The ACIS were also exposed to world events. The word war, political instabilities and the drop in sales were factors that were to affect the students while abroad. The AIFS had to factor in all these variables during its currency risk hedging process (Dessai, Dessain, Anders, 2007).

            On arranging for the trip by young people to America who were to come and assist with child care, AIFS said that there should be no price surprising as it took into account the cost base, the competitive pricing and also the hedging activities. In the year 2004, the Archer-Lock had just finalized the prices for the college divisions that it cataloged for the summer 2005 and 2006. The managers discussed the sales forecasts and the events that might affect the sales.

            For the AIFS in controlling the price cost, it had to raise the prices by smaller amounts in each year. With competition, this was not a big surprise as it had no adverse effect due to strong based customers. All these were in connection to the hedging currency risk for high school travel pricing combining tours and seasons and departure gateways. Tabacznski and Archer-lock helped the AIFS in this currency hedging so as to manage the following three kinds of risks: Firstly, it was the bottom-line risk, second was the volume risk since the foreign currency was bought based on the projected sales volume, and thirdly was the competitive pricing risk since no matter how the currency fluctuated, the AIFS price guarantee meant it could not be able to transfer rate changes into price increases (Brian, 2000).

            The hedging activities normally started six months before the pricing date. The Archer-lock report on this indicated that the currency rates and their hedging activities affected many aspects of their business. It also provided the long term and short term market rates. Hedging Currency Risks at AIFS were also monitored in the light of sales and enrollment projections, market rates, currency policy and timing within the business cycle.

            Archer-Lock on its monthly report made recommendations for the future hedging. When buying the currency, AIFS dealt with six different banks with a long standing relationship in them. Without the lines of credit, AIFS would have had to deposit at each given bank to make a cover of its hedging activities. The final group’s success on the hedging activities depended on the last sales volume and the final USD market value.

The AIFS unfortunately had to buy the currency at a higher rate than the price quoted in the catalog. To help inform its hedging decision, it had put in place a good strategic and management authority to consider and put in places all policies that could assist the advancement in this currency sector. The most influential and crucial motivating factor facilitating expansion and realization of goals in hedging is the relationship in the enhancement across the board of management which is an important tool to achieve efficiency (Deasi, Dessain, Anders, 2007).

Reference

Desai Mihir, Dessain Vincent & Anders Sjoman (2007) Hedging Currency at AIFS.

Brian Coyle (2000) Hedging Currency Exposures: Currency Risk Management. London, Lessons Professional Publishing

 

Hegemonic Stability Theory

Hegemonic Stability Theory had its genesis to The Great Depression that hit United States in 1929. Charles Kindleberger is considered to be the inventor of this theory. Hegemonic Stability Theory states the rules that are required in the maintenance of international monetary and political systems all around the world. According to Charles Kindleberger, in order for the international trade to work efficiently in its domain there has to be a hegemon. By Hegemon, he meant a state of dominance of one party on another not by force but with the excess of resources and experience of dealing. It is like a coalition ruling alliance where the major party sets the rules with the consent from the minors in the coalition with shear dominance (Peleg, 2007). Same meant here, where a country must have a hegemon in order to have a better control on its monetary. It is because that a collective action can work well during the problem. The hegemon leads from the front motivating others to get inspired to become a part of the solution of a problem.

This concept hit the world in 1929 during The Great Depression crises of the America which then spread on many years getting many countries to be involved in it from Europe including UK (Guzman, 2008).

Kindleberger’s theory also related itself to the United Kingdom which has seen a history of ups and downs in its economical and financial crises. United Kingdom was becoming a head in the 1850s when it surpassed France in manufacturing production. UK became the leading exporter of capital and on the basis of power it got from this role, UK forced many decisions which consequently led the control of economy for a very long period (Kane, 2001). It was until The Great Depression that UK ruled the world in all the ways and was acting like a hegemon. But when UK failed in The Great Depression situation went on going bad for all the countries. This was because UK didn’t have a hegemon.

According to Keohane (1984), Hegemon is a state which has the ability to create and has the power to implement its policies on international matters. That state must have the power to take decisions. The economy of the state should be very strong, it must have progressed technological skill areas and has the powerful military resources to get dominance on other countries.

This theory has seen various criticisms on its existence. The critics highly argue on the point that it is not possible for any single state to control the entire world. The dominance can be there but controlling the matters single handedly is not possible (Slack, 1996). They provide an example by stating that Soviet Union never step downed from its role of the hegemon still after 1990 when it was no more. According to them when UK, France and Germany went for US, it was not the presence of US entirely to force this decision. The threat of Soviet Union made them to take that step otherwise the situation might have been quite different.

Secondly, it was also stated that during the World War II, the economical system of the world destroyed not because there was no hegemon, but because the Germany had taken harsh steps to destroy everything in its way including the economy as well.

The critics also say that there can be more than two hegemon at the same time due to the military resources. Economically it might not happen, but on the account of military it is highly possible and both the hegemons can work against each other to destabilize each other forming a bad affect on the economical system (Guzman, 2008). It is also stated that hegemon cannot last for long. We have seen history where the control of the world started from UK, then transferred to Germany, USSR and then USA.

In the newer version of this theory, hegemon is no longer has the righteous policies. That is, the hegemon now will only look at its interest rather than others (Slack, 1996). Hegemon can create, make and change the monetary system as it likes. Also previously it was said that a single hegemon cannot last long, so with the fall of hegemon the economical system also goes down creating economical and financial crises. Having a hegemon can be very dangerous in these situations as well.

