BAO5573_4385069_4492362_4381125_4486178

BAO 5573 INTERNATIONAL FINANCIAL MANAGEMENT
Report: Exchange Rate Risk Management
Semester 1- 2015
Date of Submission: 07/05/2015
Submitted by:
SiddharthPitolwala 4385069
Amanda Nguyen 4492362
Merrilyn Spencer 4381125
AmitGandotra 4486178

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Table of Content
INTRODUCTION................................................................................................................................ 2
COMPANY PROFILES....................................................................................................................... 2
1. Apple Inc......................................................................................................................................................2
2. Samsung Electronics Co., Ltd........................................................................................................................4
COUNTRIES OVERVIEW................................................................................................................. 8
1. INDIA ...........................................................................................................................................................8
2. UNITED STATES OF AMERICA .....................................................................................................................11
3. AUSTRALIA.................................................................................................................................................14
4. SOUTH KOREA............................................................................................................................................15
APPLE & SAMSUNG ELEC. INTERNATIONAL OPERATION IN THE SELECTED
COUNTRIES......................................................................................................................................16
SOURCES OF RISKS........................................................................................................................17
EXCHANGE RATE RISK MANAGEMENT STRATEGIES ........................................................18
ECONOMIC AND FINANCIAL CRISIS .........................................................................................18
CONTEMPORARY CHALLENGES FACED BY MNCS...............................................................19
APPENDIX.........................................................................................................................................20
Appendix 1: International operations in selected countries...........................................................................20
Appendix 2: Major sources of risk- Samsung..................................................................................................22
Appendix 3: Major sources of risk- Apple ......................................................................................................23
REFERENCE LIST............................................................................................................................25

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Introduction
In today’s globalized world many companies seek to expand their businesses into different
countries around the world. The opportunity to become a global player and generate higher
profit seems promising and tempting. However there are always different sources of risks
involved when businesses operate in an international basis.
This report will look at the two MNC Apple Inc. and Samsung Electronic Co., Ltd. and
analyse these companies internalisation strategy based on the different economic and
environmental challenges in four selected countries.
Company Profiles
1. Apple Inc.
Apple Inc. is a multi-national technology company based in Cupertino, California. The
company designs, manufactures and markets mobile communication and media devices,
personal computers and portable digital music players. In addition to the hardware the
software of the products are also designed by the same company. According to the recent
study Apple is considered as the world most trusted brand. The latest mobile device of Apple
that is iPhone6 was the best selling phone worldwide.

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Internalisation Strategy
With the simple but innovative design, Apple has gained a large customer base. The main
competitor is Samsung, which offers a wide range of electronic products.
Apple is currently in 15 different nations with 437 Apple retail store as of October 2014.
There are two main growth prospects for Apple: The technological advancement has leaded
to more people owing a smartphone and because of its simple design Apple has flourished in
the smartphone market.
Out of the total sales of Apple, 62% constituted of the international net sales. The company is
based in California while the manufacturing of its hardware is done in Asia and assembling
the hardware is performed in Ireland.
TRUSTED BRAND VALUE PRODUCT DIFFERENTIATION
Apple products considered as
„high class‟
Product innovation through sourcing
and design for premium product range
STRATEGY

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2. Samsung Electronics Co., Ltd.
Samsung Electronics Co., Ltd. is a global electronics company with its headquarters in South
Korea and 150 subsidiaries around the world. Within 12 years Samsung has evolved from a
mediocre business into one of the world’s biggest and most successful manufacturers for
electronic devices with a strong brand value and exclusive premium products for costumers.
Samsung’s philosophy has always been to satisfy customer needs to the fullest. The
company states that it wants to strengthen its market leadership by diversifying its product
line up from premium to mass-market models and by leading new markets such as LTE
(Samsung Electronics 2014 Half Year Report).
Internalisation Strategy
COST LEADERSHIP DIFFERENTIATION
Affordable prices for consumers
Lower prices than Apple
New innovation on premium
products (Edge, Galaxy Gear&Fit,
and Flexible Displays)
STRATEGY

