Case 37. Baker Adhesives
• Baker would be under intensive pressure to
find new markets for possible international
sale.
• New sale to Nova, Brazilian toy manufacturer,
boost the sale of Baker. However this
international sale in Brazilian real (BRKL)
causes several concerns; 1) the impact of
exchange rate and 2) unwillingness of Novo to
change the per-gallon price. Furthermore
there is a concern regarding an increasing cost
of adhesiveness.
• 1) Discuss the adhesive market briefly.
• 2) Discuss two ways to mitigate the exchange
risk. Which one (out of two ways) is better for
Baker?
• 3) Do you believe Baker has to hedge the
impact of exchange rate?