Hello everyone. My name is Jason Iovanna and I have been a part-time Global MBA student now for 5 years. Seems so long ago that I first walked through the doors at Merrimack College for the start of my GMBA classes. At the time, I wasn't sure how successful I was going to be or how I would fit in with the new academic environment. Having been out of school and in the professional environment for about 4 years, I was a little anxious about the upcoming change in my lifestyle, both professionally and personally, and how I would handle it. Needless to say, the journey has been a challenging and rewarding experience, and the people I have met along the way have been nothing short of amazing.
Now that my journey is coming to a close, I had to come up a topic for my capstone project. Coming from an engineering background, I wanted to do something that would allow me to utilize quantitative as well as qualitative analytical skills, but also wanted to pick one that aligned with my future career ambitions (Corporate Finance). In the end, I decided to choose probably the most volatile and challenging aspects of Finance, foreign exchange. I also chose to do the project on my company, Raytheon, and analyze and evaluate their financial exposures with an international subcontractor. I had wanted to choose a different company; however, seeing that I had direct access to critical information and resources, going with the company I work for was the most efficienct way to go. My project learning objectives are the following:
- Create a hands-on experience of how Raytheon Company participates in currency trade market and how they practically and strategically offset exchange rate volatility.
- Evaluate and identify day to day challenges Raytheon faces when cash outflows and inflows are not in their reporting currency.
- Utilize foreign exchange concepts, analytical models, and economic and political data to evaluate and measure the risk of change in the reporting currency equivalent cash flows of forecasted transactions resulting from fluctuations in the exchange rate.
- Review foreign exchange risk management policy and recommend a policy change, if any, with objective analysis backup, to improve the company’s hedging practices to maximize gains and minimize losses on future earnings.
- Research country of interest, the government, their role/reputation in the international business environment, and monetary policies to determine how that affects financial exposure and exchange rates.
- Evaluate financial exposures with an international contract pursuit for Raytheon, where they are entering into transactions involving a foreign currency source which can create exposures due to denomination of revenues and costs outside of their reporting currency (USD).
My project has been coming along well thus far. I have been refreshing my memory of foreign exchange basics and what factors/variables impact foreign exchange, such as interest rates, inflation, current accounts, public debt, and trade, and I have also been reading up on the monetary policy strategy of the home country of the subcontractor. Between last week and this week, I met three people in the Corporate Treasury department who directly support personnel on international programs with FX hedging strategies, both before and after contract awards. The project has been going smoothly, but probably the most difficult part will be putting information into one concise story. I will keep everyone up to date on the progress.