5
The combination of high-quality and well-designed range of productsand affordability makes
Samsung popular with the younger audience as they have budget restrictions but show high
interest in the newest technology. The strong brand awareness makes it possible for the
company to stay competitive in the electronic market with many strong competitors such as
Apple, HTC, LG, Nokia and Sony.
Porter’s Value Chain
Prof. Sang chul Jung (2014) has analysed the strategic management of Samsung Electronics
Co., Ltd. and identified the key success factors of the company through the generic value
chain model.
Human Resources:
 Adoption of Open Personnel Management System to increase efficiency and
competitiveness
Organisation:
 Strong costumer-focus
 Adoption of American style management system while keeping Japanese style of
operation management to secure core talented employees
Table 1.1 Porter Value Chain
Source:http://research-methodology.net/illy-value-chain-analysis/

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Sustainability and Product Life Cycle
Samsung Elec. seeks to minimize environmental impact throughout the whole life cycle of
products and operates a “waste electronics collection recycle system” in Europe, North
America, Korea, and India (Samsung Electronics 2014 Half Year Report).
The company has been operating the Eco-design assessment system since 2004 in order to
satisfy the global environmental regulations and costumer demands for eco-friendly products.
Source: Samsung Electronics Co., Ltd. official website
http://www.samsung.com/us/aboutsamsung/sustainability/environment/eco_products/eco_design.
html

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The company also believes that the extension of the product life cycle is an important factor
of sustainability and has therefore introduced new innovation to extent its product life cycle.
Examples of product life extensions can be found in the table below.
Source: Samsung Electronics Co., Ltd. official website
http://www.samsung.com/us/aboutsamsung/sustainability/environment/eco_products/eco_design.html

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Countries Overview
1. INDIA
Socio-political environment in India
India is one of the largest democracies of the world, which runs on a federal form of
government. Indian Political Environment is greatly influenced by different factors such as
the policies and rules of the ruling government, Interests of Politician and the different
ideologies of the political parties in India.
Here are some of the statistics showing overall risk ranking of India

9
Economic environment
After the independence in 1947, Indian Planning Commission was formed in 1950 for
formulating the five-year plans mainly for boosting the economy of India. In 1991,
Government implemented Economic Reforms, 1991.With the reforms there was a reduction
in the industrial licensing, introduction of FDI and encouraging private investments. After the
reforms of 1991, India has seen constant growth in the Economy.
The table below represent the same.

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Financial environment in India
The growth in the financial system of India is constant and stable since independence. India
Stock market has raised three fold during the current period. The growth rate of India is more
than 8% for a long period. After the introduction of Economic reforms foreign direct
investment is increasing in India.The ruling government of India started a new initiative
“Make in India” where in the companies are encouraged to manufacture their products in
India.

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2. UNITED STATES OF AMERICA
Socio-Political Environment in United States
United States is one of the oldest democracies, which run federal form of government. As it
an open economy it encourages more business opportunities. Employment opportunities and
high GDP growth rate in United States is helping the companies to initiate industries in
United States.
Economic Environment in United States
United States follows the Capitalist mixed economy, which is rich with natural resources and
high productivity. Most of the headquarters of the Multi nationals are based in United States.
The GDP is standing at 17.8 trillion dollars with 5% growth rate. The US dollar is the world
primary reserve currency. United states is one of the largest importer and exporter of goods
and services. The economy of the nation mainly comprises of the private investments with
86.4 % while government constitutes 4.3% and state and local government constitutes 9.3%.

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Financial Environment in United States
The financial environment of United States consists of the Banking system, non- bank
financial institutions and financial markets. The committee on banking, housing and urban
affairs of the senate handles all proposed legislation. The Federal Reserve System is the
central bank of the US. The table below will explain in more detail about the financial
environment of United States.

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3. AUSTRALIA
According to the 2015 CEDA economic and political overview report1
, the Australian GPD
growth will stay below average in the current year and eventually return to average in 2016.
The weak economy has lead to a weak Australian Dollar with a current exchange rate of
0.781353 AUD/USD.2
The weakened domestic currency has lead to higher living costs.
Superannuation funds have been constantly growing and will eventually overtake the volume
of assets that banks manage, which will probably lead to a change of the Australian financial
system in near future.
The majority of managed superannuation funds invest a great share of their portfolio in
international markets as part of their risk management. Australia‟s current net foreign liability
is around 55% of the GDP and the same amount of equity is being offshored in international
entities. The International Monetary Fund forecast a higher bid-price for Australian assets as
China opens up its capital market and increases the volume of demand for Australian assets.
The biggest economic issues are currently a high (youth) unemployment rate, a dramatic fall
in the iron, coal and oil prices, a weak Australian Dollar and a dysfunctional senate. The
Australian services sector dominates the economy as it makes up to 70% of GDP3
.
Price Index
IMPORT PRICE INDEX EXPORT PRICE INDEX
Figure 1.2 International Trade Price Indexes, Australia, Dec 2014
Source: http://www.abs.gov.au/ausstats/abs@.nsf/mf/6457.0
1
http://adminpanel.ceda.com.au/FOLDERS/Service/Files/Documents/25163~EPOFinalWeb_2015.pdf?Source=landing
2http://www.x-rates.com/calculator/?from=AUD&to=USD&amount=1
3
http://www3.ambest.com/ratings/cr/reports/Australia.pdf

