This website uses cookies to ensure you have the best experience. Learn more

Tiffany & Co. 1993 Essay

888 words - 4 pages

Due to the fluctuations of yen/dollar exchange rate, the new distribution agreement with Mitsukoshi gave rise to high exchange-rate exposure for Tiffany to bear. The exposure goes in the following two ways:Economic Exposures. From 1983 to 1993, the yen/dollar exchange rate was along a down turn path (see Exhibit 1). In the past, Tiffany wholesaled its products to Mitsukoshi. Since the wholesale transactions were denominated entirely in dollars, yen/dollar exchange rate fluctuations did not represent a source of volatility for Tiffany's expected cash flows. Under the new agreement, Tiffany has to bear the risk of any exchange-rate fluctuations that will take place when it assumes the responsibility for establishing yen retail prices, holding inventory in Japan for sale, managing and funding local advertising and publicity programs, and controlling local Japanese management.Translation exposure. Since Tiffany-Japan is a wholly owned subsidiary of Tiffany, as a public company, Tiffany has to consolidate financial report of its Japanese branch. So, an unanticipated change in yen/dollar exchange rate will effect the company overall financial performance.Since Japan's sales in 1991and 1992 accounted for 23% and 15% of the net sales of Tiffany along with the long-run growth potential of Japanese sales, the above two sorts of risks could be severe in the case of an unexpected change of yen/dollar exchange rate. For example, when an unanticipated 10% rise of yen against dollar exchange rate comes, Tiffany will probably reconsider the inflated budgets in dollar term of Japanese advertising and publicity programs.Considering the potential harms brought by yen/dollar exchange-rate exposures, Tiffany should actively manage the risk. Despite the huge market potential for Tiffany's jewelry in Japan, Japanese consumers became more cautious in their spending as the Japanese economy slowed down, resulting in a slumped demand for Tiffany's luxury items. And in the $20 billion Japanese jewelry market, Tiffany was just a smaller player. Although Tiffany management believed that a retail price reduction in Japan of 20% to 25% would likely gain a substantial increase in unit volume of jewelry sales, a strong yean could hurt the competitive pricing of Tiffany's products in Japanese markets. In addition, since the management of the firm had planned to rely mainly upon internally generated funds and a $100 million non-collateralized revolving credit facility to finance its operation, the possible bad financial performance brought by high exchange-rate risk will definitely hurt its financing plan.The major objective of Tiffany's exchange-rate exposure control program is to handle appropriately the payment in yen of repurchase of inventory, which involves $87.5 million plus annual interest. From July 1993 to February 1998, Tiffany needed to pay Mitsukoshi in total inventory repurchase $87.5 million and interest payment $3.5625 million (see Exhibit 2). And so, Tiffany should...

Find Another Essay On Tiffany & Co. - 1993

phase diagram Essay

4456 words - 18 pages Introduction: Chemical equilibrium is a crucial topic in Chemistry. To represent and model equilibrium, the thermodynamic concept of Free energy is usually used. For a multi-component system the Gibbs free energy is a function of Pressure, Temperature and quantity (mass, moles) of each component. If one of these parameters is changed, a state change to a more energetically favorable state will occur. This state has the lowest free energy

Revolutionary Work of Art Essay

1890 words - 8 pages Walter Benjamin emphasizes in his essay, “The Work of Art in the Age of its Technological Reproducibility” that technology used to make an artwork has changed the way it was received, and its “aura”. Aura represents the originality and authenticity of a work of art that has not been reproduced. The Sistine Chapel in the Vatican is an example of a work that has been and truly a beacon of art. It has brought a benefit and enlightenment to the art

Enlightenment Thought in New Zealand Schools

1594 words - 6 pages In this essay I will be looking at how the political and intellectual ideas of the enlightenment have shaped New Zealand Education. I will also be discussing the perennial tension of local control versus central control of education, and how this has been affected by the political and intellectual ideas of the enlightenment. The enlightenment was an intellectual movement, which beginnings of were marked by the Glorious Revolution in Britain

Psychological Egoism Theory

2240 words - 9 pages The theory of psychological egoism is indeed plausible. The meaning of plausible in the context of this paper refers to the validity or the conceivability of the theory in question, to explain the nature and motivation of human behavior (Hinman, 2007). Human actions are motivated by the satisfaction obtained after completing a task that they are involved in. For example, Mother Teresa was satisfied by her benevolent actions and

How Celtic Folkore has Influenced My Family

1587 words - 6 pages Every family has a unique background that influences the way they live and interact with other people. My parents, who emigrated from Ireland to the States with my three brothers in 1989, brought over their own Celtic folklore and traditions that have helped shaped the way our family operates and lives. One aspect of folklore that has helped shape my family dynamic is the Celtic cross—both its background and what role it has played in our lives

