Case: 3M Foreign Currency Exposure

1)

a) Identify how your company manages its foreign currency exposure:

3M follows a strategy of significantly increase investments in international opportunities to increase the opportunity of earning in foreign exchange. According to the 3M chairman Buckley 3M's international growth plans include doubling the chances of foreign exchange investments in some developing countries like Brazil, Russia, India, China and Poland in the coming future.

b) What strategies does it use?

- 3M considers foreign exchange transactions as their single largest growth platform

-3M is investing in foreign exchanges in its full capacity on various exchanges opportunities in the developing countries which is an optimal strategy to increase the exposure.

-3M announced to take certain measures to reduce the impact of the foreign currency risks.

-3M planned to reduce the risk by entering currency hedging contracts. 5. Planning to raise product prices to offset the impact of weak currencies. 6. Localization of the production processes to avoid the import and export transaction for production that is to supply goods in India 3M started using the capacities and processes in India itself, results into lesser investment in foreign currency which attracts the risk. However, this is to be practiced in the countries with strong currencies.

c) Explain how currency rates affect the Firms business?

Currency rates affect the firms business in many ways for example Currency rates affects the domestic currency and in turn the profitability of the parent company. Also, currency rates have direct impact on the economy and country's international trade for instance weaker currency will stimulate exports and make imports more expensive. Lastly, currency rates determine the value of assets the frim holds in other countries.

2) What countries other than the U.S. does your company conduct business? Give 3 examples. What percentage of revenue is derived from its operations in these foreign markets? Please also identify each countrys currency and whether a cross rate calculation is necessary.

a) Brazil

b) Russia

c) India

d) China

e) Poland

3) Why do you think the company made the decision to operate in the locales chosen?

When investing in foreign exchange exposure, the company wants to see an increase in the markets they are investing in. For example, one way to foresee a positive future is to increase in developing countries.

USING THE QUESTIONS AND ANSWERS ABOVE ANSWER QUESTION 4 BELOW ABOUT 3M

4) Provide a summary of how the Firms strategies were executed and the results in the Firms most recent reportable quarter.