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Living Cost Index Australia
Figure 3.2 Selected Living Cost Indexes, Australia, Dec 2014
Source: http://www.abs.gov.au/ausstats/abs@.nsf/mf/6467.0
4. SOUTH KOREA
As one of the so-called Asian “Tigers”, South Korea is currently the third largest economy in
Asia and number 12 in the world‟s economy. The young and dynamic economy is very
export orientated with China and the USA as the two top export destinations. The openness to
global trade agreements and regularity environment makes it easy for foreign investors to
acquire domestic stake. A recent report4
shows that 70% of the banking sector is currently
owned by foreign investors. The Capital Market Consolidation Act aims to enhance
opportunities for cross selling by breaking down the barriers between financial sectors.
GPD growth has been moderate in the previous years due to slowing growth of exports to
China and less consumer spending. Households have increased their borrowings instead with
their debt being 80% of last year‟s GDP5
. Domestic interest rates have dropped to a minimum
of 1.75% as well as the inflation rate. However South Korea still has a big current account
surplus and little external debt, which make it easier for the country to recover from the
current economical „sleep‟.
From the socio-political view South Korea currently has to deal with a number of problems
such as social polarization, a huge gap between the rich and the poor, environmental
aggravation and population aging6
. The tensions with North Korea are also a big issue for
South Korean politics and remain a political risk with no perspective of improvement in near
future.
4
http://www.pwc.com/en_GX/gx/financial-services/pdf/pwc_fs_manda_korea.pdf
5
http://www.economist.com/news/finance-and-economics/21647323-once-fearsome-economy-struggles-fend-deflationary-
funk-tiger-winter
6
http://www.eastwestcenter.org/research/visiting-fellow-programs/posco-visiting-fellowship-program/economic-and-social-
aspects-of-korea-related-issues

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Table 3.3 Risk dimension of South Korea
Source: http://www.eulerhermes.com/mediacenter/Lists/mediacenter-documents/Country-Report-South-Korea.pdf
Apple & Samsung Elec. international operation in the selected
countries
Samsung Electronics is currently facing extreme challenges in its home country South Korea
as China‟s demand for Smartphones is decreasing due to cheaper domestic products.
International sales have also gone back due to exchange rate movements and strong
competition. Samsung has therefore announced new investments into chip plants and a
freezing of domestic salaries for employees. Sales in India have been constant as the
population like Samsung‟s big variation of products and the affordable prices. The Indian
government has also given permission to build a new manufacturing plant under „Make in
India‟ initiative. Australia and the U.S are solely platforms for sales of electronic devices.
Samsung therefore seeks to enhance sales by marketing efforts in order to stay competitive.
Apple Inc. is having a high sales growth in all the four countries namely India, South Korea,
United States and Australia. The political environment of each of the four countries is least
affected to the growth of Apple Inc. South Korean customers prefer for luxury products,
which are manufactured by Apple because of value and Status symbol. Apple increased the
prices of products in Australian market but their sales are still growing. India is one of the
major markets for Apple because of its population and preference of customers for bigger
screen increased its sales. Government also encouraged Apple to setup Research and
Development centre in India. As Apple is based in United States the effect of political and
economical environment is positively affected to the company.

