This case is about a large U.S.-based manufacturing company considering if it should shift its production from China to India to maintain it global competitiveness, particularly for selling into the U.S. market. This case study examines in detail the recent (2003-2010) economic performance of India, including changes in government policies toward foreign investment in India. The case also reviews recent financial market and product developments in India. Finally, the case study also describes, illustrates, and applies a process of country risk analysis for foreign companies considering investment in a rapidly growing emerging market economy such as India.

The case Vanguard Security Corporation, a Portuguese company, explores exchange rate and trade financing decisions for a transaction between a U.S.-based importer and a European exporter. It focuses on transaction and economic exposure identification and risk management. It also explores corporate finance and bid risk management issues. The case involves quantitative and qualitative solution techniques as it requires using four fundamental exchange rate forecasting techniques and selecting between six exchange rate hedging products to find the best solutions based on an assessment of the needs and risk appetite of the VSC corporate treasurer.

This case study is based on the actual experiences of several companies that we have worked with that want to expand their business into emerging markets. The case outlines and illustrates a framework of analysis that focuses on assessing foreign exchange rate risks, country risk analysis, and management's decision-making process in selecting a target country and about managing the risks associated with this decision. The case provides data on four possible target countries for which methods of forecasting exchange rates (PPP, IRP, IFE, B/P) can be used. The case also provides the opportunity for assessing whether a government is pursuing appropriate macroeconomic policies to avoid crises. Finally, the case allows for an evaluation of the probability of a foreign exchange, financial, foreign debt, and banking crisis in one or more of the four countries. While the case can be used to study macroeconomic policy decisions, its real purpose is to examine management's decision-making process to identify and manage possible risks associated with expanding into emerging markets.