CASE HARVARD: UNITED GRAIN GROWERS LTD (UGG) (17)

1. UGG estimates it needs $ 150 million to carry out their strategic plans. Is it possible with internal funding? How big should be the external funding?
2. Like most companies, UGG faces several risks. What elements of the business (revenues, costs, investment needs, ability to obtain financing) could be affected by each of these risks and how could UGG modify their exposure to these types of risks? What can be done to alter exposure to such risks? (See Annex 5 and 6)
3. Why should UGG (or any other company) worrying about these risks anyway if the investors can be reduced by diversification?
4. Do you think that an insurer would be more willing to extend a contract UGG pay UGG if the profits of the division grain handling company are below a certain level or a contract to pay the company if the Canadian grain volumes are below a certain level? Justify your answer.
5. What captures the “Earnings Risk” described on page 7?
6. Conceptually, what steps you need to take to reach a “Earnings Risk” for the climate?
7. Conditions are given for an insurance company sign a contract with UGG?, The insurer should accept the proposal to protect UGG depending on the volume? If so what price should be negotiated?
8. What does “Gain risks”?, What should be done to apply the effect of climate?
9. What are the implications climate factor in a company in the region? Currently, how does mitigate your risk?, What other strategy could apply?

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