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A detailed list of both companies‟ international operations in the four selected countries can
be found in the Appendix 1.
Sources of risks
Risk is an unavoidable factor that has strong impacts on business activities since it makes the
process of decision-making more difficult. The uncertainty of future events put a threat on
management decision on whether investments should be done or not.
As a global player, Samsung Electronic has to deal with various sources of risks including
foreign exchange risk, price risk, interest rate risk, credit risk, liquidity risk, and political and
environmental risk. Each of this risk source impacts on the organization‟s objectives and
Samsung is trying to manage these risks with different strategies of risk management.
The company is currently dealing with a currency problem as two different exchange risk
dynamics are crushing Samsung‟s profit7
. As the EURO has weakened due to the ECB‟s
policies, the Won has advanced against the EURO and has caused Samsung to maintain its
sales. At the same time the USD has strengthened and made the Won decline against the
USD, which increased the material cost for Samsung. The company is trying to boost
innovation in order to enhance sales after a disappointed fiscal year 2014.
Apple is currently in various countries all over the world. There are numerable risks faced by
the company on a regular period of time. Some of the risks include Foreign exchange rate
risk, interest rate risk, legal risk, long term debt risk, political risk, environmental risk and
credit risk. With all these risks affecting the company‟s objective Apple is making efforts to
reduce the risks by implementing different strategies.
One of the major risks faced by the company is the foreign exchange rate risk. The reason is
the existence of different currencies when trading international. Refer to Appendix for more
information.
A detailed list of Samsung and Apple‟s major sources of risks and a description of how the
company deals with these risks can be found in Appendix 2&3.
7
http://www.iol.co.za/business/opinion/columnists/apple-is-the-least-of-samsung-s-problems-1.1852928#.VUg4wc7lflI

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Exchange Rate Risk Management Strategies
Samsung is exposed to foreign exchange risk arising from various currency exposures.
Revenues and expenses arise from foreign currency transactions and exchange positions, and
the most widely used currencies are the US Dollar, EU‟s EURO, Japanese Yen and Chinese
Yuan. Both SEC and its subsidiaries carry out FX risk management. The company runs a
system to manage receivables and payables denominated in foreign currency. To manage FX
risk, the Company‟s subsidiaries hedge by trading forward currency contracts based on
foreign currency positions. Overseas subsidiaries buy or sell currency forwards with less than
one year maturity via a bank to avert risk.(Annual Report 2013).Samsung uses derivative
instruments, primarily forward exchange contracts, foreign currency swap and interest rate
swap contracts to hedge foreign currency exchange rate risks and floating interest rate
exposures.
Apple gets revenue in currencies other than US dollar also and that‟s why any changes in the
exchange rates may have a negative effect on the margins of the company like a stronger
dollar may adversely affect the sales and margin of the company. To mitigate this risk, Apple
hedges its foreign exchange exposures for three to six months in most of the cases. It also
enters into forwards and options with the financial institutions to reduce the risk of foreign
exchange fluctuations. The company diversifies its financing by operating in different capital
markets and raising capital in the market that provides the lowest cost for funds. To protect
the company from the exchange rate risk, the subsidiaries of the company functioning in US
dollar hedge some of its foreign currency revenue and the subsidiaries functioning in non-US
dollar hedge some of the stock purchases.
Economic and Financial Crisis
In spite of the economic recession and fierce competition in 2009, Samsung Electronics
achieved record sales and consolidated operating income-the greatest performance in its
history (Annual Report 2009).It envisioned 2010 as the start of its ten-year Vision 2020
corporate goal-- to be amongst the top ten global companies. The company developed a
business structure that blends innovation in hardware and software. Leveraging this, it
developed new businesses in health, environment and renewable energy. It took a lead over
rivals by technical leadership and continuous cost-reduction efforts. The company
restructured and streamlined its organization from two businesses overseeing 10 divisions
into 8 independent businesses. The company focussed on brand building and projected the
brand as life -enhancing to boost up consumer sentiment after financial crisis and sponsored
many sporting events for brand visibility.

