Global Treasury Management at Proct

Global Treasury Management
at Procter & Gamble
With more than 300 brands of paper, detergent, food, health, and cosmetics products sold in over 140 countries and over 60 percent of its almost $40 billion in revenues generated outside the United States, Procter & Gamble is the quintessential example of a global consumer products firm. Despite this global spread, P&G's treasury operations--which embrace investment, financing, money management, and foreign exchange decisions--were quite decentralized until the early 1990s. Essentially, each major international subsidiary managed its own investments, borrowings, and foreign exchange trades, subject only to outside borrowing limits imposed by the international treasury group at P&G's headquarters in Cincinnati.
Today P&G operates with a much more centralized system in which a global treasury management function at corporate headquarters exercises close oversight over the operations of different regional treasury centers around the world. This move was a response in part to the rise in the volume of P&G's international transactions and the resulting increase in foreign exchange exposures. Like many global firms, P&G has been trying to rationalize its global production system to realize cost economies by concentrating the production of certain products at specific locations, as opposed to producing those products in every major country in which it does business. As it has moved in this direction, the number and volume of raw materials and finished products that are being shipped across borders has been growing by leaps and bounds. This has led to a commensurate increase in the size of P&G's foreign exchange exposure, which at any one time now runs into billions of dollars. Also, more than one-third of P&G's foreign exchange exposure is now in non-dollar exposures, such as transactions that involve the exchange of rubles into won or sterling into yen.
P&G believes that centralizing the overall management of the resulting foreign exchange transactions can help the company realize a number of important gains. First, because its international subsidiaries often accumulate cash balances in the currency of the country where they are based, P&G now trades currencies between its subsidiaries. By cutting banks out of the process, P&G saves on transaction costs. Second, P&G has found that many of its subsidiaries purchase currencies in relatively small lots of say $100,000. By grouping these lots into larger purchases, P&G can generally get a better price from foreign trade dealers. Third, P&G is pooling foreign exchange risks and purchasing an "umbrella option" to cover the risks associated with various currency positions, which is cheaper than purchasing options to cover each position.
In addition to managing foreign exchange transactions, P&G's global treasury operation arranges for subsidiaries to invest their surplus funds in and to borrow money from other Procter & Gamble entities, instead of from local banks. Subsidiaries that have excess cash lend it to those that need cash, and the global treasury operation acts as a financial intermediary. P&G has cut the number of local banks that it does business with from 450 to about 200. Using intracompany loans instead of loans from local banks lowers the overall borrowing costs, which may result in annual savings on interest payments that run into tens if not hundreds of millions of dollars.
Source: R. C. Stewart, "Balancing on the Global High Wire," Financial Executive, September/October 1995, pp. 35 - 39, and S. Lipin, F. R. Bleakley, and B. D. Granito, "Portfolio Poker," The Wall Street Journal, April 14, 1994, p. A1.

Closing Case
A multinational corporation with operating companies in more than 80 countries and sales in excess of $23 billion, Motorola is one of the world's leading providers of wireless communications equipment, semiconductors, and advanced electronics systems and services. Separate Motorola companies act autonomously and trade with each other on an arm's-length basis, often across national borders. Historically, each operating company managed its own payments with other Motorola subsidiaries and with independent suppliers and executed its own foreign exchange dealings. By the mid-1990s, however, Motorola had built a global cash management system that not only managed transactions between Motorola operating companies, but also between Motorola companies and key suppliers.
The evolution of Motorola's global cash management system dates to 1976 when the company decided to develop a foreign currency netting system for transactions between Motorola companies. The objective of this system was to achieve cost savings by reducing both cash flows and the amount of foreign exchange deals required to execute cross-border payments. Under this system, all foreign currency transactions between Motorola companies are managed with a single payment or invoice from a London-based treasury management center to e

Kết quả (Anh) 1:

Global Treasury Management at Procter & Gamble With more than 300 brands of paper, detergent, food, health, and cosmetics products sold in over 140 countries and over 60 percent of its almost $ 40 billion in revenues generated outside the United States, Procter & Gamble is the quintessential example of a global consumer products firm. Despite this global spread, P & G's treasury operations--which embrace investment, financing, money management, and foreign exchange decisions--were quite decentralized until the early 1990s. Essentially, each major international subsidiary managed its own investments, borrowings, and foreign exchange trades, subject only to outside borrowing limits imposed by the international treasury group at P & G's headquarters in Cincinnati. Today P & G operates with a much more centralized system in which a global treasury management function at corporate headquarters exercises.of all close oversight over the operations of different regional treasury centers around the world. This move was a response in part to the rise in the volume of P & G's international transactions and the resulting increase in foreign exchange exposures. Like many global firms», P & G has been trying to rationalize its global production system to realize cost economies by concentrating the production of certain products at specific locations, as opposed to producing those products in every major country in which it does business. As it has moved in this direction, the number and volume of raw materials and finished products that are being shipped across borders has been growing by leaps and bounds. This has led to a commensurate increase in the size of P & G's foreign exchange exposure, which at any one time now runs into billions of dollars. Also, more than one-third of P & G's foreign exchange exposure is now in non-dollar exposures, such as transactions that involve the exchange of rubles into won or sterling into yen. P & G believes that centralizing the overall management of the resulting foreign exchange transactions can help the company realize a number of important gains. First, because its international subsidiaries often accumulate cash balances in the currency of the country where they are based, P & G now trades currencies between its subsidiaries. By cutting banks out of the process, the P & G saves on transaction costs. Second, P & G has found that many of its subsidiaries purchase currencies in relatively small lots of say $ 100.000. By grouping these lots into larger purchases, P & G can generally get a better price from foreign trade dealers. Third, P & G is pooling foreign exchange risks and purchasing an "umbrella option" to cover the risks associated with various currency positions, which is cheaper than purchasing options to cover each position. In addition to managing foreign exchange transactions, P & G's global treasury operation arranges for subsidiaries to invest their surplus funds in and to borrow money from other Procter & Gamble entities, instead of from local banks. Subsidiaries that have excess cash to lend it to those that need cash, and the global treasury operation acts as a financial intermediary. P & G has cut the number of local banks that it does business with from 450 to about 200. Using intracompany loans instead of loans from local banks lowers the overall borrowing costs, which may result in annual savings on interest payments that run into tens if not hundreds of millions of dollars. Source: r. c. Stewart, "Balancing on the Global High Wire," Financial Executive, September/October 1995, pp. 35-39, and s. Lipin, f. r. Bleakley, and b. d. Granito, the Portfolio "Poker," The Wall Street Journal, April 14, 1994, p. A1. Closing Case A multinational corporation with operating companies in more than 80 countries and sales in excess of $ 23 billion, Motorola is one of the world's leading providers of wireless communications equipment, semiconductors, and advanced electronics systems and services. Separate Motorola companies act autonomously and trade with each other on an arm's-length basis, often across national borders. Historically, each operating company managed its own payments with other Motorola subsidiaries and with independent suppliers and executed its own foreign exchange dealings. By the mid-1990s, however, Motorola had built a global cash management system that not only managed transactions between Motorola operating companies, but also between Motorola companies and key suppliers. The evolution of Motorola's global cash management system dates to 1976, when the company decided to develop a netting system for foreign currency transactions between Motorola companies. The objective of this system was to achieve cost savings by reducing both the cash flows and the amount of foreign exchange deals required to execute cross-border payments. Under this system, all foreign currency transactions between Motorola companies are managed with a single payment or invoice from a London-based treasury management center to e

Kết quả (Anh) 2:

Global Treasury Management
at Procter & Gamble
With More Than 300 brands of paper, detergent, food, health, and cosmetics products sold print over 140 Countries and over 60 percent of its almost $ 40 Billion print revenues generated outside the United States, Procter & Gamble is the quintessential example of a global consumer products firm. Despite this global spread, P & G's treasury operations - Embrace mà Investment, financing, money management, and foreign exchange Decisions - là off until the early 1990s Decentralized quite. Essentially, each major international subsidiary managed riêng Investments, borrowings, and foreign exchange trades, subject only to outside borrowing limits imposed by the international treasury group at P & G's headquarters print Cincinnati.
Today P & G operates with a much more Centralized system chứa a global treasury function at corporate headquarters management exercises over the operations of close Oversight khác regional treasury centers around the world. This move was a response in part to the rise in the volume of P & G's international transactions and the foreign exchange exposures quả tăng print. Like many global Firms, P & G Đã thử rationalize its global production system to Realize cost by concentrating the production of Economies Certain products at specific locations, As opposed to products in every major producing country những chứa it does business. As it has moved in this direction, the number and volume of raw materials and finished products being shipped across borders được Đã Growing by leaps and bounds. This has led to a commensurate tăng in the size of P & G's foreign exchange exposure, at any one time mà Into billions of dollars now runs. Also, more than one-third of P & G's foreign exchange exposure is now printed non-dollar exposures, như transactions mà to involve the exchange of rubles Into won or sterling Into yen.
P & G Believes mà centralizing the overall management of the quả foreign exchange transactions can Realize help the company a number of important, GAINS. First, its international subsidiaries vì often Do Accumulate cash in the currency of the dư country where chúng based, P & G now trades Currencies giữa its subsidiaries. By cutting banks out of the process, P & G saves on transaction Costs. Second, P & G has found many of its subsidiaries purchase mà Currencies Relatively small print lots of say $ 100,000. By grouping những lots Into larger purchases, P & G can get a better price Generally foreign trade from dealers. Third, P & G is pooling foreign exchange Risks and purchasing an "umbrella option" to cover the Risks associated with various currency positions, mà cheaper coal purchasing options to cover each position.
In addition to Dressing, foreign exchange transactions, P & G's global treasury operation arranges for subsidiaries to invest in and to ask for their surplus Funds borrow money from other Procter & Gamble entities, from local banks thay. Subsidiaries have excess cash mà lend it to những mà need cash, and the global treasury operation Acts as a Financial intermediary. P & G has cut the number of local banks mà it does business with from 450 to about 200. Using intracompany loans thay loans from local banks lowers the overall borrowing Costs, mà sewing result printed Annual savings on interest payments mà shaking Into tens if not Hundreds Millions of dollars of.
Source: RC Stewart, "Balancing on the Global High Wire," Financial Executive, September / October 1995, pp. 35-39, and S. Lipin, FR Bleakley, and BD Granito, "Portfolio Poker," The Wall Street Journal, April 14, 1994, p. A1. Closing Case A Multinational corporation with operating companies in 80 Countries and more coal sales excess of $ 23 Billion print, Motorola is one of the world's leading providers of wireless communications equipment, Semiconductors, and advanced electronics systems and services. Separate companies act autonomously Motorola and trade with each other on an arm's-length basis, across national borders often Do. Historically, each operating company managed riêng other payments with Motorola subsidiaries and with independent suppliers and foreign exchange dealings riêng executed. By the mid-1990s, Tuy nhiên, Motorola hda built a global cash management system mà not only managed transactions the between Motorola operating companies, but am also the between Motorola companies and key suppliers. The evolution of Motorola's global cash management system Dates to 1976 khi company decided to develop a system for foreign currency transactions netting the between Motorola companies. The objective of this system was to Achieve cost savings by Reducing cả cash flows and the amount of foreign exchange deals to execute cross-border required payments. Under this system, all foreign currency transactions are managed giữa Motorola companies with a single payment or invoice from a London-based treasury management center to e