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?