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Apple uses an assessment approach to decrease the risk associated with the interest rate
changes in the company‟s investment portfolio. It uses several financial tools like forward
and option contracts and entering into long-term agreements with the suppliers to reduce the
credit risk and to ensure that it receives a regular income. The risk management strategy used
by this company has proved to be effective as it mitigates the economic risk by using
products from different countries as it offsets the uncertainties due to FX fluctuations like if
the exchange rate of one country turns unfavourable, the company can make purchases from
supplier in another country with favourable exchange rate. Apple always uses substantial
strategies focusing on customer experience and profits to the shareholders.
Contemporary Challenges faced by MNCs
With the increasing complexities in the business environment around the world, the
companies face many contemporary challenges like transfer pricing and tax structures.
Transfer pricing is the value at which companies trade products, services or assets between
units across borders. Revenue authorities in many countries are challenging attempts of
companies to minimize tax liabilities by moving taxable income from higher-taxing
jurisdictions to lower-tax ones.Thetax department in emerging economies believes many
firms are taking advantage of low costs in such countries to develop high-end, patented
services or products that are sent to overseas parent firms as low-value routine work.(The
Wall Street Journal).The tensions reflect growing debate over how MNCs should report their
income through subsidiaries around the world. Emerging economies such as India want to
grab a larger slice of such income, while countries where the multinationals are based want to
keep profits—and taxes—at home.(Wall Street Journal). Tax authorities are getting
aggressive, having strict adjustments for the use of parent owned intangibles (brand
name/patents). To overcome this, the governments have proposed rigorous documentation
requirements and hefty penalties for the defaulters. The national tax authorities are protecting
the taxation system from the tax evasions made possible due to the transfer pricing
adjustments. The multinational companies are now required to comply with the requirements
and use such a method for compliance that can be tested for credibility by the tax authorities.
The increasing changes in international business environment and the loopholes in the
existing tax laws have led to serious problems in the international tax laws known as BEPS
(Base Erosion and Profit Shifting)

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Appendix
Appendix 1: International operations in selected countries
South Korea The South Korean economy
heavily relies on exports with
China being the number one
trading partner. As domestic
Chinese companies have started
to produce cheap smartphones,
the demand for Samsung
products have dropped and
caused the company‟s sales to
break down. The company has
reacted with a freeze of
employees in South Korea in
2015 to compensate the profit
falls. Samsung also stated that
the company would focus on
increasing the chip production,
as the memory chip earnings
were robust in the last quarter.
Samsung is about to invest 15.6
billion won for the
establishment of a new chip
plant in South Korea.
The South Korean luxury
market has moved to a new
trend and South Koreans are
now eager to purchase premium
products. The value of status
symbol gadgets has therefore
increased. Apple products are
still being considered as
„premium‟ compared to
Samsung products since the
Retina displays and the
aluminum and steel coating are
making Apple products more
luxury than Samsung‟s plastic
products. In 2014 Apple had an
amazingly 33% market share in
South Korea. Apple is however
still being criticized by the
Korean Press for not opening a
flagship store in South Korea.
The company states that the rent
in Korea would be too costly.
Australia Australia is one of the sales
platforms for Samsung
Electronics. Samsung Australia
is solely focused on the sales of
electronic devices and therefore
puts a lot of effort in marketing
activities. The company is trying
to increase sales and strengthen
brand image by attracting
Australian consumers with the
newest technologies. Samsung
has partnered with Australian
airline Qantas, which now
provide Samsung GEAR VR for
First Class passengers.
In the recent 2015 Australian
corporate reputation stakes,
Apple was only ranked 11th
place. Tablet sales have also
been staggering in Australia as
the Australian tablet sales
dropped 20% in 2014 (Telsyte
Report). In March 2015 Apple
increased its prices by 15% due
to a change in exchange rate
between USD and AUD.
Apple‟s expansion into the
Australian market is not feasible
on its own. Therefore they have
established alliances with

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industry leaders to enable their
exposure as a risk-averse
strategy.
India A wide range of products is
helping the company to boost
their sales growth in India.
Under The “Make in India”
initiative by the Government of
India Samsung is planning for a
100 million investment in India,
which shows a positive sign for
Samsung to manufacture
products on a lower cost and
gaining more wealth. The
expectations are high for
Samsung in India after the
launch of new Samsung smart
phone Samsung S6. The main
advantage in India for Samsung
is the mass population between
ages of 20-50.
Smart phone customer in India
mainly looks for the bigger
screen size. This has helped
Apple to double the sales in
India after launching their new
model iphone6 plus in the Indian
Market. The sales are in the
same ratio as China.
Additionally lack of innovation
of Indian local companies has
helped multinationals like Apple
to succeed in India. The newly
elected government of India
(May 2014) focuses on
development of technology,
which is a positive point for
Apple and other Multinationals.
USA The Company is facing troubles
in United States from its
competitors as well as new
entrants. There is a patent
litigation filed against Samsung
from its rival Apple Inc. in
United Sates. But efforts are
made by the Federal Court of
US to finish the long legal
battle. Also Samsung is planning
to make screens for Apple
Phones. Samsung is facing
issues from Microsoft for the
patent litigation where they both
need to share IP licenses.
Apple Inc. was established in
United States, which is a clear
indication that the political and
financial environments of
United states have a positive
impact on the Company. The
new product of Apple iWatch is
expected to cross 15 million
sales in United States. Even the
decrease in the PC market in US
has not the sales growth of
Apple. To sustain their influence
in United States Apple is
making efforts to reduce
environmental impacts by
reducing the green house gas
emissions and cutting down of
paper.