Hegemon state is nowadays known as the superpower (Joseph, 2002). The word was transferred from USSR to US. Hegemon was very reluctant to work in the framework order it was provided and the superpower only knows how to dominate the world economically and militarily.

References

Keohane, Robert O. (1984). After Hegemony: Cooperation and Discord in the World Political Economy. New York: Princeton University Press.

Joseph, Jonathan. (2002). Hegemony: a realist analysis, New York: Routledge.

Slack, Jennifer Daryl. (1996). “The Theory and Method of Articulation in Cultural Studies”, in Morley, David; Chen, Kuan-Hsing, Stuart Hall: Critical Dialogues in Cultural Studies, London: Routledge.

Friedman, Jonathan and Chase-Dunn, Christopher. (2004). Hegemonic Decline: Present and Past. New York: Paradigm Publishers.

Jackson, Robert and Sorensen, Georg. (2007). Introduction to International Relations: Theories and Approaches. New York: Oxford University Press.

Emerson M. S. Niou, Peter C. Ordeshook, and Gregory F. Rose. (1989). The Balance of Power: Stability in International Systems. London: Cambridge University Press.

Steve Smith, Ken Booth, and Marysia Zalewski. (1996). International Theory: Positivism and Beyond. London: Cambridge University Press.

Kane, John. (2001). The Politics of Moral Capital. London: Cambridge University Press.

Peleg, Ilan. (2007). Democratizing the Hegemonic State: Political Transformation in the Age of Identity.  London: Cambridge University Press.

Guzman, Andrew T. (2008). How International Law Works: A Rational Choice Theory. London: Oxford University Press.

 

Helen Hunt From A Century Of Dishonor (1881)

            It is the test of a great book to remain current and relevant and enlightening many years perhaps centuries- after its publication. Helen Hunt Jackson’s A Century of Dishonor, first published in 1881, has not only passed the test, it has become a landmark in teaching the subject of American Indians and their history.  The book traces the classic account of U.S. government’s policy towards American Indians[1].

            For those who are not familiar with the author, it should be noted that this work remains one of the most insightful, coherent and perhaps precise treatment on the unfair and even cruel conduct given to American Indians by Americans during the age of expansion. It is said that Jackson penned the book to “appeal to the hearts and conscience of the American people”[2] and rescue the country from a “century of dishonor”[3], hence the title of the book. The release of her book opened the door for awareness of the life, sufferings and inevitable, the culture of the American Indians in the country.

            The book tackles the histories of seven Indian tribes- the Delawares, Nez Preces, Sioux, Poncas, Winnebagoes and the Cherokees[4]. Starting with a brief on the Indian right of occupancy, Jackson discusses on how the U.S. government broke promises to them. Peppered with detailed cases of mistreatment and abuse of human right, Jackson chronicles the dilemma faced by Native Americans at the hands of white settlers. Foremost of these incidents is the abolition of the Praying Town Indians, even though they had embraced and converted into Christianity[5]. It is also written that Jackson spent a year gathering materials for A Century[6]. It exposes Americans as a selfish race, seeking for land, money and even power.  Who exactly is Helen Hunt Jackson and why did she write A Century of Dishonor?

            Jackson was better known as a children’s book author[7]. As a protégé of Thomas Wentworth Higginson, her works were published in known journals[8]. Once, after attending a lecture on the “suffering and dispossession of Native Americans,” Jackson became intrigued and affected by their plights that she started unearthing materials on the subject[9].  When the book was finished, Jackson sent copies to Congress members, urging them to read it[10].  Basing on Jackson’s own work, measures towards the Mission Indian of California were presented and got a Senate approval, only to be vetoed by Congress[11]. Through the years, Jackson’s initiative paved off. In 1882, she became the commissioner for Indian Affairs by the Indian Rights Association[12]. Jackson had become a prominent figure in the plight of the Native American nation and her involvement and deep concern had begun the process of taking account of American Indians.  One book that also travels the same vein as Jackson is Ward Churchill’s From a Native Sons: Selected Essays on Indigenism, 1985-1995. Collecting essays throughout the years, Churchill is able to make the message known similar to how Jackson was able to achieve. What is good about the book is that Churchill has the ability to make the reader feel the continuous anguish Indians are facing in a white society. His blunt writing helps ingrain the suffering his people are dealing with.

            Reading Jackson and Churchill can serve as an eye-opener to the world of the American Indians.  It is rather ironic that these people, beyond doubt part of US history, have to rely on writers like Jackson and Churchill to remind Americans that they too, are part of the American fabric of society and as such, deserve to be treated as equals.

BIBLIOGRAPHY

Jackson, Helen Hunt. “A Century of Dishonor,” Archive.org. Home page on-line.

Available from http://www.archive.org/steam/centurydis00jackrich/centurydis00jack_djvu.txt;

Internet; accessed 7 March 2009.

Enotes.com. “Nineteenth Century Criticism,” eNotes.com. Home page on-line.

Available from  http://www.enotes.com/nineteenth-century-criticism/jackson-helen-hunt;

Internet; accessed , 7 March 2009.

[1] Helen Hunt Jackson, ”A Century of Dishonor,” Archive.org, http://www.archive.org/steam/centurydis00jackrich/centurydis00jack_djvu.txt, Accessed 7 March 2009.

[2] Ibid.

[3]  Ibid.

[4]  Ibid.

[5] Ibid.

[6]  Ibid.

[7] Enotes.com, “Nineteenth Century Criticism,” eNotes.com, http://www.enotes.com/nineteenth-century-criticism/jackson-helen-hunt, Accessed 7 March 2009.

[8]  Ibid.

[9]  Ibid.

[10] Ibid.

[11] Ibid.

[12] Ibid.

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