Julia Margaret Cameron

1406 words - 6 pages At a time when women were looked upon as being homemakers, wives, mothers and such the late 1850's presented a change in pace for one woman in specific. Photography was discovered in 1826 and soon after the phenomenon of photography was being experimented with and in turn brought new and different ways of photo taking not only as documenting real time, but also conceptualizing a scene in which an image would be taken. Julia Margaret Cameron will

Evaluation of School Improvement

1403 words - 6 pages improve performance in the education of all of the students. Furthermore, administrators, teachers, and staffs were encouraged to utilize the expertise of instructional coaches in the classroom. For example, coaches can assist with creating effective lesson plan and developing new strategies and resources for instruction. In addition, the Lead Special Education teacher (LTSE) all training sections for co-teaching in the general education

Case Study: The Benefits of Animal Testing

1757 words - 7 pages Nine year old Amy has already had a rough start in life. She was born with an abnormal heart that hinders her everyday activities. Amy is unable to keep up with kids her own age because she often tires out easily. As a consequence, she has very little friends and is often alone. Amy is forced to take different medications everyday just to survive. Amy’s life consists of medicine, doctors, and constant hospital visits. However, Amy is due for a

Myth and Magic: Realism in "One Hundred Years of Solitude"

1531 words - 6 pages “He enjoyed his grandmother's unique way of telling stories. No matter how fantastic or improbable her statements, she always delivered them as if they were the irrefutable truth” (Wikipedia, 2011). Experiences are particular instances of one personally encountering or undergoing something and in these moments of time life changes for the best or the worst and memories are formed. These recollections such as riding your first bicycle, going to

Adiponectin: a Novel Indicator of Malnutrition and Inflammation in Hemodialysis Patients

2384 words - 10 pages Objective Protein-Energy malnutrition (PEM) and inflammation are common and overlapping conditions in hemodialysis patients which are associated with increased risk of morbidity and mortality. Adiponectin is an adipocytokine which is exclusively produced by adipose tissue. Few studies in hemodialysis patients have demonstrated that serum levels of adiponectin were significantly higher in malnourished patients compared to well-nourished ones. The

The Congo Free State: A Legacy of Apathy, Exploitation and Brutality

2298 words - 9 pages Between 1885 and 1908, Belgium’s Leopold II ruled Congo, a region in central Africa, as his personal colony, exploiting the resources and inhabitants for his own gain. Leopold allowed and encouraged Europeans and other Westerners to enter Congo and set up companies whose primary purpose was to gather rubber, which was abundant but difficult to get to in the Congo, using the Congolese as the laborers for the Europeans. Rubber gathering in Congo

Similar Essays

Tiffany Essay

1594 words - 6 pages Executive summary Since July 1993 when Tiffany & Company made the new agreement with its Japanese distributor, Mitsukoshi Limited, Tiffany would face the risk of any exchange-rate fluctuations which previously Mitsukoshi used to bear. In addition, as long as the retail sales in Japan are expected to increase, it is necessary that Tiffany hedge the risk of exchange rates between dollar and yen. Basically two kinds of derivatives which are

A Biography On Entrepreneur Donald Trump

1002 words - 4 pages womanizer. Donald with a 13 year marriage with Ivana, having three children by the names of Donald Jr. in 1978, Ivanka in 1982 and Eric in 1986. They divorced in 1991, with publicized accusations of an affair with Marla Maples. He bore another child with this woman by the name of Tiffany, which was born in 1993 and again he separated from Marla in 1997. Donald is seen with woman all the time so nobody ever knows if he is single or not

Biography Of Paula Scher Essay

1501 words - 7 pages office. Pentagram is a very well know design firm, with offices in London, San Francisco, New York, and Berlin. They have created designs for very well know and renowned clients. Including brands like Revlon, Walgreens and Saks Fifth Avenue. While at Pentagram Paula Scher has worked on many brands, developing brand identity and systems, environmental graphics, packaging and publications. Brands like Citi Bank, Microsoft, Tiffany & Co, Coca-Cola, and

When The Bubble Burst Essay

1539 words - 6 pages By the time I arrived state side from my second tour in the Middle East the housing bubble had already burst. I noticed a drastic change in the way that many of my friends and family were living. Several of my friends that worked in real estate had sold their boats and seconds houses. My own stock portfolio had lost a third of its value. My sister and her husband had defaulted on their home mortgage leaving them scrambling for a place to live. I