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Appendix 2: Major sources of risk- Samsung
Risk Source Impact on overall business activities
Foreign exchange risk Samsung is exposed to foreign exchange risk due to
various currency exposures, mainly with the U.S,
EU, South America and Asian countries with the
most widely used currencies being USD, EUR, Yen
and Yuan. A change in exchange rate against the
Korean Won can cause can cause changes to the
company‟s foreign assets and liabilities and in the
worst case lead to high losses
Price risk As the company holds an investment portfolio,
which consists of both direct and indirect
investments in equity securities, a price fluctuation
in relation to marketable equity securities results in
changes in the company‟s comprehensive income
Interest rate risk Samsung is exposed to interest risks mainly through
interest bearing debt obligations such as bonds,
deposits and issuance of receivables. Changes in the
market interest rates can cause fluctuations of the
fair value of future cash flows and impact the
interest income and expenses of floating interest rate
of financial instruments. Samsung therefore keeps
only a minimum of external borrowings by
facilitating cash pooling systems on a regional and
global basis to minimize this source of risk
Credit risk Credit risks can cause companies to experience great
losses as the client fails to discharge an obligation.
Samsung therefore only agrees to transactions with
banks, which have strong international credit ratings
and estimates its own risk exposure to be limited
Liquidity risk Liquidity risk occurs when an asset or security
cannot be traded quickly enough to minimize or
prevent losses. Samsung faces this source of risk due
to large investments made by the company. The
maximum liquidity risk exposure was W183,644
million at the end of the fiscal year 2013. To control
that risk, Samsung periodically forecasts projected
cash flows and runs a Cash Pooling program, which
helps the company to reduce capital operation and
finance expenses and maintain its competitive
position.
Political risk Political risks can cause unpredicted strikes, which
lead to a shutdown of business activities and high
losses. Samsung is seeks to hold good relations to
the company‟s external stakeholders and
shareholders in order to avoid strikes.
Environmental risk Environmental risks such as natural disasters can
lead to a delay of supply and cause huge amount of
losses. As Samsung product‟s core components are
mainly sourced from Korea, a natural disaster in the

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Appendix 3: Major sources of risk- Apple
Risk Source Impact on overall business activity
Foreign Exchange Risk Apple is exposed to Foreign Exchange Risk due to
various currency exposures including the US dollar,
Euro, AUD, INR and many more. The FX risk is mainly
affecting the sales and earnings of the Company. To
reduce the risk Apple uses foreign currency forward
and options contracts to hedge certain fluctuations
Credit Risk Company can be affected by credit rating, which can
affect the liquidity, credit detoriation and financial
results. This risk might result into fluctuations in
value and liquidity of the Company
Legal Risk Apple is subject to various legal proceedings and
claims and there are certain claims against the
company, which are not yet fully resolved. Legal risk
is one of the top most risk faced by any company.
There are two cases still pending for Apple.
Interest Rate Risk Interest Income of Apple is sensitive to US Interest
rate fluctuations and thereby affects Company’s
Cash and Cash Equivalents and Market securities
and cost associated with hedging. Interest rate risk
relates primarily to Investment portfolio. Apple
performed a sensitivity analysis to determine the
effect of change in the interest rates on the value of
investment portfolio.
Asian region can cause transportation system to
break down and hinder the delivery of these
components to the global subsidiaries, where the
single parts are being assembled.
Global Legal Issues Samsung has been fighting a legal war with Apple,
for three years now, which has cost both companies
a good amount of money. The war is about patented
features as Apple accuses Samsung of copying its
products. As the war goes on the costs to cover the
expenses increase and cause cuts on annual profits
and the company‟s shares could fall.

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Long Term Debt Risk As of the latest data, Apple has issued a $ 17 billion
debt. To manage the risk company entered into
interest rate swaps for the floating rates notes.
Political Risk Apple is currently operating in 15 different nations
and all the companies are faced with political risk for
all the countries they are operating in. Political risk
usually occurs when there is a change in the ruling of
the government of the country in which the
company operates.
Environmental Risk Apple is trying to manufacture products, which can
affect least to the environment. Still there are
certain risk faced by the company and that can lead
to permanent closures of the company.

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